For economists, one pinnacle stands above all others—the Nobel Prize. And no philanthropic group has done more to assist top thinkers in their climb toward this prize than the Earhart Foundation of Ann Arbor, Michigan.
Though relatively small, the foundation has enjoyed incredible success identifying and supporting those who will go on to Stockholm. The prize in economics was established in 1969 and has been awarded 35 times. Nine of those winners had received Earhart support. “This is a pretty good measure of success,” says outgoing president David Kennedy. “Each one of our Nobel laureates had received support early in his career, several as graduate students, or at least long before being awarded the Nobel prize.”
The foundation doesn’t limit itself to economics alone. “Our basic role is to influence ideas,” Kennedy tells Philanthropy. The foundation does this by providing fellowships to young scholars, usually graduate students or junior faculty, who are committed to the principles of a free society and who show the potential for high-quality work in political philosophy, economics, and other disciplines in the humanities and social sciences.
It is meticulous, painstaking work in which success is measured over generations. But over the course of three-quarters of a century, Earhart has perfected the practice.
The foundation depends upon its network of academics and intellectuals, who serve as “talent scouts,” to identify the most promising students. These scouts include leading scholars from traditional powerhouse universities such as University of Chicago and Princeton University, as well as lesser-name schools such as Bowling Green State University and the University of Tennessee Chattanooga.
The scouts recommend students whose work they know well for fellowships. Recipients are then able to continue their academic work without having to worry about finances. Kennedy stresses that the foundation depends heavily upon these scouts, as it does not solicit or accept applications for the graduate fellowship program.
Once the awards are announced, the foundation is willing to wait for its return. “How do we measure success?” Kennedy asks rhetorically. “That’s easy. We sit back and wait a generation.”
It’s not a flippant response. Over the years, the foundation has supported more than its fair share of success stories. Among them, philosopher Allan Bloom, author of the best-selling critique of American university education The Closing of the American Mind; economist Lord Peter Bauer, who was given a peerage for his influential works criticizing state-led development policies; and historian Daniel J. Boorstin, author of the Pulitzer Prize-winning The Americans: The Democratic Experience and former librarian of the Library of Congress.
So Good for So Long
The cornerstone of the foundation’s success is its board of trustees. To understand their role, it helps to know a little of the foundation’s history.
Kennedy’s grandfather Harry B. Earhart started the foundation in 1929 with the fortune he made with White Star Oil Company. Among his foundation’s early beneficiaries was Friedrich von Hayek of the London School of Economics, who wrote The Road to Serfdom and The Constitution of Liberty, two of the most influential works of classical liberalism in the 20th century.
For twenty years, Kennedy recalls, Earhart tried to get his children interested in the world of ideas, but not all of them shared his vision. For this reason, in 1949 Earhart took the bold step of asking all of his children to resign their board positions in order to allow him to appoint an independent outside board of trustees to oversee the foundation’s operations. The family board was reconstituted near the same time with those family members who supported Earhart’s vision, so that the foundation had and continues to have dual boards. The small family board meets once a year and elects the trustees themselves. It is partly the family board members’ responsibility to ensure the board of trustee appointees will remain true to Earhart’s vision.
The demands on the outside trustees are great, but this does not deter them. Although they meet 11 times a year and receive little remuneration, they tend to stay on. The sacrifice isn’t lost on Kennedy, who understands that these people have many more important things they could be doing. “The success of the Earhart Foundation,” he says, “has been its board. The board has been so good over so many years.”
No document, Kennedy says, can ensure that members will enforce the donor’s intent. It can make it easier, but it doesn’t offer a guarantee. “It’s only the board that can keep the foundation on the track,” he continues. “It’s been the care with which board members have been chosen over the years that has kept the foundation on track.”
As the foundation steps into its seventy-sixth year of operation, it does so under new leadership. Ingrid Gregg has taken over the foundation’s reins from Kennedy, who’s been president since 1985. In addition to serving as president of Earhart Foundation, Kennedy is also the long-time chairman of the Institute for Justice, one of America’s preeminent libertarian public interest law firms.
Gregg is a former Earhart Fellowship winner who holds a Ph.D. from the University of Edinburgh in Scotland. She did her doctoral work on the Scottish Enlightenment. She went to work for the Earhart Foundation in 1998, after completing her dissertation, as a program officer. To date, the accomplishment she’s been most proud of is assisting others committed to a free society achieve their goals.
From her perspective, her most important goal is to continue ensuring that Harry Earhart’s intent is respected and followed. She also will carry on with the very effective model of operations that Kennedy pursued.
As in the past, the foundation will continue to focus on funding students, faculty, and others working in political philosophy, economics, and the culture. But she does see a number of new challenges on the horizon—including terrorism.
“There is an immediacy about terrorism that is much more pressing,” she says. She sees Earhart’s role in this challenge as one of providing support to organizations that are already equipped with the experts to tackle the problem.
Yet the need to fund groups that will have an immediate impact on the threat presented by terrorism has not caused Gregg to lose patience with the foundation’s overall long-range vision. She, like Kennedy, is willing to wait considerable lengths of time to see the end-results of a grant.
“I think people can lose a sense of what’s possible and achievable,” she says, “by having to accomplish things on a grand scale and in an immediate way.”
Those who will win the Nobel Prize in the future can rest assured that the foundation will continue on its current path of identifying and supporting the most worthy minds, then giving them a generation to come of age.
Nobel Economists who had Earhart Support
Gary Becker—awarded 1992, “for having extended the domain of microeconomic analysis to a wide range of human behaviour and interaction, including nonmarket behaviour.”
James M. Buchanan—awarded 1986, “for his development of the contractual and constitutional bases for the theory of economic and political decision-making.”
Ronald Coase—awarded 1991, “for his discovery and clarification of the significance of transaction costs and property rights for the institutional structure and functioning of the economy.”
Milton Friedman—awarded 1976, “for his achievements in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilization policy.”
Friedrich A. Hayek—shared 1974 with Gunnar Myrdal, “for their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena.”
Robert Lucas—awarded 1995, “for having developed and applied the hypothesis of rational expectations, and thereby having transformed macroeconomic analysis and deepened our understanding of economic policy.”
Daniel McFadden—shared 2000 with James J. Heckman, “for his development of theory and methods for analyzing discrete choice.”
Vernon L. Smith—shared 2002 with Daniel Kahneman, “for having established laboratory experiments as a tool in empirical economic analysis, especially in the study of alternative market mechanisms.”
George Stigler—awarded 1982, “for his seminal studies of industrial structures, functioning of markets and causes and effects of public regulation.”
Martin Davis is managing editor of Philanthropy.