Ford Foundation Still Driving a Fairmont

The new president of the Ford Foundation commits to continuity, while the organization remains best known for projects it sponsored a over a generation ago. 

Almost as a local story, the New York Times (Stephanie Strom) reported on the selection of Luis A. Ubiñas as the new president of the Ford Foundation (EIN 13-1684331 Form 990-72Mb!).  The Ford Foundation is now the second-largest foundation in the US in assets ($11.6 billion as of 9/30/2005), having lost the top spot in the last decade to the Bill & Melinda Gates Foundation ($33 billion and growing), not to mention non-foundations like Harvard, Stanford, and Yale with larger endowments. 

Mr. Ubiñas comes from the consulting firm of McKinsey & Co., and at 44 is about ten years younger than retiring president Susan V. Berresford was when she took the post in 1996—but still considered a baby boomer (by the US census definition).  Bringing in a relatively young outsider with the strategic background of McKinsey suggests that the board may be up for change, but the words from Mr. Ubiñas to the New York Times emphasize continuity:

Mr. Ubiñas said he had no plans to overhaul Ford radically. “Change for change’s sake is never good,” he said. “For me, it’s about innovation, and innovation has defined Ford for a long time.”

What struck me is the background paragraph at the end of the article, which identifies the Ford Foundation's major accomplishments as

• its support for the microcredit pioneer Grameen Bank, for which it provided important seed capital in the mid-1970s and
• the Local Initiatives Support Corp. (EIN 13-3030229 Form 990), a funder and coordinator of local community development programs, which it founded in 1979

It says something about an organization when the New York Times has to reference its accomplishments from the Jimmy Carter era, when its namesake automobile manufacturer was building Fairmonts and Mavericks.

A look at the hefty Form 990 (1,810 pages, thicker than a couple of the later Harry Potter books) reveals something else about the Ford Foundation.  The most highly paid official (page 50 of the PDF file) is not the president.  Susan V. Berresford is listed with $717,299 in compensation and $155,303 in benefits, and the Chronicle of Philanthropy reports that Mr. Ubiñas will start at $675,000.   

But Chief Investment Officer Linda Stumpf takes home $986,406 with $160,170 in benefits.  The general counsel and four other investment-related positions (listed as non-officer staff on page six) then follow, earning in the $400,000 to $650,000 range.  The highest paid program officer is Alison Bernstein, VP of knowledge, creativity, and freedom: $343,042 in compensation, $96,053 in benefits. 

So at the senior staff level, the foundation looks more like a financial institution than a charity.  It's worth noting that the two signature projects cited by the New York Times, Grameen Bank and LISC, are themselves essentially financial institutions. 

But the big challenge for Mr. Ubiñas will be to find a new role for the number two foundation, now that the focus of philanthropy as a whole has shifted decisively to favor the younger moguls with their interest in social entrepreneurship. 

My suggestions for the Ford Foundation:

• It needs to find more focused niches.  Even an $11 billion endowment is tiny compared to the world's economy.  The foundation needs to focus on more specific opportunities, both programmatic and geographic.
• One relevant geographic focus might involve a return to the organization's roots in Michigan, whose economy is in shambles due to the implosion of the US auto industry.  It would be an appropriate next step for a foundation that has done as much as any in the area of community economic development.
• Pursue mergers with other large foundations.  Warren Buffet showed the way here in giving his money to Bill & Melinda Gates.  It may be that the time is right for some of the older foundations to pool their resources to facilitate larger and more innovative initiatives.  A drawback here is that at this point there are probably not enough large foundations out there whose assets would elevate Ford to a significantly larger scale than it already is.  (The scale of foundations drops sharply once past the top ten or so, and there are only about 50 with assets over $1 billion.)  Nevertheless, a strategy of becoming the community foundation (and conscience) of the world is an idea worth pursuing. 

Comments

[Sam Davis]

Ford Foundation merging with another foundation is not necessarily the best option. Megacorporations become lax and inefficient; megagovernments are inefficient and oppressive; there is no reason to think "bigger is better" for Ford Foundation.

In fact, from the summary of pay for the top executives, it looks like FF is already too big and has been for some time. Perhaps a good move would be to split it into two or more foundations with missions more clearly defined than enriching its top administrators, and a corresponding pay reduction for administrators. Doubtless that idea will not play well in the FF executive suite but might with its board, whose members are presumably exercising digilent stewardship of FF resources.

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