To Fight Poverty, a Fund Changes Tactics but Sticks to Its Mission

As the Wall Street financier and notorious miser, Russell Sage, lay on his deathbed in 1906, the press declared he wept not at the thought of dying but at the cost of his tombstone. Though he was tightfisted in life, his soon-to-be widow decided that he would be generous in death.

After he died, Margaret Olivia Sage dried her tears and went out and bought 12 fur coats.

Then Mrs. Sage decided to use her inheritance to make a difference to the causes she cared about most. She set out to build a foundation dedicated to studying and “improving social and living and conditions in the United States,” even though her husband had never shown the slightest interest in the downtrodden.

With the signing of the papers that established the Russell Sage Foundation, the long-suffering Mrs. Sage put down her pen and declared, “I am nearly 80 years old, and I feel as though I were just beginning to live!”

As it would turn out, Mrs. Sage lived long enough to begin to see the money make a profound impact on the lives of the poor.

With an army of social workers, Russell Sage was soon operating housing programs, running anti-usury campaigns, and dispatching health workers on horseback in West Virginia. But the foundation was unusual among the early charitable institutions in that much of its focus was on investigating the causes of persistent poverty and social ills.

In its first few decades, the foundation’s work combined scholarly reports with political activism.

The groundbreaking Pittsburgh Survey, which began in 1907, documented the miseries and dangers of working in America’s steel industry. The survey and other foundation reports sparked Progressive Era changes that eventually abolished the 12-hour, 7-day workweek and established workers’ compensation.

The foundation’s leaders “were the first to employ the language of scientific philanthropy,” says Ruth C. Crocker, the author of Mrs. Russell Sage: Women’s Activism and Philanthropy in Gilded Age and Progressive Era America. “It meant the use of statistics. They weren’t using a religious argument, they were gathering data about the poor and various social problems where the facts would speak for themselves.”

Today, the Russell Sage Foundation continues to champion research from its headquarters in New York, though political and social changes—along with a slimmer wallet—have narrowed its overall focus. Much of the theoretical research it supports might fail to impress Progressive Era activists, who were bent on instituting new social policies and overhauling labor laws. But those now at the foundation’s helm feel strongly that their work is fulfilling Mrs. Sage’s original mission.

‘Under the Radar’

The foundation has had its share of turbulent times, including the 1920s, when it lost a large sum of money in a failed experimental urban-planning project.

Over the next two decades, the New Deal and the emergence of a government-sponsored safety net rendered the charitable side of the grant maker’s work less relevant. In the 1960s and ’70s, Congress poured money into universities to boost America’s competitive edge, dwarfing the budgets of private foundations. By the 1980s, the proceeds from Mrs. Sage’s original endowment were gone and the foundation was foundering.

“They had difficulty figuring out what their niche was,” said Stanley N. Katz, director of the Center for Arts and Cultural Policy Studies at Princeton University and a scholar of philanthropy.

The organization, he says, got completely out of the business of charity work and focused instead on studying a narrow set of social problems and using the foundation to attract the best and the brightest scholars.

As it begins its second century, the foundation is a relatively small organization, quietly supporting social-science research and projects to improve the theoretical foundations of research itself.

With a $12-million annual budget, and an endowment valued at $200-million, it supports the projects of about 50 university researchers around the country and publishes their work. A visiting-scholar program brings an additional 15 researchers to New York each year.

While the organization has a reputation for producing high-quality work, Russell Sage is working “under the radar” these days, says Mr. Katz. The nonprofit is not overly concerned about whether it is producing results as are many larger foundations.

Supporting only projects that will make a splash “leads to smoke and mirrors,” Mr. Katz argues. Too many foundations “have drunk the Kool-Aid in which the measure of success is to show demonstrable change in the short term,” he says. “That goes against what the learned foundations were about.”

Supporting Innovation

But if the research is to have real value, it can’t remain in a vacuum. Should it not ultimately lead to improvements in living and working conditions?

“I want to be skeptical, but I think I can point to several ways this kind of research does have influence,” says Lawrence Aber, professor of applied psychology and public policy at New York University.

He says his own experience as a visiting Russell Sage scholar studying the impact of poverty on children was transformative. His time at the foundation allowed his ideas to cross-pollinate with academics from other disciplines.

Some of his findings, he says, helped policy makers in the Clinton administration as they designed economic empowerment zones, in which poor neighborhoods received federal grants to help stimulate economic development. The influence continues today with President Obama’s Promise Neighborhoods, which galvanizes communities to fight poverty.

Russell Sage’s president, Eric Wanner, a social psychologist, concedes that it is a challenge living up to the groundbreaking work conducted by the foundation’s first generation of social workers and activists. Financial constraints have required him to narrow the institution’s focus, concentrating on persistent poverty and inequality—issues, he points out, that were of great concern to Mrs. Sage.

The foundation tends to support investigations into long-term, intractable problems that receive less attention from others, Mr. Wanner says. This has even included the study of studies, hardly a sexy subject.

“One problem with social science is that you get all of these studies and you don’t know what they add up to,” he says. “Our whole goal is to be innovative and do things other people are not doing.”

But Mr. Wanner argues the foundation’s work is hardly esoteric. For years, Russell Sage has focused on the murkier side of work in America. Long-running investigations into the exploitation of low-wage workers in unregulated jobs, such as restaurant employees and domestic helpers, have led to the passage of new state laws protecting the rights of vulnerable workers.

Just last month, New York’s wage theft law, which was motivated by research supported by the foundation, was signed into law. The foundation’s findings have been cited in support of the legislative changes and even in the preambles of the bills themselves.

The organization’s president does not want to appear blithe about the question of whether its work makes a difference, but he does not believe the foundation should be hobbled by it. Unlike other foundations that support research, Sage does not ask applicants to file what are known as “impact statements,” which summarize what the positive results of the research will be.

“I consider that so much fluff,“ Mr. Wanner says. “I really do.”

It is hard to measure impact, says Harris M. Cooper, professor of education at Duke University, who studied how research influences public policy as a recent Sage scholar.

“If Russell Sage is out there funding 100 of them and one hits and changes lives for the better, then it makes all those investments worthwhile,” he says. “You never know when one is going to hit and why.”

As to the question of whether the foundation is still relevant, Mr. Wanner says he answers to his board and to the memory of Russell Sage’s founder, who sought to alleviate poverty and end inequality a century ago.

“Would Margaret Olivia be happy?” says Mr. Wanner. “She would say, ‘Boys, you have to get on with this; it’s been 100 years now.’ But I think she would look at our work as important. I have a hope that she would approve of us.”