Remarks by Jonathan Fanton to the Donors Forum of South Florida
November 15, 2000 | Speech

It is a pleasure to be here with you this afternoon especially on National Philanthropy Day. I have enjoyed learning more about the work of The Donors Forum of South Florida. Your 1999 Annual Report chronicles an impressive set of programs covering a wide range of important substantive issues about the art and science of philanthropy. I am honored to be among your distinguished roster of speakers, which include my good friend Eli Evans and even a former student, Kelin Gersick, who spoke to you about strengthening the family through philanthropy.

I welcome this opportunity to offer some early reflections on our profession of philanthropy, share some news about MacArthur's programs, and muse for a few moments about how our work might contribute to a domestic policy. I hope we will have time for questions and discussion at the end.

Let me start with MacArthur and our work in South Florida. Our philanthropy program began here in 1980 and since then we have invested well over $100 million in Florida, primarily in Palm Beach and Martin counties. Some examples include MacArthur Beach State Park, a donation of the land on which Florida Atlantic University's Abacoa campus is built, and support for cultural organizations and community development activities such as the Local Initiative Support Corporation of Palm Beach County and the Glades Community Development Corporation.

At one point we owned more than 100,000 acres of undeveloped land in Florida left to the Foundation by John MacArthur. It represented about 40% of our asset base. Over the past twenty years our Board worked hard to dispose of Mr. MacArthur's vast holdings in a way that balanced fiduciary responsibility with the Foundations concerns for the environment. Indeed about one-third of the land we originally owned is now in long-term environmental use.

But that is largely behind us now. Going forward we will concentrate our Florida efforts on philanthropy, not real estate. Let me be clear that I am committed to maintaining MacArthur's philanthropy in South Florida. I have great confidence in David Harris, our Director of Florida Philanthropy, and he has articulated a compelling vision for our work here.

We want to help South Florida become a national model for regional economic, social and environmental cooperation and development. Regions have become the natural building block upon which to improve our economic prosperity and quality of life. As Neal Pierce and Curtis Johnson of the CitiStates Project observed: "Few regions in world history have entered a new century with prospects as dramatic, and challenges as serious, as South Florida today."

We hope our Florida grantmaking will help the South Florida region achieve more sustainable and balanced regional growth by supporting the development of strong institutions and leaders focused on regional issues. And we want to help community groups be part of the policy-making process. We see growth management as central in efforts to reduce disparities and inequities in opportunity, and in addressing the needs of disadvantaged people and communities in the region.

On some issues we might be the lead donor. But we will be very happy to be your junior partners on others. And you can count on our help in building the field of philanthropy and strengthening this important forum.

Let me turn now to my thoughts about the overall MacArthur program.

Many of the largest foundations have new leadership. Several of us have come from the academic world and we are comfortable sharing with each other early impressions about our new line of work. We all find that giving money away wisely is harder than it looked from the outside. Speaking now for myself, I think a large foundation has an obligation to tackle a few significant problems and make a difference. That goal is in some tension, of course, with another objective, which is to be always open to other peoples good ideas. We try to strike a balance by limiting the number of areas in which we work, and then within each area constructing a balanced portfolio of grants, some which proceed according to our own theory of change and some which do not.

I am not ready to suggest what proportion of a foundations assets should be concentrated on a very few issues or how many a foundation of our size can take on at once. My guess is that the number is under ten, the amount per issue must be in the tens of millions and the commitment in the range of a decade or more.

Almost by definition, large issues will exceed the resources of a single or even several foundations. So the objective must be to define the issue, support research that is relevant to policy and practice, sometimes experiment with possible solutions through demonstration projects, and then bring the work to a sufficient scale so that either the market or government takes over.

I see it as my role-at least in the early years-to help the MacArthur Foundation choose from among its many interests those in which we will make deeper investments. This means for the immediate future that any growth in our assets will not result in new initiatives but rather more resources for existing programs.

We know already, for example, that we will be doing more in Africa, focusing on Nigeria in the West and Tanzania and the Great Lakes countries in the East. Our population and environment programs are already at work there and we will be adding initiatives to strengthen civil society and the rule of law and to build capacity in the university system.

Deeper investment in some areas implies scaling down in others. For example our work in peace and security used to have five sub-components: nuclear disarmament, chemical and biological weapons, regional security in Latin America and the Middle East, conventional weapons and small arms, and the tracking of global military expenditure - all for $5 million a year. But in practice we do not do much work in some of these areas so in the future we will be concentrating on nuclear disarmament and phasing down our work in chemical and biological weapons. We will end our work on regional security in Latin America and the Middle East. And since Russian U.S. relations are critical to further progress on reduction of nuclear arms and building a stable world order, we will be increasing our work in human rights, building civil society, and strengthening scholarly infrastructure in Russia.

This process of readjusting our portfolio of programs will be gradual but three to five years from now look for a more sharply focused MacArthur Foundation.

In the domestic arena we have programs in education, juvenile justice, employment, building community capacity, and mental health. We believe that research is essential in the crafting of public policies that can improve American society. Research comes in many forms. MacArthur pioneered the concept of networks that enable scholars from different fields and different universities to work for as long as ten years at a time on critical problems. These inter-disciplinary networks are producing results which have clear policy implications. Let me give you a few examples:

  • The Project on Human Development in Chicago Neighborhoods will ultimately produce the clearest picture ever taken of the forces that shape the life of a child growing up in an urban environment. One piece of its research, published in the journal Science, demonstrated that mutual trust among neighborhood residents — an atmosphere in which they watch out for one another's children or keep an eye on a neighbors property — explains differences in rates of violence among neighborhoods that are otherwise similar in terms of race, social class, and income. This idea of collective efficacy is central to much of the work we are supporting in Chicagos neighborhoods.
  • A researcher in our Network on Adolescent Development and Juvenile Justice compared what happened to young people who ran afoul of the law in New Jersey and were handled as juveniles in the criminal justice system with another group of young people who committed exactly the same type of crimes in New York state but were treated as adults. He found that the young people who were treated as adults were significantly more likely to commit serious crimes later in their lives.
  • Our Research Network on Mental Health and the Law determined that people with serious mental illness are no more likely to be violent than people without mental illness who are living in the same community. They also found, however, that if substance abuse is involved, the potential for violence among the mentally ill increases five-fold. This has enormous implications for those at the community and state levels making decisions about whether or not a mentally ill person can live in a community setting and the type of treatment necessary to ensure public safety.

We also support research outside the interdisciplinary network model:

  • Work we support at the University of Maryland is building on early studies showing the cost of adequate mental health benefits in a health care plan can be reasonably controlled. This type of finding was instrumental in the work of the Bazelon Center for Mental Health Law in Washington, DC in their successful effort to persuade Congress to pass legislation mandating parity between physical and mental health in health care plans. There is, of course, a great deal of work to be done in reaching that goal, but the important principal of parity has been established.
  • Research done with our support by the Chicago office of the Boston Consulting Group revealed surprising new information about the inner-city economy. Their report estimated that more than 25,000 jobs could be created or retained in Chicago's poorest neighborhoods. The researchers estimated there is $5 billion in consumer demand in those neighborhoods, most of which is spent elsewhere. It is findings like these that make private sector investment in the inner-city a wise business decision, not an exercise in corporate philanthropy.

From time to time we do major interventions to help bring ideas to scale and demonstrations that test ideas for change. Let me describe one of each.

In education MacArthur has spent ten years and about $40 million helping with school reform in Chicago. The critical path was placing more authority over education at the school and neighborhood level by empowering Local School Councils to chose principals and have a say in how schools are run. The results are heartening. Across the city, 43% of the public elementary schools are at or above the national norms in math and about 36% are at national norms in reading. Systemwide numbers like that do not take your breath away until you realize that they have almost doubled over the past five years.

Take the Ruiz School in the city's Pilsen neighborhood, for example. This is a community in which 75% of the parents speak little or no English and virtually all the children qualify for free or low-cost lunches. In 1991 only about 11% of the students at Ruiz were reading at the national norm. Today it is 33%. In math the scores rose from 17.5% to 49.7% during that period.

There are plenty of problem areas and a lot of work to be done especially at the high school level. And there are many elementary schools — as many as one-third by some estimates — where the tools of local responsibility are not being used effectively.

But in Chicago there is an attitude that change for the better is possible in the citys public school system. We are seeing families that five years ago would have left the city or sent their children to private schools now using the public school system. And some students are leaving private schools in favor of a public school. This is a remarkable transformation.

But we know the reforms need more time and constant vigilance to take root. We are designing a follow-up demonstration to be tried in Chicago and then other cities. We call it the expert teaching initiative and it is meant to test the proposition that a critical number of expert teachers, together with a strong principal working in a collegial style of governance can change the culture and curriculum of a school in ways that produce better student performance over the long run.

The common thread between our earlier work in school reform and the new initiative is a concern for what happens at an individual school. This concern for the local level also underlies our program in neighborhood capacity building. We are working in five, soon to be 8-10, Chicago inner-city neighborhoods testing the notion that even the poorest neighborhoods have inherent assets which can be strengthened and mobilized for neighborhood improvement. Building social capital through a variety of civic organizations creates a sense of collective responsibility that results in lower crime rates, better schools, greater household income, increased rates of homeownership and higher property values. And once a neighborhood begins to improve, its isolation diminishes and its members, as individuals and organizations, connect to sources of help and investment from outside.

We will work hard to ensure that what we learn in Chicago's neighborhoods is shared with other cities. One vehicle for a conservation about urban improvement is the National Community Development Initiative. NCDI is a coalition of foundations, financial institutions and HUD which has raised $103 million over ten years to support LISC and the Enterprise Foundation in 23 cities including Miami. These investments are expected to generate more than $2 billion in total funding when coupled with financial resources committed by over 250 local partners, including state and local governments, foundations, banks, and other corporations.

The NCDI has resulted in the construction of 16,000 low-income homes and 1.2 million square feet of commercial space in poor neighborhoods. As we think about the next 10 years, the funders want to use NCDI to do more than physical construction. Work has already begun on programs that, for example, provide workforce development services and increased childcare resources. Hodding Carter of the Knight Foundation has been a leader in transforming NCDI to be more than a source of financing for construction projects.

There is an emerging theory that underlies our work in education and community development, indeed much of what MacArthur does. We hope the partners that make up NCDI can inform that theory and perhaps lay the groundwork for a new urban policy. I say an emerging theory because it is not fully developed.

Think about the history of social reform in the 20th century. The progressive movement at the turn of the century broke with the concept of laissez faire. Progressives believed government could intervene usefully on social problems. Franklin Roosevelt's New Deal fully developed that idea but we found there were limits to what big government could do. Lyndon Johnson's poverty program groped for a balance between big government and local initiative — remember the maximum feasible participation of the poor? But that was more of a slogan than a reality. Community advisory committees to large government programs were not genuine local initiatives.

I believe social policy in the last three decades of the 20th Century was not informed by a clear theory — the new federalism calling for the greater involvement by states or incentives to enlist private enterprise were pieces of a puzzle not yet assembled.

Now I think we are poised for a new approach, one which realizes that local initiative must be an equal partner with government, not a procedural afterthought. Government alone cannot deliver the services or fix all the urban problems. It can provide resources, tax incentives, and information about best practices but there is no substitute for local initiative, local sensitivity, local imagination, local responsibility and regional policy and planning. In a country where business and free enterprise are the engines that fuel the economy, the private sector is the indisputable third partner with government and local communities. I am not talking here only about the blunt instrument of privatization as a way to shape up ossified public bureaucracies. I am talking about a three-way equal partnership — the kind we find in the National Community Development Initiative.

We have just been through a long campaign short on attention to urban and regional issues. But the new Administration has a chance to start the new century like the progressives started the last. I remind you that the progressive movement was bi-partisan.

Now is the time to pull together the lessons learned into a new commitment to social progress informed by the insight that motivating and enabling people to take responsibility for their lives and the places where they live is the critical path. The research findings I cited earlier are not liberal or conservative, Republican or Democrat. They offer objective evidence that points to good public policy for all.

We in philanthropy have a role to play in funding objective research, making it available to the policy-making process and accessible to the general public, and then helping implement sensible public policies. And this is not the exclusive domain of large foundations - there is a vital role for smaller foundations and individuals.

Let me conclude by saying that I am eager to demystify the way foundations work, to foster a spirit of colleagueship between our staff and those who seek grants, and encourage humility in those who have the privilege of supporting those who are on the frontline.

We are all engaged in big issues on which many people need to work-through the public, private and non-profit sectors-over many years. No one has a monopoly on right thinking and there are no magic solutions. A good foundation professional staff proceeds with strategic grant making informed by a theory-or theories-of change but should also respond to other points of view. A foundation should invite honest criticism of its work. I hope to foster an atmosphere within MacArthur and between MacArthur and the outside world that takes challenges in stride in the belief that better decisions come through a critical dialogue rather than a steady stream of flattery.

This is perhaps a dangerous note on which to conclude, but I welcome your thoughts now — or later — about how you think MacArthur is doing.

Let me stop, hoping that I have primed the pump for discussion.

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