More than perhaps any other major foundation, the $4 billion MacArthur Foundation is the creation of the people who staff it. John D. MacArthur, who at the time of his death was one of the three wealthiest men in America and sole owner of the nation’s largest privately-held insurance company, gave almost no direction as to what he wanted the foundation named after him and his wife, Catherine, to do. That leaves the trustees and president of MacArthur in the enviable position of coming up with ways to spend nearly $170 million a year.
And that leaves Jonathan Fanton, MacArthur’s president since September 1999, as one of the most influential men in the world of philanthropy. Look for him to be around for a while—the two previous presidents of MacArthur served terms of twelve and ten years, respectively—and to shake up the decentralized, collegial atmosphere at the foundation. He’s presently shepherding a top-down review of MacArthur’s program areas, looking for ways to focus the giving of a foundation that has been criticized for doing a little of everything and not much of anything.
Fanton, an academic who came to MacArthur from New York’s New School, spoke to Philanthropy at his office in MacArthur’s Chicago headquarters. He fields questions on topics such as the Genius Awards, MacArthur’s famously underperforming endowment and expansive program areas, the virtues of general vs. program grants, New York City flophouses, and the alleged foibles of the criminal justice system.
PHILANTHROPY: What is the New School?
MR. FANTON: The New School University, as it’s now known, is a comprehensive urban university in New York City founded in 1919 by a group of Columbia professors who wanted an independent institution working with educated adults on public policy issues. Over time it has grown into a university with many parts—the Parsons School of Design, the Mannes College of Music, Eugene Lang College, the Actor’s Studio Drama School, the Milano School of Management and Urban Policy, and the Graduate Faculty. All together it has about 7,000 degree students in addition to 20,000 adults in the original continuing education program.
PHILANTHROPY: How did you get there?
MR. FANTON: I was recruited from the University of Chicago where I was vice president of planning. Before that I worked at Yale. Coming to the New School was odd because I’d only worked in major research universities, and the New School is somewhat offbeat. But I was attracted by the rebuilding job—here was a place that had a good history, but had fallen on hard times. I was brought in to help rebuild the graduate program in the social sciences. In rebuilding the graduate program I realized that the university needed an undergraduate college, so that there would be a faculty that would teach both undergraduates and graduates. After I arrived I also saw the opportunity to strengthen the arts. Parsons was already there; we started a jazz and contemporary music program, which later merged with the Mannes College of Music, a classical conservatory in financial difficulty. Then we partnered with the Actor’s Studio to start a drama school, which has been very successful, and we affiliated with the Joffrey Ballet to offer a BFA for dance students wanting to complete a college degree. So, I spent my time there restoring some of the older, distinguished parts of the university, but adding a lot, especially in the arts and undergraduate program.
PHILANTHROPY: How about money? You went there in 1982 and they had $6 million in the kitty; you left 17 years later and they had $80 million.
MR. FANTON: The endowment was actually under $6 million, but the really scary fact was that the university had to borrow in August to meet payroll in anticipation of September tuition, so financially it was a very fragile organization. Part of what I did was to strengthen the financial base through an endowment campaign; but more important was the addition of different educational programs, which diversified the sources of tuition. About 80 percent of the school’s budget, 80 to 85 percent, came from tuition and fees, so the enrollment was very important.
PHILANTHROPY: As a university president, what’s the best thing and worst thing about working with a foundation?
MR. FANTON: One of the difficulties is finding the alignment between what you want to do and what the foundation funds while trying to raise all-important money for core needs. It’s frustrating to go to place after place and be told, “Sorry, we don’t do that.”
PHILANTHROPY: Why do so few foundations provide general operating support?
MR. FANTON: It goes back to the question of what the foundation is trying to do and what the board stakes out as its program interests. A lot of foundations blend some general support with some program support, as we do. For instance, we provide general support to a number of cultural and artistic institutions in the Chicago area.
PHILANTHROPY: We talked to MacArthur grantee Les Gelb, head of the Council on Foreign Relations, and he said, “It has been a trend in the foundation world”—he was not referring specifically to MacArthur—“to assert foundation priorities and agendas over the priorities and agendas of the public policy schools they fund. I think that is a general problem in the foundation world.” Do you think that’s a problem?
MR. FANTON: I think there’s a tension between wanting to respond to good institutions that ask for support—either general support or for particular projects—and the need to pick a few areas where the foundation is trying to make a difference. I don’t think there’s a correct answer to how best to balance that tension. Most foundations follow a blended approach; we do give some large institutional grants, no strings attached, and we do a lot of program work as well. Just what the balance ought to be is something I am not prepared to say this early in my tenure. But if you look at trends in MacArthur grant making, there is an increase in larger grants, including larger institutional grants. For example, every year we choose a few of our longtime grantees, maybe at a critical moment when they are about to launch a capital campaign, and give them an endowment capital grant. Last year Conservation International was the recipient of a $5 million grant. This year we’re going to probably double the amount of money for these large institutional grants.
PHILANTHROPY: In a speech you gave last March you said, “It pains me to tell a wonderful new dean, as I did the other day, ‘Sorry, we have no program to give you what you need most: a million dollars of flexible money to go to your institution.’” Michael Shuman, writing in The Nation in 1998 about MacArthur and other “progressive” foundations, as he described them, also criticized the tendency to not give general operating support. Shuman wants to blame you and your colleagues at Rockefeller, Carnegie, and other foundations because liberal think tanks like the Institute for Policy Studies go begging for a million dollars while the Heritage Foundation spends that amount every 13 days. Is that fair?
MR. FANTON: Do we give some general operating support? Yes, we do. Are we making larger grants now than we were? Yes, we are. Are we increasing the number of large institutional and general operating grants? Yes, we are. Do we have an exact notion of the right balance between operating grants or institutional grants versus program grants? No—at least not yet.
PHILANTHROPY: I don’t think he’s talking about fine-tuning, though. I think he’s talking about a wholesale change in priorities.
MR. FANTON: There is a tension between being completely open as to the field or type of grant, on the one hand, and on the other hand feeling an obligation as a large foundation to make an impact in a few places. Critics of foundations come at us from both sides. I think Philanthropy asked [Ford Foundation president] Susan Berresford [Philanthropy interview, September-October 2000] a question that had as its premise, what kind of major impact could the foundation point to? The assumption was that a foundation ought to be able to point to a few. But it is difficult to have a major impact if you scatter the money in small amounts to lots of organizations and institutions. So I think it really is a challenge to get a balance between some general support, be open to new ideas, but concentrate at least a portion of your giving on a few major projects.
PHILANTHROPY: Reading through the rather small number of things John D. MacArthur said about philanthropy, I came across a quote to the effect of, “I haven’t given any money away and I’m not about to start now.” This was followed by a quote attributed to him by a colleague: “I made it and you have to decide how to give it away.” How did he get from A to B?
MR. FANTON: I don’t think there is a tremendous amount on the record. One of our trustees, Paul Harvey, an original trustee and a close friend of John D. MacArthur’s, is my main source. Mr. Harvey confirms that there isn’t much you can discern from MacArthur’s instructions in setting up the foundation as to what he wished to see happen.
PHILANTHROPY: Does Paul Harvey ever “channel” John D. MacArthur at board meetings? Does he ever say, “I think John would have liked this”?
MR. FANTON: Not during my tenure.
PHILANTHROPY: What are your program areas and how do you move the ball forward on them?
MR. FANTON: In the international arena we have an area called conservation and sustainable development, focusing on what are called “hot spots,” a very small number of places marked by rich species diversity and immediate threats from human activity. There are at least 19 such hot spots in the developing world, and we are working in nine of those places currently. In the area of peace and security, we have had a major program for a long period of time building up research capacity and policy analysis at 15 or 20 universities and other research centers around the world, trying, in the post-Cold War era, to expand the definition of security to include human security and to encourage development of new modes of interaction among nation-states. And of course we have a long-standing interest in nuclear disarmament and arms control more broadly.
The third area is population and reproductive health. In that program area, our work is focused on four countries—Brazil, Mexico, Nigeria, and India.
A fourth area, which is still in the process of being developed, is called Global Challenges. A major piece of that deals with human rights. Another piece likely will deal with the economic impacts of globalization.
Finally, we have had a major initiative in the former Soviet Union since 1991, and we maintain an office and substantial programmatic involvement there, especially in Russia. So on the international side we have those five areas of interest.
On the domestic side, called Human and Community Development, one area of interest is child and youth development, including a major emphasis on school reform in Chicago.
A second area is called “building community capacity,” and there we’re working in a number of neighborhoods in Chicago, poor neighborhoods, trying to demonstrate that by building up “social capital,” the neighborhood can be regenerated from within. Our work in Chicago is paralleled by a national effort of which we are a part called the National Community Development Initiative. This effort works in 23 cities and is funded by banks, foundations, and government to grant local groups a sizeable amount of capital to work in developing affordable housing and business opportunities in poor areas.
We also have a grant making area called “access to economic opportunity,” in which we are likely to take on two of the barriers to poor people entering the workforce—early childhood education and care, which is most commonly a barrier for women, and—further down the road—criminal records, which is commonly a problem for men who want to get into the workforce. In early education and care our focus is on increasing access to care and helping state and local officials make more fully-informed policy decisions.
We have a small, but I think very good, mental health program that’s been around for a long time and has done important work in focusing attention on the need for adequate mental health care.
In addition to these four areas of emphasis, we support a series of research networks—typically seven-to-ten-year endeavors—linking scholars from different disciplines and experts from different fields to work on a particular problem. For example, we have a project working right now on juvenile justice. It’s looking more deeply into the question of alternatives to incarceration that will lead to better behavior after the person exits the system. The hypothesis being tested is that if a young person convicted of a crime is put into a program that works at helping the individual re-enter society, get educated, and get a job, that will correlate with a lower recidivism rate in the future. Anecdotally and intuitively we know this to be true. Add to this a research component and you have a powerful set of information for policymakers. Doing the right thing for a juvenile offender will provide benefits for society in terms of economic vitality, public safety, and lower tax burdens. So we feel this is important work.
We also have a general program that is meant to give us some latitude to do things that don’t fit within our more tightly defined areas. I think that’s a good thing for a foundation to have, because it means one can respond to good, new ideas.
And finally, of course, we are home to the MacArthur Fellows Program, which awards five-year, no-strings-attached grants to creative individuals.
PHILANTHROPY: Does the board ever tweak the program areas?
MR. FANTON: The board meets four times a year, normally for two days, and spends a good part of this time on the substance of the program work. Once a year I prepare a list of issues and invite the board to choose among them or add other issues they want to discuss in the coming year, so certainly any new initiative would be talked about and ultimately approved by the board. When we propose a refinement in an existing area of work, we discuss it fully with the board. I believe strongly that the board should be fully involved in all that we’re doing, and in fact our board votes on all grants over $50,000. There’s a trend, I notice, in the foundation world for boards to back away from approving grants. I actually think it’s a good thing for the board to look at and approve the grants. It’s just part of the checks and balances.
PHILANTHROPY: What are you doing in the child care area?
MR. FANTON: Our concern is with both the availability and quality of child care, realizing that a large amount of child care happens not in large, institutional settings, but in small family units of five, six, or seven kids. We’ve made an effort to push for certification of child care facilities using a template that would include safe and clean physical facilities, adequate nutrition, and some educational content. We’ve been doing that here in Chicago, in Illinois, and also nationally.
PHILANTHROPY: If you make it more onerous to become a child care provider, by requiring various forms of certification, aren’t you worried that at least initially you are going to restrict the availability of child care, rather than increase it? As an example, you were in New York when the city started enforcing code regulations on low-priced hotels, so-called “flophouses,” and a lot of people became homeless when these hotels closed.
MR. FANTON: Our point is that quantity and quality go hand in hand. We’ve been active in helping child care facilities expand, both physically and with more staff, and at the same time helping to increase quality, so I don’t think it’s an either/or. I do know something about the homeless situation in New York, as I was on Mayor Koch’s commission on the homeless and visited a lot of those hotels, which were horrendous. I think our commission was right to recommend raising the quality of housing for the homeless. No city government should have been subsidizing or sponsoring some of those hotels; they were just terrible. I spent one whole night going around doing unannounced visits to the various kinds of shelters in New York, and by far the worst were the so-called welfare hotels.
PHILANTHROPY: You mentioned your “access to economic opportunity” program, and that one barrier to poor men entering the workforce is a criminal record. Isn’t it reasonable that that would be a barrier? Should a small shop owner want a felon running the cash register?
MR. FANTON: You’re asking a philosophical question, asking whether one believes in redemption for people who have made mistakes, whether they can learn from their mistakes and become better people. I believe people can improve; I believe people can be redeemed. It is in society’s interests to develop re-entry programs that help people move from prisons to jobs, and I believe research will show that ex-offenders who have participated in such programs are more likely to become productive citizens rather than commit crimes.
PHILANTHROPY: Do you think the current criminal justice system is broken with respect to juvenile offenders?
MR. FANTON: I’d be happy to give you a copy of a speech that Judge Robert Carter [a trustee of the New School] gave to me. Bob Carter is a distinguished judge, and he gave a speech about racial disparity within the criminal justice system ranging from racial profiling, arrest rates, who gets bail, who goes to jail, differential conviction rates, and sentencing rates. It’s pretty powerful information. I have been trying to educate myself about discrimination in the criminal justice system. Whether we end up having a program here is another question. I’m simply trying to learn, and we were stimulated by his speech. I convened a group of people the other day, just to talk about it, including Judge Carter. In talking to a group of federal judges, it seemed to me that the place to look for discrimination was where there was discretion in the system. Where drug strike forces choose to operate, when people are picked up for possession, and where the arresting officer or the prosecutor uses discretion—in such areas there may well be clear statistical differences by race. I think that’s worth looking into.
PHILANTHROPY: You’ve just made some pretty substantial assertions about almost every aspect of the criminal justice system—against the cop on the beat, the judges who hand down sentences, and the juries who convict. The question of “time served” potentially implicates parole boards and prison officials. But you’re also saying you’re “just trying to learn”?
MR. FANTON: I was reporting about a text that piqued my interest, and I’m trying to learn more. It’s an illustration of an area our foundation might decide to address. I have not reached conclusions. I simply reported on an article I’d read.
PHILANTHROPY: But there’s a pretty mature debate here where the ruts are fairly well-worn—conservatives believe in incapacitating and punishing, and liberals believe in, as you put it, “redeeming,” curing, and treating.
MR. FANTON: Let’s look at your easy assumption, that liberals and conservatives have different views about how people ought to be treated in the criminal justice system. If the research we support shows that alternatives to incarceration result in a much lower rate of future crime—and if they are cheaper than incarceration—it becomes not a liberal or conservative issue, or even a philosophical issue, but a common sense issue. I see our role as trying to get at the facts and then make those facts available to policy makers and the general public.
PHILANTHROPY: Let me put you on the spot then. Can you name a single government diversion program, whether federally or state-funded, that has demonstrated the ability to reduce criminal recidivism?
MR. FANTON: The study we have underway is looking at two cities, Philadelphia and Phoenix. We’re waiting to see the outcomes. I think this is just one illustration—it’s a useful illustration—of how our foundation can fund research that tries to get information that would be useful to the public and to policy makers without starting from a liberal or conservative assumption.
PHILANTHROPY: It wouldn’t be a complete interview without asking you a question about the MacArthur Fellows. I’m sure that’s totally boring for you.
MR. FANTON: [laughs] None of this is boring.
PHILANTHROPY: What is the goal of the program?
MR. FANTON: The program has a simple goal, which is to identify 20 or 25 very talented people and give them sizeable financial support that gives them opportunity to develop their craft, their talent, their science, unconstrained by normal duties. It gives them a five-year sabbatical.
PHILANTHROPY: When the awards were adopted, one of your early board members, William Kirby, cited an article that referred to the “potential for great advances in knowledge.” Your Web site refers to “the promise for important future advances.” What are the results?
MR. FANTON: We are doing a study now—not scientific, but more a series of interviews—to try to learn how the Fellows perceive the impact of the program. We don’t have the results yet, but if you asked, “Are there Fellows who went on to great distinction,” the answer is, “Yes.” Five of them, for example, went on to win the Nobel Prize. Can you draw a connection between the fellowship and winning a Nobel Prize? No. But we do have lots of examples of distinguished people who received fellowships relatively early in their careers. To the question of whether the fellowships support those who show promise for making important future advances, the answer is clearly yes.
PHILANTHROPY: Any amusing stories about people lobbying for the grant or pressuring staff for information?
MR. FANTON: I’m rather amazed that I get so few letters. I think people understand there’s no application process. People kid me, of course, since it’s the best-known part of the foundation. Back in New York when I talk to people, they say, “Well, how about considering me for a Genius Award,” and I say, “Well, there are just some people who are so smart, they ‘qualify out’” [laughs].
PHILANTHROPY: How do you feel when you read in the paper about a MacArthur Fellow talking about banking the award or saying that he used it to pay off a nasty divorce or to put an addition on his home? These are three actual instances. That must be a little disappointing.
MR. FANTON: I don’t think that’s typical.
PHILANTHROPY: John Leo famously lampooned the Fellows program back in 1995, describing a Fellow who discerned—I’m sure you remember this—rape themes in Beethoven’s Ninth Symphony. Leo referred to awardees as “gender ideologues” and “low-luster laborers in the traditional vineyards of the left.” He also looked at the current year’s crop of awardees and said, Well, I don’t know who all these people are, but they appear to be—this is John Leo talking—less ideological. Has there been a change in the way that grants are evaluated or awarded?
MR. FANTON: The only major change, aside from the leadership of the program, is that the nominating process now involves many more people—a thousand nominators.
PHILANTHROPY: The rap on MacArthur is that it’s utterly decentralized. In March you gave a speech where you touched on the question of “readjusting the portfolio of programs.” You described it as a gradual process but told listeners to “look for a more sharply focused MacArthur Foundation” three to five years from now. So, once this process is done, who’s going to get more and who’s going to get less, and where are you going to push harder and what are you going to do less of?
MR. FANTON: It’s probably true of many large foundations, certainly true here, that the stated areas—we talked about population, environment, and so forth—can have within them sub-initiatives. And by the time you add up all the sub-initiatives, you’ve got a pretty large number. I think the criticism that we do too much, that we’re spread out over too many fields, comes not from the seven or eight areas at the top but from all the sub-initiatives that have grown over time. What I have asked the staff to do is to take a look at these sub-initiatives and be sure that we have a strategy for each one, and that we have enough money to pursue that strategy. If it turns out, as it has, that we’re doing more than we can afford to do, then choices need to be made. So these are not big, cataclysmic choices, like moving out of the population field, moving out of environment, moving out of education. They are micro-choices. For example, in the international peace and security area, we had regional security programs in Latin America and the Middle East. How much were we spending in the Middle East? Two hundred fifty thousand dollars a year. What can you accomplish with that amount considering the complex and intractable problems in that region? And so, when we did our strategic review in the peace and security area, we decided to drop regional security in Latin America and the Middle East as a priority. We’ve gone through that process area by area. It isn’t so much a radical shift as it is fine-tuning and getting more focused. When we’re done the large architecture will probably look very much the way it does today, but underneath there will be a sharper focus.
PHILANTHROPY: I’ve talked to some former colleagues who say there’s been resistance to what you’ve tried to do, that you’ve been accused of being a micro-manager, for what it’s worth. Have you encountered resistance in these, as you say, micro-changes? What’s your management style in dealing with that?
MR. FANTON: Clearly, I’m on the record encouraging the foundation to make choices. I do think the foundation will make better decisions if there is give and take both in determining overall strategy and in testing whether individual grants really advance the overall strategy. So I’ve asked a lot of questions—partly to educate myself and partly because I think it’s important for the president to take an interest in the basic work of the foundation. Our job is to give away money in a way that supports good people and good institutions, and one hopes that by focusing on a few areas we can make a real difference.
PHILANTHROPY: Between 1987 and 1997 there was a huge run-up in the endowments of many foundations. But I went back and looked at your annual report from 1987 and it seemed like yours barely budged. What happened there?
MR. FANTON: At one point during the early 1990s, nonperforming real estate assets amounted to nearly 27 percent of the endowment portfolio. In addition to being very expensive to hold in terms of taxes, land management, and staff costs, they yielded little return. In 1991, for example, we took a $350 million write down on real estate. I was not here then, of course, but I am sure that having such an imbalance in our portfolio affected decisions about managing our other investments. We would have been less inclined to be risky with the 73 percent of our endowment that had to produce our entire disbursement.
This is land that Mr. MacArthur had owned that we were trying to dispose of in a mature and environmentally responsible way while getting a good return. There was an article in the Times [“Nonprofits Facing Ethical Challenges Over Sales of Land,” New York Times, September 16, 2000] that talked about us and how we tried to balance fiduciary responsibility to grow the assets with actions that were consistent with program goals—in our case the environment was the point of tension. We probably could have sold the land faster if we were not so concerned with the environment.
PHILANTHROPY: Anything I should have asked?
MR. FANTON: I think a foundation can and should be open to the free flow of discussion based on factual information. We try to support research of all kinds and not pass it through a litmus test of liberal or conservative, and we support conferences and organizations that some people would label liberal and others that people would label conservative.
PHILANTHROPY: Can you think of any examples? I mean, it’s your money to spend, but I would think of MacArthur as a liberal foundation. Whom do you support who is conservative?
MR. FANTON: Well, we support lots of organizations like the Aspen Institute that have conferences involving a full range of people. Participants at the Aspen Institute are both liberal and conservative. We supported a conference on missile defense with former Secretary of Defense Perry at Stanford that included a former director of the CIA, James Woolsey, who is a staunch proponent of missile defense. We had as our keynote speaker Senator Thad Cochran, who is in favor of missile defense. The idea was to get a group of people, some pro and some con, some technical, some political, and to really thrash it out, to try to help ourselves understand and help them talk together in a rational, civil setting.
PHILANTHROPY: You also hired Mitch Wallerstein [Deputy Assistant Secretary of Defense for Counterproliferation Policy, 1993-1997], who’s an opponent of space missile defenses, to be your person for. . ..
MR. FANTON: He’s a wonderful person, and I’m glad that he’s here.
PHILANTHROPY: The point is that you’re hardly agnostic on missile defense.
MR. FANTON: But the point I was trying to make was we try to promote conversation on the issues and have all points of view represented. What I personally do or don’t think about missile defense, or whether I’ve really reached a view in my own mind, is not the issue. The issue is promoting good conversation among people who disagree in order to stimulate a broader public discussion, so at the end of the day, when the decision gets made, as many people as possible will understand the issue at a deep level and will be able to formulate their own point of view—to prime the pump for a good discussion.