Posted on May 26, 2004

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Chicago Sun-Times Profiles MacArthur Foundation

The John D. and Catherine T. MacArthur Foundation, the nation's tenth-largest charitable foundation with nearly $4 billion in assets, paid its chief financial officer more than $760,000 in 2002, fourth among top foundation executives in the country, the Chicago Sun-Times reports.

In a lengthy profile of insurance and real estate magnate John D. MacArthur, who left the bulk of his fortune to the Chicago-based foundation when he died in 1978, the Sun-Times contrasts MacArthur's modest lifestyle and spending habits with the foundation's expenditures on salaries and perks for its employees and board members. According to the paper, while the foundation is among the top ten foundations in giving, it ranks third in board and officer compensation and is fourth in the ratio of its overall expenses to giving.

In 2002, for example, the foundation gave away $195.5 million and had $77.7 million in operating and administrative expenses, including $52.8 million in investment management expenses, exceeding those of the Seattle-based Bill and Melinda Gates Foundation ($29 million) and the Philadelphia-based Pew Charitable Trusts ($11 million), even though the assets of the former are eight times those of MacArthur's, while Pew's are about equal. "We have a strategy that includes investing in private partnerships," said Joshua Mintz, the foundation's vice president and general counsel, who added that in 2002 MacArthur had 30 percent of its assets in private investments. "People go into private equity because the return characteristics of that asset class is supposed to be great. So you pay higher fees."

In fact, over the last five years, the foundation's return on its investments has averaged 7.56 percent annually — less than the 9 percent earned by the Gates Foundation over the same period, but significantly better than the half-a-percent loss suffered by investors in the S&P 500 or the 3.2 percent earned by Pew. "[That's] a very, very strong performance," said Mintz. "We're constantly looking at it, and we think the expenses are appropriate for the kind of return we are getting."

In addition to supporting a wide range of international, national, and Chicago-area programs, the foundation gave $1.4 million in 2002 to 138 MacArthur Fellows — artists, writers, scientists who are deemed to show exceptional merit — and the fifteen consultants who nominated them. The program, perhaps the foundation's most original and innovative, was the brainchild of MacArthur's son Roderick, who, according to radio personality Paul Harvey, a longtime friend of John MacArthur's and a member of the foundation's board from its establishment until 2002, had a contentious relationship with his father.

But then, to hear Harvey tell it, MacArthur was not the most forthcoming of men. Once, said Harvey told the Sun-Times, he tried to get his friend to tell him what he wanted the foundation to support. "[But he] kept evading the question," Harvey remembered. "Finally, towards morning, in half exasperation, he said to me: 'I've seen too many men try to manage their affairs from their graves, and it just can't be done.'" And on another occasion, he told his advisors, "I figured out how to make the money. You fellows will have to figure out how to spend it."

Reed, Cheryl. “City's Top Charity Pampers its Own.” Chicago Sun-Times 5/23/04.

Primary Subject: Philanthropy and Voluntarism
Location(s): Chicago, Illinois

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