John D. & Catherine T. MacArthur Foundation

The John D. and Catherine T. MacArthur Foundation was created in 1978 when John D. MacArthur, a Bankers Life executive, passed away, leaving over $900 million for its formation. Though board disputes plagued it, by 2001, the foundation was one of the country's largest, making $226 million in grants across the world. Among its causes, it sponsors the MacArthur Fellows (for innovation and creativity in any field), National Public Radio and PBS, human and community development, and global security.

Definition

Foundations are nonprofit organizations that use their resources to support programs, organizations, research and/or direct assistance. Microsoft Encarta Online Encyclopedia defines them as "a non-profit organization, with funds and programs managed by its own trustees or directors, established to maintain and aid social, educational, charitable, religious, or other activities serving the common welfare." Their status is defined in the United States tax codes in sections 501(c)(3) and 509(a).

The Council on Foundations lists the following types of foundations:

  • Community foundations
  • Corporate foundations/giving programs
  • Family foundations
  • Private independent and private operating foundations
  • Public foundations
  • Non-U.S. foundations

Foundations are as varied as the people or organizations that sponsored them. Some have a very restricted area of focus as specified by the foundation founder(s). Others have a board of directors who determine focus areas over time. Foundations, like other organizations in our society, remake themselves as the needs of our country, society, environment and/or world change. They have a history of supporting many worthwhile causes and helping change things for the better.

The John D. and Catherine T. MacArthur Foundation, founded in 1978, was one such family foundation established for the betterment of society. Its inception, with over $900 million bequeathed from John D. MacArthur's estate, created a foundation that had a history of board disputes, but whose legacy has grown over the past two decades. By 2001, the foundation had become one of the largest in the United States, making $226 million in grants across the country and the world.

Historic Roots

The John D. and Catherine T. MacArthur Foundation was founded in 1978 when John D. MacArthur passed away. He left ninety-two percent of his approximately $1 billion estate to begin the foundation. The foundation was created in John's will but with no instructions on how the money should be used. He left that up to his hand-picked board of directors. The composition of the first board included Catherine T. MacArthur (his wife), J. Roderick MacArthur (their son), three officers of Bankers Life (the company he established), and Paul Harvey (radio commentator).

The foundation had a rocky beginning with the board disagreeing on fundamental matters. Catherine had no interest in the foundation or what became of the money. Rod (J. Roderick) was passionate about how the foundation should be run and its focus. The Bankers Life executives and Paul Harvey held conservative views and were in conflict with Rod's more liberal view that the foundation should be on the cutting edge of change. However, the entire board agreed they each should be active participants in the foundation rather than relying solely on professional staff.

In the early years, major issues for the board were the funding of genius grants (grants made to anonymously-selected outstanding individuals from a wide variety of fields), structure and size of the board, and the sale of businesses (required within ten years of the foundation's inception by the Federal tax code).

After a great deal of pressure from Rod, the board was expanded to thirteen members in 1979. The new members had backgrounds from academia, science, government, and business. This board now openly fought over the grants that were made to favorite board member causes. Especially vitriolic were the arguments between Rod and former U.S. Treasury Secretary William E. Simon. Rod learned that a number of grants had been made to conservative groups that Simon supported. As a result of the disagreement, Simon resigned from the board.

The board then entered a period of relative calm. They organized into committees and subcommittees. Committee focus areas were the MacArthur Fellows Program (genius grants), mental health, Chicago grants and general grants. Board members were involved with each committee and its work in programs and grant making. Board members were welcome at any committee meeting. Rod took advantage of this privilege especially if he disagreed with the committee. Initially, the foundation made primarily one-time grants to support programs, fellowships and MacArthur academic chairs for professors at universities and colleges. By the early 1980s, it was funding large multi-year programs for the environment, application of new research to cure diseases, and international affairs.

Rod MacArthur continued to be unhappy with the foundation and its management. He had very specific views on the role of foundations in our society. His comments reflect these viewpoints:

.Foundations should be striving to do the kinds of things that government cannot do. I repeat, cannot do: things that are just too far ahead of what the public will put up with.A private foundation, where the board of directors is answerable only to itself, is in a completely different situation, and if it doesn't take advantage of that uniqueness, it's just blowing its opportunity, and perhaps its moral obligation. (Nielsen 1985)

In Rod's view the MacArthur Foundation was not living up to this ideal.

Secondly, Rod believed the foundation was not managing its assets properly. High fees were being paid to board members for their foundation work. Bankers Life was not being managed well and had lost value. Board members were executives of Bankers Life and were looking out for their own best interest versus the needs of the foundation.

To resolve all the issues he saw, Rod filed suit in February 1984. He made allegations against eleven board members. He requested that the foundation be either dissolved or that the court appoint a receiver to manage and sell Bankers Life. The board found a buyer for Bankers Life that was willing to pay $384 million for the company. Rod agreed to this sale since it was $116 million more than an offer he had blocked. This removed the Bankers Life issue from the suit. The board believed that Rod would drop the suit now that the life insurance company was sold. However, there were still the allegations that board members and key foundation executives were profiting at the expense of the foundation.

The board fought back against Rod. They alleged that he was a troublemaker and did not agree with the rest of the board on most issues. They pointed out that he did not have a good relationship with his father. Several members decided that Rod should be removed from the board. All board action stopped when Rod was diagnosed with cancer.

Rod, however, continued to pursue his cause. He believed that it was his duty to make his father's foundation a model foundation. With his health declining, he dropped the suit in November 1984 and died a month later.

The MacArthur Foundation had a turbulent beginning. During the time, it laid the cornerstone of what it has become. The John D. and Catherine T. MacArthur Foundation has made and continues to make significant contributions for the common good. It has met some of the aspirations that Rod once held for it.

Importance

The MacArthur Foundation is one of the largest and most visible foundations in the United States. A thirteen-member board of directors leads it. It has a staff of 164 in the United States and twenty-eight employees working out of its branches in Brazil, India, Mexico, Russia, and Nigeria. Its headquarters in Chicago at the Marquette Building is listed on the National Registry of Historic Places (the building was the former headquarters of Bankers Life). The Foundation Center, an organization that tracks philanthropy, has ranked the MacArthur Foundation as ninth in assets and twelfth in grant making for U.S. foundations based on information in its database on December 9, 2002. It is the largest foundation in Illinois, with assets of approximately $4.2 billion. In 2001, total grants of $226.6 million were made to 565 organizations and 192 individuals. The average size of a grant was $370,000. The largest 2001 grant was $25 million.

The John D. and Catherine T. MacArthur Foundation is known throughout the United States and the world. It sponsors programming on National Public Radio, Public Radio International and PBS. National and international news coverage is given each year when the MacArthur Fellows are announced. Through its grants it makes significant contributions to communities throughout the world.

Ties to the Philanthropic Sector

Through its grant making, the John D. and Catherine T. MacArthur Foundation provides funding for many programs carried out by nonprofit organizations and for research on specific topics. It is organized around five focus areas as described on the MacArthur Foundation Web site:

•  The Program on Human and Community Development

•  The Program on Global Security and Sustainability

•  The General Program

•  Program-Related Investments

•  The MacArthur Fellows Program

Human and Community Development grants focus on making life better in U.S. cities and for people (TJDandCTMAF About Us: Human 2003). The areas of interest are community capacity, stable and affordable housing, regional policy and practice, individuals and society, teaching and learning, policy research, and arts and culture in Chicago. Specific emphasis is placed on Chicago and southeast Florida. The foundation has forged alliances with the Chicago Housing Authority, Chicago Public Schools, and the U.S. Department of Housing and Development. Grant applications are sought from individuals or organizations for some areas, while others are only at the invitation of the foundation.

Global Security and Sustainability is a key area for improving the safety of citizens of the world as well as safe guarding sensitive ecosystems for current and future generations (TJDandCTMAF About Us: Global 2003). Specific sensitive areas in Latin American, the Caribbean, Asia, Pacific islands and Africa are the focus of sustainability grants. The purpose of the grants is to maintain the bio-diversity of very specific and sensitive ecological areas. Other areas of interest are international peace and security, population and reproductive health, global challenges, educational and research grants in Russia and post-Soviet states and Nigeria. They also sponsor a research and writing competition; its current topics are migration and refugees, and technological change and global security and sustainability.

The General Program primarily makes grants in support of broadcast media. It funds the development and distribution of independent programs for radio and television. Examples of programming supported are All Things Considered on National Public Radio and P.O.V. on PBS. Large institutional grants may be made from the General Program. Also, from time-to-time, grants are made to initiatives that do not fall under the other categories (TJDandCTMAF About Us: The General 2003).

Program-Related Investments are made in support of affordable housing preservation and community development venture capital. The program's goal is to work through community-based organizations to improve neighborhoods through business development, community facilities and housing. These investments are in the form of below-market-rate loans and are made for social purposes rather than to make a profit (TJDandCTMAF About Us: Program-Related 2003).

The MacArthur Fellows program was J. Roderick MacArthur's idea. It provides unrestricted $500,000 five-year grants to each fellow. The purpose of the award is "to give greater freedom of choice to the creative individual who, observed historian Arthur J. Schlesinger, 'vibrates to his own iron string'" (TJDandCTMAF 1989). The winners are creative individuals who show the potential to do extraordinary things in their field of interest. The selection process is done entirely in secret. Individual nominators from a broad spectrum of fields recommend candidates to the evaluation team. The evaluation team reviews the nominees and determines who should be recommended to the board of directors. The board makes the final selections. All nominators and evaluators serve confidentially and their names are never revealed. Between twenty and thirty fellows are selected each year. As of September 2002, the MacArthur Foundation has named a total of 635 fellows from a wide diversity of fields. The nominees learn that they were considered for the award when they are informed that they have won it.

The whole idea behind the program is to provide talented individuals with the resources to pursue their areas of interest without the normal restrictions imposed by grants. Rod was quoted as saying "it's very much in the old man's style, you know.The idea behind the MacArthur Fellows program is that Albert Einstein could not have written a grant application saying he was going to discover the theory of relativity.My father was a firm believer in the individual. He spent his whole life sneering at stuffed shirts and pooh-poohing institutions" (Nielsen 1985). The MacArthur Fellows Program has been called the genius program by the press. The 2002 winners included a seismologist, novelist, computational linguist, artist, bassist, filmmaker, and urban archivist to name a few. Their ages ranged from twenty-nine to sixty. It is a unique program designed to foster creativity in the best and brightest.

In celebration of the twenty-fifth anniversary of the John D. and Catherine T. MacArthur Foundation, $40 million in special grants were announced on January 13, 2002. Of this amount, $21.5 million was given to forty-one arts and cultural organizations in the greater Chicago area. National Public Radio received $14 million. Grants of $1million were made to four international organizations. Five organizations in southeast Florida each received grants of $500,000; the recipients were organizations that the foundation had worked with in past years (TJDandCTMAF MacArthur 2003).

In addition to supporting work across the world on its own, the MacArthur Foundation jointly funds many programs with other foundations. It has forged alliances with numerous public institutions worldwide to improve conditions for individuals, make the world a safer place and sustain the environment.

Key Related Ideas

Community development initiatives are designed to improve the quality of life for individuals where they live and work. Programs typically support improvements in low income and declining neighborhoods. The MacArthur Foundation's efforts support programs in Chicago, southeast Florida and revitalization efforts in twenty-three other cities.

Early education and care is the keystone to preparing low-income children for school and allowing their mothers the opportunity to work. Quality, affordable care is usually not available in low-income neighborhoods. The MacArthur Foundation is supporting demonstration projects in the Chicago area that will increase the supply of available care and its quality.

Ecosystems describe an entire environment including the people, land, plants, animals, water, and insects. With population growth and technology, many of the most diverse ecosystems in the world are threatened. The MacArthur Foundation supports programs to protect these ecosystems from extinction.

Global security is the concept of a world without wars, international cooperation and the elimination of weapons of mass destruction. The MacArthur Foundation supports projects and institutions that meet its goals of fostering a safer world.

Housing preservation works to maintain affordable housing for low-income people in large U.S. cities. Affordable housing is a key to assisting families in finding jobs and supporting a stable family life. The MacArthur Foundation and the Chicago Housing Authority are demolishing 16,000 units of public housing that will be replaced by 25,000 new units within 10 years.

Intellectual property and the public domain is the concept describing access to information by individuals. With the advent of the Internet, more information is readily available to individuals. However, there is a risk that the amount of information available may, in fact, decline rather than increase as the creators of information attempt to protect their intellectual property. The MacArthur Foundation is interested in assuring that the public's access to information is protected.

Important People Related to the Topic

John Corbally: First president of the MacArthur Foundation and former president of the University of Illinois.

Murray Gell-Mann: Nobel Prize scientist who joined the MacArthur Foundation board of directors in 1979.

Catherine T. MacArthur: The second wife of John D. MacArthur. She was his partner in setting up many of the business systems that Bankers Life and Casualty Company used for years. She was listed as C.T. Hyland, her maiden name, as secretary and/or director for many of their companies. John changed the name of the foundation to include her name when his lawyer presented him with the legal documents.

John D. MacArthur: MacArthur was an insurance and real estate tycoon. He purchased financially-troubled Bankers Life and Casualty Company for $2,500 in 1935. He built a corporate and real estate portfolio of more than $1 billion in assets. He owned 100,000 acres of prime Florida real estate in the Palm Beach and Sarasota areas. Upon his death, he left the substantial portion of his wealth to the John D. and Catherine T. MacArthur Foundation with no specification on how the money was to be used. MacArthur believed that family should not inherit wealth and that his skill was in making money and not giving it away.

J. Roderick MacArthur: Rod was the son of John D. MacArthur and his first wife, Louise Ingals. He was a member of the first board of directors of the MacArthur Foundation and was very influential in determining the direction the foundation. Rod was the dissident on the board, questioning the motives of the Bankers Life and Casualty executives, as well as other board members. He was the champion of creative and innovation in foundation giving and was the guiding force behind the MacArthur Fellows program. Rod made a fortune for himself with the Bradford Exchange and, upon his death, the J. Roderick MacArthur Foundation was established.

Jonas Salk: Eminent research scientist who developed the polio vaccine and joined the MacArthur Foundation board of directors in 1979.

Related Nonprofit Organizations

Carnegie Corporation of New York is a foundation that works with the MacArthur Foundation on a number of initiatives as well as supporting grants to organizations and individuals in its own areas of emphasis (Carnegie Corporation 2003).

Ford Foundation jointly funds several programs with the MacArthur Foundation in addition to its areas of program interest - 1) Asset Building and Community Development; 2) Peace and Social Justice; and 3) Knowledge, Creativity and Freedom (Ford Foundation 2003).

J. Roderick MacArthur Foundation was founded by Rod MacArthur, and is located in Niles, Illinois. Its purpose is to assure that all individuals are treated fairly in our democracy. The ACLU is a recipient of numerous grants from the foundation

The Rockefeller Foundation is a large foundation that funds programs in seven focus areas, including 1) Creativity and Culture, 2) Food Security, 3) Health Equity, 4) Working Communities, 5) Global Inclusion, 6) Special Program/Assets and Capacities, and 7) Regional Programs (The Rockefeller Foundation 2003). The Rockefeller Foundation also works with the MacArthur Foundation in funding a number of programs.

Related Web Sites

Active Voice Web site, at http://ww w .activevoice.net/ , is the site for a nonprofit organization that provides service to filmmakers for a fee. The MacArthur Foundation uses Active Voice to support its film outreach program.

Chicago Housing Authority Web site, at http://www.thecha.org/ , provides information on the authority including its history, related news, plans for development, contracts and available employment. CHA works jointly with the MacArthur Foundation to address the housing needs of the underprivileged in Chicago.

Chicago Public Schools receives support from the MacArthur Foundation to improve their schools through research and programs to build leadership. Visit its Web site at http://www. c ps. k 12.il.us/ .

The Foundation Center Web site, at http://ww w .fdn c enter.org/ , provides information on the organization that promotes philanthropy and access to grants for individuals and organizations. In particular, the site gives online access to grants for individuals and the Foundation Directory (which provides basic information on over seventy thousand grantmakers).

The MacArthur Foundation Web site , at http://www.macf o und.org , provides a comprehensive review of the foundation history, areas of focus, information on applying for grants as well as information on the MacArthur Fellows winners and process.

National Community Development Initiative Web site, available at http://www.enterprisefoundation.org/aboutUs/annual/index.asp, describes the initiative to improve the conditions in some of America's neediest neighborhoods. This is done by combining the resources of business, foundations and the U.S. Department of Housing and Urban Development over a number of years.

National Public Radio is a recipient of substantial support from the MacArthur Foundation. The foundation's grants contribute to program development and distribution. NPR is a network of more than 600 non-commercial stations nationwide. More information on NPR, affiliated stations and programming can be found at http://www.npr . org/ .

P.O.V. is a PBS television series that presents discussions and different viewpoints on various issues of societal importance. It receives ongoing support from the MacArthur Foundation. A review of the series and upcoming programs is available at http://www.pbs. o rg/pov/ .

Public Radio International is focused on providing programming that broadens people's knowledge of the world (such as BBC World Service). More information about the organization is available at http://www.pri.org/PublicSite/home. html .

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This paper was developed by a student taking a Philanthropic Studies course taught at Grand Valley State University. It is offered by Learning To Give and Grand Valley State University.