Fasten Your Seatbelts, MacArthur Grantees. It's Going to be a Bumpy Ride

Can you boil down your "value proposition" to a single sentence? Or explain your "enterprise strategy" in an elevator ride? If not, you better get cracking if you're a MacArthur Foundation grantee. Because a year from now, those are the kind of questions that may be coming your way from a new regime in Chicago. 

Then again, some grantees might as well not bother getting all McKinsey. They're doomed already. 

The MacArthur Foundation will be heading in a fresh direction after its current president, Robert Gallucci, walks out the door in late June. The board has made clear that it wants a "new kind of leadership" ready to use "new tools" to tackle even bigger goals.

As we reported here last week, that's code for leaning more heavily on market-based approaches, enterprise strategies, and technology. 

Opinions will differ on whether such change is good or bad. But what we can say is that the shift—assuming it really happens—will produce winners and losers, and maybe even inflict serious fiscal trauma on some longstanding grantees. 

Before any umbilical cords actually get severed, there will be a long gestation period as MacArthur hunts for a new president and then embarks on the inevitable strategic planning process. That leaves plenty of time for anxiety to fester among grantees. 

And since free-floating anxiety is unhealthy, we thought it'd be useful to channel fears in more concrete ways. So here's our guide to the bumpy ride ahead. 

Starting July 1, Julia Stasch will become MacArthur's interim president as the search starts for Gallucci's replacement. It's impossible to say how long the search might take, but I'd bet on a while. Just wordsmithing the job description could be prolonged, given what's going on here. 

Anyway, after some period of time, the new person will show up. And whomever MacArthur chooses, that person definitely will not be a usual suspect like Gallucci or Jonathan Fanton before him. If the board wants to disrupt and innovate, they'll choose a person with that kind of track record. (Although I suppose such people have become the new "usual suspects" of our time.)

When the board announces its final decision, just reading the bio of their choice may be enough to leave some beneficiaries of MacArthur largesse quaking in fear, and for good reason. 

Upon arrival, the new president will say a bunch of reassuring things meant to soothe the nerves of grantees—and then set in motion a process that will eventually push a bunch of them overboard. Again, it's hard to say how long that process might take. But while it's goes on, the foundation is likely to avoid taking on new grantees or making multi-year grants to existing grantees. Some commitments may be wound down, but it seems likely that existing lines of funding will keep flowing during this interim.

Eventually, though, newly carved tablets will come down from the mountain. They will proclaim that MacArthur will henceforth seek to have impact in bold new ways, and likely outline an approach to grantmaking that will look like elementary common sense to any venture capitalist, and read like Chinese to many nonprofits. 

Not only will MacArthur's approach shift, its areas of priority will shrink. That's because the new person will take one look at the foundation's far-flung list of programs and say, This is insane. Even if we had all the money in the world, we can't have impact in nearly 20 different areas. And so the planning process will identify MacArthur's core competencies and the top places it might add value, and whack grantmaking priorities that don't make the cut. 

Who knows what MacArthur may leave on the cutting room floor of some fancy retreat center with views of Lake Michigan. But if your NGO's cause is among the edits, then you can kiss those MacArthur checks goodbye. 

And if you're a program officer doling out those funding lines from your nice office in the Marquette Building, it will be time to find another job. 

Or maybe not. 

Because here's what will happen after the tablets come down from the mountain: There will be another lull as the battle begins to actually implement change. That's the way things go in any foundation reorganization: Every funding priority has a constituency, at both the staff and board level, and these people will fight for their pet causes and groups. 

One way they'll fight, which we've seen at other revamped foundations, is by insisting that such-and-such group really does fit the new criteria for X and Y reasons, even if that's patently silly. 

Regardless, change will happen, and heads will roll, but many exceptions will also be made.  And things will be dragged out, too. Grantees may get de facto severance packages: decent money, with a final cutoff later. 

I have no idea what issues or what organizations might take the brunt of all this. Nor what kinds of winners might emerge as existing grantees get elevated and new ones are chosen. 

But I can say this: There are more and more NGOs out there these days that borrow heavily from the business world and employ enterprise strategies to achieve scale and impact. These NGOs are likely to get more of a hearing at MacArthur, and those who aren't hip to such approaches may find a less receptive funder. 

All of which makes one wonder how certain prototypical MacArthur grantees will fare. Can we imagine the new cutting-edge head of MacArthur really renewing a $1.8 million grant to the Woodrow Wilson School at Princeton for seminars and post-doc work on science and nuclear security? Or shoveling grants to the Brookings Institution every year? Or viewing the American Museum of Natural History as the best grantee to advance "natural resource management in the Solomon Islands?" 

Personally, I hope a lot of that kind of grantmaking does continue, since I've sat in my share of great seminars at Princeton (where I got my PhD) and helped start a think tank. But I wouldn't count on it. 

And what about all those grants to local Chicago institutions grounded in traditional operating approaches? 

I could go on, but the basic point is this: The usual suspects who have been running MacArthur have been giving a lot of money to other usual suspects—as well as, to be sure, doing some very innovative grantmaking, as we have written about here in the past.

I don't have a problem with usual suspects and may even be one myself. But if the board's idea is truly to do things differently, there's wide room for change in who gets funding. 

As we said at the start: Fasten your seatbealts.