1992

The Andrew W. Mellon Foundation continues to devote by far the largest share of its resources to its traditional areas of emphasis: higher education and scholarship, the arts and culture, conservation and the environment, and population. In the last four years, however, the Foundation has also been an increasingly active grantmaker in public affairs. In 1992, roughly 20 percent of all appropriations were classified under this broad rubric. A summary table (pdf) follows this report.

To be sure, the line between "public affairs" and other programmatic areas is blurred at best, and no purpose is served by trying to draw it with specious precision. For example, the entire field of population, in which the Foundation invests heavily, could be regarded as a sub-category within public affairs. Also, the Foundation sponsors work on a variety of topics in public affairs, such as the economics of higher education, which relate directly to institutions and fields which the Foundation supports more generally. The Foundation's extensive efforts to encourage fuller participation by minority groups in higher education, and especially in doctoral education in the arts and sciences, are another illustration of how a set of grants can bridge public affairs and a substantive area of longstanding interest. (Apropos the blurred nature of the line separating categories, grants for research on the economics of higher education are classified under "public affairs," whereas grants in support of educational opportunities for underrepresented minorities are classified under "higher education and scholarship.")

In deciding to allocate more resources to public affairs per se, the Trustees and staff were extremely conscious of the exceedingly wide range of projects which could fall under this heading and of the attendant danger of adopting so diffuse a pattern of grantmaking that its impact would not be discernible or productive. At the same time, we wanted to preserve the Foundation's flexibility by making clear from the start our intention to concentrate on certain objectives for specified periods of time and then to redirect our efforts elsewhere as circumstances changed.

One major area of concentration in recent years has been Eastern Europe: In 1988, the Foundation decided to focus significant energies and resources on Hungary, Poland, and Czechoslovakia (as it was then). This decision was made in response to the dramatic changes which were occurring in that part of the world, and especially to the evident need for timely assistance of various kinds if democratic, market-oriented initiatives were to succeed. It was also made in recognition of the relative inactivity in the region at that time by major foundations and governmental or quasi-governmental entities. We also thought that it would be possible to identify particular sets of activities in which we had, or could develop, sufficient expertise to spend reasonably large amounts of money wisely.

Previous annual reports have contained discussions by Neil L. Rudenstine of literacy (1989); by Carolyn Makinson of Population (1990); and by Rachel N. Bellow of the Foundation's program in arts and culture(1991). The practice of asking a staff member (or, this year, a Senior Advisor) to review one area of activity in some detail has been well received, and we expect to continue it.

To guide our efforts, we recruited Professor Richard E. Quandt, a highly respected economist at Princeton University who was born in Hungary and has extensive knowledge of the region, as a Senior Advisor to the Foundation. Largely as a result of Professor Quandt's active engagement with certain systemic problems in Eastern Europe, and with key institutions and individuals there, the Foundation has now (through 1992) appropriated $20 million for programs and projects in the region; and we expect to appropriate an additional $12 million to $15 million by the end of 1994.

Consistent with the general practice followed for the last three years, a discussion by Professor Quandt of the Foundation's grantmaking program in Eastern Europe follows this report. This discussion of activities in Eastern Europe will be useful, we hope, in its own right. In addition, it is meant to illustrate the way in which the Foundation seeks to focus on specific topics, problems, and areas in fashioning its programs.

Other Fields of Activity

Before yielding to Professor Quandt, I wish to comment briefly on some of the Foundation's other activities, noting programmatic emphases in 1992 and identifying one or two new initiatives under consideration.

In addition to programs in Eastern Europe, one other area of activity within the broad field of public affairs should be highlighted. After receiving an extensive report prepared by our colleague, Stephanie Bell-Rose, the Trustees decided to increase the Foundation's commitment to immigrant studies and immigrant education in the United States. Special emphasis is to be given to programs designed to improve immigrants' acquisition of English, to policy development efforts at state and local levels, and to the longer term development of additional scholarly and analytical capacity which can help us understand and address the full range of issues related to recent increases in the size and diversity of the immigrant population. In 1992, a $2 million matching grant was made to the Urban Institute for some of these purposes, and we expect to have appropriated as much as $10 million in this area by the end of 1994.

The fields of Population and Arts and Culture require no special comment since they continue to be supported in the ways outlined in some detail by Carolyn Makinson and Rachel Bellow in (respectively) the 1990 (pdf) and 1991 (pdf) annual reports of the Foundation.

In the field of Conservation and the Environment, the Foundation continues to support research and training programs at leading centers for the study of ecosystems and also to support organizations such as the New York Botanical Garden, the Trust for Public Land, the Nature Conservancy, and the Organization for Tropical Studies. The staff member responsible for this area, William Robertson, has suggested that this would be an opportune time to review the program in its entirety, and Dr. M. Gordon Wolman of Johns Hopkins University has agreed to chair a committee which will undertake that task and prepare a report in 1993. A fuller discussion of the Foundation's program in this field will appear in next year's annual report (pdf), following this review.

In 1992 the Foundation completed a review of its Literacy program. The Trustees concluded that more emphasis should be placed on research projects which relate directly to educational practice. Also, we are pleased to report that arrangements have been made for our vice president, Harriet Zuckerman, to work with the Russell Sage Foundation and its president, Eric Wanner, in reviewing, supporting, and disseminating the results of projects of particular significance in this field. The interests of our two foundations seem highly complementary, and we look forward to this new partnership.

Higher Education and Scholarship

Somewhat more should be said about the field of "higher education and scholarship," since it has been central to the work of the Foundation for so long and continues to receive by far the largest share of all funding: $41 million in 1992 alone, or 45 percent of all appropriations in that year.

The Foundation continues to assign a particularly high priority to efforts to strengthen doctoral education in the arts and sciences (see the 1990 and 1991 annual reports). Under the direction of Harriet Zuckerman, the departmentally based program of institutional grants for use at ten universities is now in its second full year. It is much too early to come to any conclusions concerning the effectiveness of the efforts being made to reduce time-to-degree and raise completion rates, while simultaneously enhancing the quality of doctoral programs. We are encouraged, however, by the early soundings. The first full round of statistical summaries suggests movement in the right direction within most participating departments, and the initial qualitative assessments have been even more positive. At the same time, the need for some "fine-tuning" of the guidelines for expenditures under this program is also clear, as is the need to take account of the difficulties associated with the currently depressed state of academic labor markets in most of the fields covered by this program -- a condition which we are trying to monitor closely.

A major accomplishment in 1992 was the transfer to the University of Michigan of the large and complex database for this program -- which already contains longitudinal data on approximately 9,000 students as well as information on 47 participating departments. Direct responsibility for maintaining this rapidly growing database rests with Sharon Brucker, working under the direction of John D'Arms, Vice Provost for Academic Affairs and Dean of the Horace H. Rackham School of Graduate Studies.

The Foundation also continues to fund "portable" fellowships for outstanding graduate students in the humanities through programs administered by the Woodrow Wilson National Fellowship Foundation and directed by Alvin Kernan. The original, ten-year old program of multi-year fellowships (the "Mellon Fellowships in the Humanities," sometimes called "Mellon I") is being concluded, and the last group of recipients was chosen in 1992. While no new multi-year awards will be made in 1993, students chosen in earlier years will of course continue to be supported. Planning was completed in 1992 for a new program of one-year portable awards (the "Andrew W. Mellon fellowships in Humanistic Studies", or "Mellon II"), and the first group of recipients will be chosen in the spring of 1993. Information on students in both portable fellowship programs is being incorporated into the Michigan database described above, and detailed comparisons will be made of the progress of students in all of these programs, to assist us in assessing their relative effectiveness.

A third, albeit shorter, "leg" of the Foundation's efforts to assist doctoral programs consists of a series of graduate seminars in literature and history being sponsored at universities other than those participating in the institutional grants program. These seminars were the idea of Alvin Kernan, and their purpose is to stimulate more open and candid discussion of such sensitive and contentious issues as the nature of "truth" in these fields and the extent to which it is possible to confront texts and issues of interpretation without committing oneself at the outset to a strong theoretical or political position. A number of faculty members, as well as students, have warned that failure to confront such questions directly can create great difficulty for students approaching the dissertation phase of their work and can impede progress toward timely completion of degrees.

Another set of related initiatives, led by Henry Drewry, is designed to address the widely recognized need for more minority scholars with PhDs in core fields within the arts and sciences. Our major focus is on the identification of talented candidates while they are undergraduates (preferably in the sophomore year) and on institutionalizing a variety of modes of support and encouragement, including the subsequent repayment of undergraduate debt, in order to increase the flow of students from underrepresented minority groups into -- and through -- doctoral programs. While this too is a long-term undertaking which cannot be assessed fully for quite some time, the results to date have been sufficiently promising to justify extending the life of the program and adding five additional colleges and universities to the roster of institutional participants (while not renewing grants to two of the institutions included initially). The United Negro College Fund is also an ever more active partner of the Foundation in this effort.

In 1992, appropriations for this set of programs, including grants to assist some faculty at historically Black colleges and universities to complete their PhDs, exceeded $8 million. Mr. Drewry and his associates are maintaining records on the characteristics and performance of both institutional and individual participants, and in a subsequent annual report, we expect to describe in some detail our experiences with these programs, and the lessons learned from them.

The Foundation also maintains a strong interest in the well-being of selected liberal arts colleges. Two currently active programs under the direction of Roberto Ifill -- one to assist new presidents and the other to enable colleges (and a few small universities) to consolidate programs in ways that would clarify and enhance their educational missions -- will be concluded in June of 1993. Alice F. Emerson, who has joined the staff of the Foundation after serving for sixteen years as president of Wheaton College, is now actively engaged in formulating a next set of programmatic guidelines for consideration by the Foundation's Trustees. Our expectation is that we will wish to build on the work begun under the consolidation program (perhaps supporting some model planning efforts which would incorporate explicit mechanisms for tracking consequences) and also to contribute in some appropriate way to the national debate on the future of financial aid programs at liberal arts colleges and private universities.

Area studies have also been of interest to the Foundation for many years. Harriet Zuckerman and Richard Ekman are now reviewing needs and opportunities in European studies and Latin American studies, respectively, and here too we expect recommendations concerning programmatic directions to be ready for discussion by the Trustees in 1993. Concurrently, Stephanie Bell-Rose is overseeing an external review of the Foundation's grants in support of policy studies affecting Latin America (which are classified within Public Affairs).

Finally, special mention should be made of libraries at research universities. As many individuals and organizations have noted, the future functions of these libraries -- and the financing of the services they provide -- are unsettled issues which are poorly understood. Accordingly, the Foundation launched a study of the circumstances of these libraries, which was completed in the winter of 1992. This research project was intended to identify major trends in, for instance, the share of total educational and general expenditures of colleges and universities going to their libraries, expenditures within library budgets on books versus journals, the share of the relevant universe of newly published materials being acquired, and outlays on automation in its various forms. We were also especially interested in the ways in which technological innovations have affected practices, expectations, and future possibilities in this domain.

Along with many others -- and for reasons explained in detail in the study -- we are persuaded that the status quo is unstable, and that it is urgent that careful consideration be given to the interrelationships among mechanisms of scholarly publication, acquisitions policies of libraries, modes of inter-institutional cooperation, alternative methods of making information available, and the requirements of users associated with institutions of various sizes and capacities (for example, small colleges versus large universities). Realistic assessments must be made of cost functions, pricing options, and the full economic consequences of potential new forms of journal publication -- to cite just one important example.

We are now awaiting responses to this report. At the same time, we are seeking advice from economists, experts on the relevant technology, and others on problems which must be viewed in their totality, not just from the perspective of one constituency or one set of institutions. Richard Ekman has principal responsibility within the Foundation for overseeing our future activities in this area, which could well be substantial.

Nonprofit Organizations

In the course of working with numerous grantees, especially when they have confronted unusual adversity, we have become increasingly aware of the need for fuller understanding of the nonprofit sector and of its generic problems. Accordingly, the small research staff of the Foundation (consisting principally of Joan Gilbert and Thomas Nygren in the Princeton office, Kevin Guthrie and Jed Bergman in the New York Office, and Sarah Turner, now a PhD candidate at the University of Michigan) has been working on a variety of projects including: (1) the adequacy of existing systems used to classify entities according to their fields of activity; (2) a "macro" analysis of the evolving populations of entities within fields such as higher education, the performing arts, and science/technology, noting changes in both size and composition; (3) the strengths and limitations of existing methods of financial reporting used by individual organizations; and (4) problems of governance, including the capacity of organizations to adapt to changing circumstances and, when necessary, to cease operations altogether.

A detailed examination by our staff of the coding used in applying the NTEE taxonomy (the National Taxonomy of Exempt Entities) to the field of higher education demonstrated that the error rate was so high as to require thorough revision. Agreement was reached on a plan to accomplish the needed reforms, and grants for this purpose were made in 1992 to Independent Sector (National Center for Charitable Statistics) and the Foundation Center. We are optimistic that improved coding will permit the NTEE system to be adopted by the Internal Revenue Service, thereby allowing students of the nonprofit sector to make much more effective use of information collected annually on the IRS's 990 Forms. Mundane as it may sound, improving the reliability and validity of this classification system is an essential first step in both charting the growth of sub-fields within the universe of nonprofit entities and analyzing the financial characteristics of sets of institutions.

A number of narrower issues of particular interest, including how one identifies "warning signals" in time to address the problems faced by institutions in potential trouble -- such as The New-York Historical Society -- can best be approached, we have come to believe, by conducting case studies. We began the case study part of our work by studying in some detail the recent histories of five leading independent research libraries (the American Antiquarian Society, the Huntington, the Folger Shakespeare Library, the Pierpont Morgan, and the Newberry). This research provided the basis for making challenge grants for endowment of the core functions of these libraries totaling $7.5 million. The grants were tied specifically to the results of the case-study analyses and to financial plans prepared by each institution to strengthen its core functions -- thereby reducing the risk of encountering problems analogous to those experienced by The New-York Historical Society.

The Foundation's general interest in the functioning of nonprofit entities will have implications for a number of other fields in which we are active grantmakers. In the case of the performing arts, for example, Rachel Bellow is eager to obtain a more systematic understanding of the factors related to the financial instability of certain groups of arts organizations. Recognizing the limited capacity of any foundation to undergird the finances of individual organizations, it is possible that we can make a more lasting contribution by encouraging improvements in management and planning, while also seeking to focus attention on "structural" problems which beset entire fields.

I wish to conclude my part of this annual report by acknowledging the contributions of Kenneth J. Herr as Treasurer of the Foundation. Mr. Herr was present "at the beginning" -- on the day when The Andrew W. Mellon Foundation was established in 1969. (He also spent 1968 as Treasurer of the Bollingen/Old Dominion Foundation, having held other positions in the field of accounting before that.) For the next 23 years, through 1992, Mr. Herr served faithfully as Treasurer of this Foundation.

When I arrived in 1988, I was assured by the chairman, William O. Baker, and the president, John E. Sawyer, that one of the things that I did not have to worry about was the accuracy or the integrity of the Foundation's financial records. They were absolutely right. Ken Herr maintained the highest standards of reliability and probity. Personally, I shall always be grateful to Mr. Herr for his patient tutelage in introducing me to the mysteries of his world, including the Foundation's interest in certain coal properties (which he had monitored with uncommon care for so many years). All of us at the Foundation are in his debt.

In his characteristic way, Mr. Herr has already committed what seems like 150 percent of his post-retirement time to good causes, including extensive volunteer work. I know that I speak for our Trustees and staff, and for others, in wishing him many happy and productive years of retirement.

William G. Bowen
President
The Andrew W. Mellon Foundation
140 East 62nd Street
New York, NY 10021
(212) 838-8400