Creating new initiatives is an exciting prospect for philanthropic institutions. The hopes and ambitions that we have for the world find their expression in new and continuing areas of grantmaking. And there are a surprisingly large number of social problems that appear to be amenable to philanthropic intervention. Choosing among them, fashioning grantmaking strategies to address problems and to advance new policy agendas, and placing adequate resources in the hands of those who can effect social change are among the greatest challenges and responsibilities of private foundations.

When foundations experience rapid financial growth, decisions about entering new fields can be made with less attention to trade-offs among areas of grantmaking than at times of stasis or decline. The MacArthur Foundation’s 25-year history has been characterized by extraordinary growth in financial assets—from $600 million to over $4 billion* at its high point in 2001. For the most part, the Foundation has not been called upon to make choices that might result in phasing out initiatives and closing out major grantmaking areas. To be sure, there are always choices to be made among the many organizations worthy of support, and due diligence and sound program development also call for phasing out funding for specific organizations. Closing down an area of grantmaking altogether has ramifications for those working in a policy arena, as well as for other philanthropic donors. Making such choices are among the most difficult and frustrating decisions that a foundation takes. At a time when the Foundation’s assets are static or even declining, the often substantial consequences of exiting an area need to be taken into account even when contemplating entry into a new field, with an eye to the long-term effects of the Foundation’s choices overall.

 

Purpose

This paper provides a basis for discussing the choices MacArthur makes about its grantmaking—about how new initiatives are created, how they change, and how they are closed. As an institution, the Foundation is sufficiently young that procedures for entering and exiting grantmaking areas have not been made explicit, nor have we had opportunities to discuss in systematic fashion the criteria to be used in making these decisions. The early years of many foundations are spent in experimentation and institutional learning, in false starts, and surprising successes, and MacArthur is no different from others in this regard. Much of MacArthur’s new work has evolved from existing programs and initiatives, although that evolution has not always been explicitly recognized and discussed by the Board. An implicit set of criteria for such changes, however, has developed over the years.

In this paper, we describe aspects of the foundation’s decisionmaking process, and from those experiences, suggest criteria to be used to create new programs and initiatives, to change focus and redirect grantmaking areas, and, in some cases, to phase out areas and initiatives altogether.

A note about how grantmaking areas are clustered and defined. MacArthur has five major programs—Global Security and Sustainability, Human and Community Development, Fellows, General, and Program-Related Investments. Within programs, grantmaking is clustered in thematic areas, for example, Conservation and Sustainable Development or Community Capacity. Within those areas, elements refer to parts of grantmaking strategies that, taken together, are intended to accomplish the goals of an area. So, for example, in the Population and Reproductive Health area, reducing maternal mortality is one element of the strategy to achieve the Population area’s goals. In Human and Community Development, public housing transformation is one element of the Housing area.

In the General Program, in addition to grantmaking through major areas like Media, mini-initiatives have been used as a means to explore and experiment with new domains of grantmaking that may later emerge as major program areas in Human and Community Development or Global Security and Sustainability. Human rights grantmaking is an example. Grants for international human rights organizations were made through the General Program for a number of years. As the Foundation’s thinking evolved, resulting in a major reorganization in 1997, human rights was incorporated into the Global Security and Sustainability program, where grantmaking has developed further beyond the support for major international human rights organizations to include awards to human rights organizations in Mexico, Nigeria, and Russia.

Other mini-initiatives, however, like one on philanthropy in Mexico, were established and later closed. Still others were meant to be time-limited from the outset. An initiative on Indigenous Voices, for example, was tied to the 1992 observance of Columbus’ arrival in the Americas. One-time gifts to artists’ colonies for buildings and infrastructure support were limited, as were awards to small liberal arts colleges.

Mini-initiatives can also serve as means to explore the possibilities in a field without making a long-term commitment. Being more explicit about the criteria for creating and closing areas of philanthropic activity is not intended to erect barriers to new ideas or to risk-taking. And the vehicle of mini-initiatives provides a way to explore issues and test opportunities without having to develop a more formal grantmaking program.

 

Criteria to consider in creating new areas of grantmaking

1. Significance of the issue

Private foundations are in a position to tackle major problems and stimulate attention to the most significant issues of our day. Responsibility for the stewardship of these public trusts is a grave one and requires that we consider how best to deploy resources for the greatest common good. The issues that the Foundation takes on should be significant enough to command the attention of the public as well as the Foundation itself. They will likely be viewed as urgent and as touching on deeply felt public concerns.

In addition, at the outset, any new initiative should engage a critical mass of Board members. To be successful, the initiative will need to excite them and matter to them as an expression of the Foundation’s mission and underlying values. Interest needs to be high enough to sustain the responsibility to oversee and guide the initiative over a number of years. In addition, while Board members need not be experts in the proposed grantmaking area, some knowledge and experience on the part of Board members enriches discussions about program development and evaluation. Such expertise can also provide an efficient means of tapping additional networks and intellectual resources that can be helpful to the foundation in its grantmaking.

2. Timing of the Foundation’s entry in the lifecyle of an issue

The timing of the Foundation’s intervention in the lifecycle of issues will be a major factor to consider. Policy issues appear to move through stages, from the earliest phases of identifying a problem and clarifying the issues, to setting a policy agenda and moving new solutions into the policy arena, on to policy implementation and practice. Foundation grantmaking can address each stage of the lifecycle depending on our diagnosis of the issue needs at any given time.

As other foundations do, MacArthur has a portfolio of strategies that can be deployed at different stages of an issue’s evolution. Some strategies and resources may best be used in the early days of its lifecycle—identifying neglected components and approaches, supporting research to clarify problems, developing human capital to move ideas into the policy arena, contributing innovative solutions that shift paradigms, and setting new policy agendas. Other strategies include support for monitoring efforts and investigative research to ensure public accountability of policies already in place. Still others can help to restructure market opportunities and bring smaller-scale projects to scale.

As new areas of foundation activity are considered, attention should be given to the strategies and tools available to us, and to our comparative advantages in any given policy arena.

For example, MacArthur brought worldwide attention to biodiversity loss and conservation, when the World Environment and Resources program began in 1987. At that time, the scientific community was just developing a consensus about the importance to human life of protecting biological diversity. The Foundation’s distinctive contribution lay in putting the theory of conserving biodiversity into practice. It quickly moved to link conservation efforts with ideas about sustainable development, realizing that merely protecting habitats in the form of parks—where mostly poor people were trying to sustain livelihoods—would not provide for robust conservation efforts. At the time, the value and need for biodiversity conservation was just beginning to emerge in public and governmental policy circles. The Foundation’s decision to put the ideas into action was a bold move that demonstrated how much could be accomplished by building the capacity of institutions in regions of greatest fragility and endemism. These efforts have also garnered the attention of several multilateral institutions and national governments around the world, institutions that have taken on the issue and are funding projects that further the Foundation’s goals.

Other strategies may be employed in the policy implementation stage. Sustaining institutions and supporting monitoring efforts, for example, is one way to ensure compliance with new agendas, and funding investigative research can lead to reforms in existing policy and practice. Program-related investments can be used to stimulate market changes and bring some projects to scale.

For example, the Foundation supports efforts to monitor and evaluate the progress of the Cooperative Threat Reduction Program that the U.S. and Russia have undertaken to dismantle nuclear weapons and secure fissile materials. Earlier support for innovative research in the late 1980s and 1990s, had led to the formulation of a new way of dealing with nuclear weapons—one based on cooperation rather than confrontation. To guarantee the success of this effort, MacArthur continues to support policy research organizations that monitor and evaluate progress toward nuclear dismantlement and materials security, bringing to public attention notable achievements, as well as lack of progress, and ensuring that public funding continues to support the effort.

Attention to the long term, however, should not prevent the Foundation from responding to significant one-time opportunities that will have long-term effects.

The transformation of public housing in Chicago, for example, is an opportunity that the Foundation has seized to shape the implementation of new policies at a significant juncture in the city’s history. As early as 1996, MacArthur had sought ways to address the problem of poor housing in distressed neighborhoods, and to break up the concentration of poverty in those neighborhoods dominated by poor dilapidated public housing. The return of local control over public housing to the City in 1999 from the federal government was an historic moment that presented a way for the Foundation to help shape the redevelopment process. Through practical activity, system reform, research, and advocacy, the Foundation aims to help transform poor neighborhoods into ones where mixed income housing can serve as the basis for new opportunities that will help residents overcome isolation and poverty. As part of a broader approach to reducing poverty and building community capacity, the public housing transformation project affords a significant opportunity to further the Foundation’s goals.

3. A realistic strategy for change can be identified.

In choosing an area for a new initiative, the Foundation will need to have a sense of what is to be changed, and how and whether the grantmaking and other mechanisms available to MacArthur can help in the change process. The question will need to be answered whether the issue lends itself to the strategies available to the Foundation, and whether MacArthur enjoys a comparative advantage in the field. The Foundation will also need to understand the leverage points—for bringing about change in policies and practices, and for developing financial resources, if needed, to solve the problem. A balance will likely be struck between choosing a problem that is tractable, but perhaps less significant, and one that may appear intractable, but has the potential of significant social benefit if it were solved.

For example, one of the earliest programs to be created at MacArthur was the Program on Peace and International Cooperation. The strategy that emerged from a two-year commission funded by Carnegie Corporation and MacArthur, and from subsequent meetings of selected commission members, MacArthur Board members and staff, took a long view and a broad perspective on the needs of the policy and academic fields of international security in the U.S. and abroad. It proposed to broaden the field beyond a focus by physicists and political scientists on the U.S.-Soviet relationship. The strategy recognized the deficit of talented and knowledgeable younger people interested in pursuing careers in international peace and security (in large measure as a consequence of the Vietnam war). Finally, the strategy also included attention to human rights, environmental and economic change, and social and cultural issues—to some of the underlying and root causes of violent organized conflict—and thus to their role in new understandings of international security. Furthermore, there was a recognition that emerging trends in the economy, in population, in information and communications technology, and in regional conflicts demanded broader training and a richer mix of disciplinary perspectives for those interested in international peace and security.

The grantmaking program that emerged from these deliberations was comprehensive, calling for major grants for fellowships to universities and institutes in the U.S. and Europe, an international fellowship competition administered by the Social Science Research Council, and a research and writing competition administered by the Foundation that would encourage developing country researchers, journalists and others not associated with the major academic centers that were the focus of the Foundation’s larger grants. The strategy also included awards to policy research institutes in the U.S. and abroad, in an effort to translate the best new thinking into policy solutions. In all of this, a major emphasis was placed on bringing specialists in country and regional area studies to the study of international security. The aim was to combine detailed knowledge of social and economic trends with political analysis and the theoretical perspectives of more traditional international security scholarship to fashion a richer academic and policy field. Such a contribution, it was hoped, would contribute to more sophisticated thinking and policy initiatives in the U.S. The theory of change that undergirded MacArthur’s grantmaking strategy was the notion that younger people and those outside of traditional international security fields would ask new questions, surface fresh perspectives, and promote innovation in the academic and policy fields of international peace and security.

4. The level of funding that MacArthur can provide is adequate to address the issue

While this may seem obvious, there needs to be an early estimate and recognition of the level of financial resources—for grantmaking, and for staffing and other administrative costs—required for creating and sustaining an initiative. Early discussions will require estimates of the length of time of the Foundation’s engagement in an issue area, as well as the level of annual budget allocation. Estimates of the needed resources will depend on the strategy to be employed and on an estimate of the time required to make headway on a problem. This does not mean that an area’s budget must remain constant; funding levels may rise or fall over time. When objectives change in a program area, or become more ambitious, then a conscious decision will be made to change budget allocations. Likewise, shifts or refinements in strategies will also have funding implications, which will need to be taken into account.

For example, the Initiative in the Former Soviet Union began with a modest $3 million annual commitment, and now has an annual budget of about $10 million. In the early days of the initiative, the confidence in institutions and individuals in the former Soviet Union was not as high as it is now. We began the grantmaking on the theory that providing assistance to researchers and scholars, some of the most highly trained and internationally-minded in the region, would provide the policy research needed for societies to grapple with the transitions in economics, politics, and social relations brought about by the revolutions at the end of the cold war and the demise of the Soviet Union. Such transformational change, on this scale and in a relatively short period of time—from a centrally-planned to a pluralist society—had not occurred before in modern history, and very few were willing to predict the future course of events. So our investments were necessarily tentative and experimental at the beginning. The emphasis on support for individual research projects would encourage pluralism, it was thought, while early seed grants for private universities and independent policy institutes provided intellectual homes for researchers. In addition, such grant awards would yield information about the capacity for building nongovernmental organizations. As Russian society has developed, and as institutions have evolved, we have gained greater confidence about the survival and sustainability of independent research capacities. In recognition of our deepening knowledge, our growing confidence in the future of Russian society, and the positive changes in conditions, the budget for the Initiative in Russia has grown.

5. Position of MacArthur in relation to other donors.

We assume that MacArthur would like to position itself as a leader in a new grantmaking and policy domain, so the choice of an area will likely lead the Board to favor those where few other public or private donors are operating.

In the mid-1980s, when MacArthur initiated its World Environment and Resources program, no other donors had focused on biodiversity conservation on a global level. Likewise, the creation of the Mental Health Program in the early 1980s was based, in part, on the observation that the U.S. government, through the National Institutes of Health, was the only major funder in the field of mental health. The Foundation believed that it could provide funding that, unlike government funding, would encourage interdisciplinary research that might yield new insights into human development and successful life transitions.

Most of the problems that the Foundation will choose to address will be significant enough, however, that even the Foundation’s resources will not be sufficient to solve them. In some areas, then, bringing in additional resources from government or multilateral donors, from private sector markets, or from other private foundations will constitute one element of the overall strategy for change.

In fact, in some areas, but for MacArthur’s funding initiative, other donors might not have even entered a field. It could be argued that the effect of MacArthur’s program-related investments in housing preservation was catalytic as it stimulated other investors to participate in a field they might not otherwise have considered.

Even where MacArthur is joining others in a field, it may wish to consider the distinctive contribution that the Foundation may be able to make.

For example, in the international peace and security area, other major foundations such as Ford, Rockefeller and Carnegie were already significant players when MacArthur established its program in 1984. MacArthur’s distinctive contribution then was in providing for the training of a new generation of scholars and professionals, and in emphasizing interdisciplinary approaches to international security issues.

6. Capacity to marshal advisory and staff resources to create and implement a new initiative.

Because of the freedom of its charter, MacArthur has few constraints on the areas it may choose to enter. The question is whether the Board wishes to make use of the existing expertise, and of the credibility and the comparative advantage that the Foundation has developed in certain broad areas of grantmaking, as it explores and sets up new initiatives.

In education, for example, MacArthur has had long experience in the field, in Chicago school reform, as well as national policy. As we look ahead, however, there may be opportunities to draw on the Foundation’s expertise in technology and join it with experience in education to fashion a new initiative on information and communication technologies and education.

Another and related question is whether a new initiative should be associated with existing programs and priority areas. Nothing prevents the Foundation from undertaking initiatives well outside current programs. Yet there may be inefficiencies or opportunity costs associated with moving into policy arenas where MacArthur is unknown, and has yet to establish its credibility.

As noted earlier, many new areas and initiatives of grantmaking emerge from existing areas. As we see progress on issues, as we learn about problems from the people that we support and from our assessments of performance, as policy environments change, and as the constellation of funding sources shifts, we take these into account and seek new opportunities for grantmaking and convening. The next section will focus on criteria used in refining our goals and changing strategies to take account of these changes.

 

Criteria for changing grantmaking strategies

1. Progress achieved

Progress toward reaching foundation goals can stimulate further opportunities for deepening grantmaking in a field. As the Foundation supports policy change, these developments, in turn, create new relationships and stimulate further changes in the field to which the Foundation may wish to respond.

For example, the human rights field has changed substantially over the past twenty years, and grantmaking strategies have responded to those shifts. With others, MacArthur has helped to strengthen international organizations that protect victims of human rights abuses. Human rights organizations have become powerful forces for upholding principles of individual civil and political rights, and have brought international attention to the most grievous cases and systematic violations, and have made substantial progress in bringing consideration of human rights more squarely into U.S. foreign policy considerations.

The Foundation also recognizes, however, that sustaining the human rights agenda requires the development of mechanisms and institutions within countries to implement basic rights law and principles. Over several years, the Foundation has expanded its efforts to include support for local human rights groups, and experiments with new mechanisms, like human rights ombudsmen, in the countries where MacArthur has offices—Mexico, Nigeria, and Moscow. This change in focus within countries is based on the progress internationally, and on our growing knowledge of human rights in the countries where we have staff in place.

In addition, there is a growing recognition of the value of sharing information and building networks among human rights organizations at the local, national, and international levels to effectively promote protection of human rights, and MacArthur has helped to nurture those relationships and networks.

Finally, there has been a growing realization, arising from customary practices and informal networks, of the need for a more formal international system of justice. The effort to support the establishment of an International Criminal Court is one manifestation of this development; the idea of the “responsibility to protect”—the obligation that states have, and if they are not able or willing, that the international community has, to protect citizens from harm—is another.

2. Lessons from grantmaking can be applied

In some cases, the Foundation has learned from the results of its grantmaking and sees a way to contribute to policy change based on that knowledge. These lessons may evolve as we learn about the results of projects and consult with outside specialists. They may come as a result of formal evaluations that provide us with independent assessments of the projects and institutions that we support. In some instances, we are able to take the understandings of grant recipients, for example, and move them into public debate where they may have the effect of changing the underlying assumptions of policymaking and practice.

In the case of juvenile justice, there was a confluence of several streams of mental health research funded by MacArthur that challenged the evolving practice of treating juveniles as adults. Results from the Foundation-funded network on Adolescent and Child Development (1988-96) suggested that teenagers are more immature, more impulsive, take greater risks, and are more amenable to treatment than adults. Yet the response of the criminal justice system in many states to a spike in juvenile crime was to treat more and more juveniles as adults. States were rolling back earlier laws that had protected young offenders from harsh treatment, and not only those offenders charged with murder, but those picked up for lesser offenses like drug use and repeat offenses. We also knew from support of the Mental Health and the Law networks (1988-96 )and from following the research of the Human Development in Chicago Neighborhoods project (1991-present) that decisions in the legal system are often divorced from scientific information. The treatment of juvenile offenders seemed to bear this out. Based on these observations from earlier grantmaking, the Foundation developed a new strategy which links the already known research findings to the legal system, raising questions about the treatment of juveniles, funding additional research where needed, awarding grants for training materials for court personnel, and for communication of these research results more broadly in state criminal justice systems and to the media.

3. Major changes in the policy environment

Exogenous shocks. Major shocks to societies, like wars, economic depression, or other similarly transforming changes come infrequently. When they do, however, foundations involved in policy change take stock of their grantmaking strategies and directions to see whether the directions they started with still seem to address the new policy environment.

In the lifetime of the MacArthur Foundation, one of the greatest shocks has come in the international peace and security area. The end of the cold war and the demise of the Soviet Union have caused major transformations in the international system, the results of which we are still trying to understand and incorporate in new policies. Changes in thinking, in institutions, in power arrangements and the meaning of sovereignty, in the role of weapons of mass destruction in international relations, and the rise of new forces outside of the system of nation-states, such as catastrophic terrorism, have challenged the political and policy systems in the U.S. and in many other countries of the world. Private philanthropy has a role to play, especially in providing resources for new ideas and new ways of understanding the implications of these changes for international peace and security. But the kind of drastic changes we have witnessed require reevaluation of program directions, experimentation and nimbleness in our grantmaking to respond to the uncertainty and fluidity of the current international scene.

Since the beginning of the Foundation’s entry into the international peace and security field, the area has undertaken three reassessments of its grantmaking strategy—one in 1991, a second in 1995-6, and a third in 2000-2002. Over that period new emphases had been elevated in the grantmaking portfolio and later phased out—for example, a number of projects on international governance and civil society were supported, as was a portfolio of grants on human rights in Central America. The creation of the Initiative in the Former Soviet Union was a result of the end of the cold war and the opening up of opportunities for direct support of new institutions in Russia and elsewhere in the region.

With increasing recognition, however, of the continuing risks from nuclear, biological, and chemical weapons, the prospect of placing and using weapons in space coupled with the realization that the end of the cold war was not going to bring an end to reliance on weapons of mass destruction as a force in international security, the Foundation has focused its attention on these problems, but with a new appreciation for the complexity of the context—including the prospect of further terrorist attacks—in which biological and nuclear weapons now sit.

Evolutionary change. Other changes may be slower in coming, but have profound effects as well. Such change may come about because of the introduction of new technologies, or because of major population and demographic shifts, for example. The cascading effects of these tectonic shifts may be felt in many sectors and in many policy areas, and the foundation may wish to address some of the consequences of these underlying changes.

The effects of information and communications systems are pervasive and can be felt in areas as disparate as international affairs, higher education, and the arts. There may be particular areas, however, where the Foundation can accelerate knowledge development and help shape the consequences of new policies in information and communication technologies. Two areas of current exploration are education and technology, and the consequences of globalization of economies—a phenomenon that has been facilitated by computer technologies that can transfer capital, goods, and services at an increasingly faster pace, with sometimes enormous consequences for the stability of national and regional economies.

4. Shifts in constellation of financial resources

One of the factors that the Foundation takes into account before entering a field is the availability of other private and public monies to bring to bear on a set of problems. Those initial conditions may change, however, over the lifetime of an initiative and require responses from MacArthur. Existing donors may change their priorities, new entrants may focus on one aspect of a problem, and other donors may leave the field altogether. As these shifts occur, the Foundation takes these into account and may choose to make changes in its own grantmaking strategy.

It is clear from these examples that the Foundation is engaged in ongoing assessment, evaluation, and learning as it solicits proposals, awards grants, and monitors projects. We are engaged in social change, and, as an institution, we are likely to be more successful in achieving our goals if we continue to be attuned to changes in the policy fields in which we operate. The art is in finding the right balance between sustaining efforts over the long term, and responding to new opportunities as they emerge.

 

Criteria for closing areas of grantmaking

Though infrequent, there are occasions when areas of grantmaking are closed down—when the Foundation exits a field. Phasing out an element of an area or a mini-initiative in the General Program is much easier to undertake than closing down an entire program or area. Most of the phasing out that we do is in the context of evolving policy, foundation learning, and shifting emphases in grantmaking. Large areas of grantmaking that have closed down completely are generally ones that began with a specific time limit at the outset—for example, support for research in parastic biology, and collaborative research competitions like the one on population, consumption and environment. In other areas, like workforce development, the Foundation may not have been able to identify the levers of change, or the institutions and leaders to bring about policy reform, and made a decision to close a grantmaking portfolio that had never really taken shape.

1. The foundation has succeeded in achieving its goal.

In many cases, “success” will be achieved when issues are clarified, or the issues we are trying to bring to public attention find their way onto public and policy agendas, or when new policies are in place. The problems may not have been solved, but there will be evidence that policymakers and practitioners can make use of the knowledge, human capital, and institutional capacities that the Foundation has fostered. Finally, unanticipated consequences of the Foundaton’s grantmaking may change the definition of success.

In the international peace and security area, the Foundation’s contribution to a redefinition of international security that goes beyond military and geopolitical considerations—to what is called human security—can be counted a success. The foreign policies of Canada, Sweden, Japan and Norway include attention to the broader range of underlying conditions that contribute to human security, such as protection of human rights, and economic and environmental sustainability. In many other countries, we have seen increasing attention to the protection of human rights and individual well-being in public discussions of peace and security. While there may be more to do to move these ideas into policy and legislative agendas, the Foundation’s 15-year effort has yielded sufficient progress to allow us to turn to other needs in the peace and security field.

In these and other cases, MacArthur would phase out grantmaking gradually so that organizations would have time to find other resources. The aim would be to phase down rather than lurch out.

2. The foundation has not succeeded.

Lack of success can be attributed to several different factors depending on the issue:

a. We may have tried a set of strategies and found that we cannot seem to bring about the desired change on an issue;

b. We have learned after a period of grantmaking that the timing is not right for the policy change we sought, and the leverage points that we thought existed are not there or, in the end, are not effective;

c. Policy or political conditions have changed and the Foundation’s strategies and funding are no longer relevant to the issues; or,

d. We are not able to mobilize additional donors to enlarge the pool of funding needed to solve a problem.

Judgments about lack of success are rarely clear cut. These are most often nuanced, multi-faceted calculations that weigh comparative opportunities based on whether prospects of impact warrant the proposed commitment of resources, including funding, staff time and attention, and the Foundation’s reputation.

In the field of workforce development, for example, the Foundation decided to phase out a longstanding but modest grantmaking program that supported a number of "best practice" community-based programs throughout Chicago. By 1999, both staff and the board had determined that this grantmaking would not yield major improvements in the massive and fragmented public systems that fund adult education and job training, notwitstanding some of the nationally significant models that had been seeded with Foundation grants. A year of extensive study followed, coupled with modest grant support for research on promising workforce intermediary examples in other parts of the country, as well as market research on the receptivity among employers to this type of entity. This research led staff to conclude that the new strategy could not be successfully implemented without a substantial, long-term focus on reforming the City Colleges of Chicago. The Foundation's existing efforts, focused on the Chicago Board of Education and with the Chicago Housing Authority, led staff to weigh whether a third such commitment could or should be undertaken. It was determined that the urgency of public housing transformation and its dramatic implications for the Foundation's grantmaking in Chicago neighborhoods made it a higher priority for the Foundation. The urgency of public housing transformation also presented a better opportunity for near-term success. Accordingly, implementation of the grant strategy for workforce development was not pursued.

In another case, one mental health research network that never found a footing was the Program on Conscious and Unconscious Processes, even though it enjoyed funding for several years. The purpose of the research program was to understand the physiological bases of unconscious processes of the human mind. A major figure in the psychotherapeutic field was funded to conduct observations of individuals in clinical treatment. The research agenda was complicated, intellectually challenging, and risky. But in the end, there was too much variability in the data so that it was difficult to generate results that had general applicability. Furthermore, the leadership of the project was not conducive to a broad network approach, and finally, it was not clear how useful the results would be, even if they had been clear and persuasive.

3. Priorities change

Some issues that may have seemed urgent and important at one point in the Foundation’s history, no longer command the public attention that they once did, in light of emerging or other more compelling problems. As the Foundation considers the mix of fields that it is addressing, it may find that some stand out as more significant than others, and it may choose to phase out funding in areas that no longer seem urgent.

The Foundation’s initiative on Philanthropy in Mexico is an example of changing Foundation priorities. When grantmaking began in 1995, the economic conditions in Mexico, including the opening of the economy to the development of private enterprise and the prospect of substantial wealth creation, suggested that grantmaking to encourage a philanthropic culture was a timely effort. As other issues have emerged, however, the appeal and urgency of developing Mexican philanthropy faded.

4. Other resources have been leveraged.

There may be areas where the problem has not been solved, but other and larger donors have since entered the field to fund projects or to address the issues that the foundation had helped to make more visible.

In the Conservation and Sustainable Development Area, MacArthur’s early grantmaking in the Atlantic Forest brought national and international attention to a neglected geographic area. With governmental and multilateral financial resources going into that area of Brazil, MacArthur made a judgment that it could divert funding to another hotspot and other areas that required more attention, and phase out its grantmaking in the Atlantic Forest.

In a hypothetical and future example, we might envision a time, when sufficient private and public resources were at last available in Russia to sustain the reforms in higher education that the foundation is helping to stimulate. While there is substantial work still to be done in developing mechanisms to raise money for basic research, we can be fairly confident that public and private sources eventually will be available to continue and even increase funding for major research in universities.

 

Conclusion

 

When creating new initiatives, changing grantmaking strategies and portfolios, and closing down areas of activity, the Foundation’s decisions will turn on judgments about the evolution of the problems that the foundation wishes to address. If we believe that the tools that the foundation can bring to bear through its grantmaking and convening power—to clarify problems, develop human capital, devise innovative solutions, set agendas, support investigative research, and bring projects to scale—are appropriate to the stage of the policy problem, then we will be more confident that the foundation has a role to play in a policy domain.

Foundation attention to government action or inaction in the areas in which we work is a thread running throughout this discussion. How the Foundation positions its grantmaking in relation to policies and public funding at the local, state, national, and international levels of public decisionmaking figures in our decisionmaking, and could well be the subject of another paper. For the purposes of this paper, we have tried to take into account several factors as we enunciated the criteria to be used in making choices. Among these are government policies and practices, private market mechanisms, and the actions of nongovernmental organizations, including other private donors. Of these, the action or lack of action by government is often the most significant element to be factored into the strategies we devise to address a particular issue or problem.

In brief, key factors in deciding when and where to enter and exit a field will include:

1) interest; 2) significance of the issue; 3) timing; 4) issue tractability; 5) funding availability; and, 6) comparative advantage. The qualities required for undertaking new initiatives, on the one hand, and leaving areas of grantmaking, on the other, might be summed up as “good judgment,” or “deciding on the exceptional.” We have attempted to make more explicit some of the underlying principles involved in these judgments. 
In schematic form, this paper has described briefly the criteria for creating, changing, and closing areas of grantmaking. We have provided relevant examples and tried to distill those factors to be considered when making decisions to enter, sustain, and exit policy and research fields. The presentation has drawn most directly from experience at the MacArthur Foundation and has attempted to surface underlying patterns and generic processes in the institutional decisionmaking process. It is not meant to be definitive, but rather is intended to provoke discussion and comment.

 

Appendix I

 

Methods for Creating New Grantmaking Areas and Initiatives

Consult with experts in a policy field.

Creating any new initiative requires investigation and consultation with a broad range of knowledgeable persons. One way to make use of expertise in a field is to conduct a series of small consultations with a range of individuals . These consultations can be undertaken in one- to two-day meetings group meetings, or on an individual basis. Such consultations can also be used to generate brief papers describing the nature of the problem and suggesting initial strategies that the Foundation might pursue to address the problem, authored by participants in the consultation, or by outside advisers. Staff along with one or two outside consultants can draw on these papers and advice to devise a program design and strategy.

Both the environment and population areas have relied on this kind of consultation process to create grantmaking programs in these areas.

  • Use grantmaking to explore a policy area.

There are ways for the Foundation to test new areas of grantmaking without incurring the substantial costs of launching a full-blown initiative. The “mini-initiative” or incubation function that the General Program has played is an important example of the way that MacArthur has experimented with grantmaking and learned from its experience. Support for international human rights organizations began in the General Program, for example, and after several years of experience, and a reorganization of the international programs, was integrated into the Global Security and Sustainability grantmaking portfolio. The digital information initiative is another mini-initiative that permits the Foundation to explore a new area without making a substantial commitment at the outset.

  • Establish a commission to explore a problem and identify needs.

Commissions provide, over a period of time, a structured review of the needs in a policy area. In the interactions of the commission, a range of ideas and experience can be drawn upon to identify the needs and alternative approaches to a problem. The Foundation can tap expertise, and more important, can generate a series of cross-interrogations to stimulate innovative thinking and new designs for philanthropic giving. Such commissions can provide a relatively efficient means of educating board members and staff, of eliciting some of the best ideas, and of designing a comprehensive program of grantmaking.

The creation of the International Peace and Security Program in 1984 was preceded by a two-year commission, jointly funded by the MacArthur Foundation and the Carnegie Corporation of New York. The Commission and a successor working group addressed the problems of peace and security at what seemed the height of the cold war between the U.S. and the Soviet Union. The working group developed a design that would begin to meet that need and identified the grantmaking mechanisms and the institutions to carry out the Foundation’s grantmaking program.

Such a commission also serves the purposes of drawing attention to the Foundation’s interests, stimulating new interest in the field, and informing a broader community, beyond the commission, of the Foundation’s underlying rationale and goals. In doing so, a Commission can help stimulate the very change that the Foundation seeks, even before the awarding of grants. 

*At the end of 2007, MacArthur's endowment was $6. 4 billion.