On the sunny April day when I meet Julia Stasch, Freddie Gray is all over the headlines. It has been nearly two weeks since the Baltimore man died in police custody, joining a growing list of unarmed African Americans who have had fatal encounters with cops. The Gray case has swiftly come to represent something broken in the American justice system.

It’s this brokenness that Stasch talks about as we settle into our seats in a subterranean Italian restaurant near her Loop office. Over lunch, she ticks off the basic problems she sees in the nation’s jails and prisons: the system is “counterproductive, undermines human potential, diminishes our competitiveness, costs too much.” She’ll elaborate on these concerns in a speech the following week: “How do we change the way jails are used and perceived so that they do not undermine the credibility of and respect for the justice system?”

If you’re surprised to hear the president of the 45-year-old John D. and Catherine T. MacArthur Foundation tackling an issue that seems more like the purview of government—well, get used to it. With wage inequality growing and government increasingly underfunded and/or ineffectual, depending on your point of view, the nation’s largest foundations—those that bear such august names as Ford, Johnson, Rockefeller—are increasingly reshuffling their priorities, taking on the kinds of fundamental national problems that they weren’t quite built for.

This is an odd, slightly anxious moment for big foundations, and it’s not just due to the stresses of venturing onto less familiar turf. There’s also a growing feeling that for too long they’ve sprinkled money across too many causes, failing to make much of an impact in any particular one. The Chicago-based MacArthur, whose $6.47 billion in assets makes it the 10th-largest private foundation in the United States (see “How the Richest Private U.S. Philanthropies Stack Up”), is certainly vulnerable to such criticism. “Over time, the MacArthur Foundation has taken on a great many issues, which are all important issues,” notes David Callahan, the editor of the online journal Inside Philanthropy and cofounder of the liberal think tank Demos. “But taken together, it seemed unlikely they were going to score a knockout punch in any of those areas.”

Even the most unscientific survey of MacArthur’s grant making turns up wildly eclectic results: here a grant to New York City’s Firelight Media to promote diversity in documentary filmmaking, there a grant to Chicago’s John Howard Association to boost oversight of juvenile and adult prisons in Illinois. MacArthur supports conservation in Africa’s Great Lakes region. It supports sexual health in India. It supports human rights in Russia. (Or it did before President Vladimir Putin’s government effectively kicked the foundation out of the country in July, calling it a threat to Russian sovereignty.) And it famously supports creative people in the United States through mid-six-figure fellowships that the media have dubbed “genius” grants (it will announce this year’s winners in late September).

Younger foundations, such as the 15-year-old Bill and Melinda Gates Foundation, tend to take a different approach. The hard-driving Microsoft cofounder and his wife are all about laser focus and dramatic results. The ambitious vaccination programs it has funded, for example, have already helped lead to a 92 percent reduction in measles deaths in Africa, according to the foundation. When was the last time you heard of an old-school philanthropy achieving that kind of impact? No wonder Stasch, 68, often uses the word “existential” to describe the challenges MacArthur faces.

Despite her insider status—Stasch ran MacArthur’s U.S. grant making for 13 years before winning the top job in March—she’s also clearly impatient for change. She has already created a $100 million grant, to be paid out over three years, aimed at solving a specific still-to-be-determined social problem (more on that later). For a place that gives away $220 million a year, that sum is huge. A few days after our lunch, she’ll fly to Washington, D.C., to announce the first grantees in a $75 million multiyear initiative to reduce incarceration by intervening at the local jail level. “I want to inject this notion that urgency is a guiding principle, urgency is a value,” Stasch says. “Because the sooner we tackle things, the sooner people affected by negative conditions can find relief." [For more on the changes at MacArthur, read Stasch's essay on the matter, released after this piece went to press.]

“I feel the weight of the stewardship of this institution—I feel that very acutely,” she continues, her voice softening. “The challenge, for the institution, is to figure out what it needs to do to remain relevant and influential in a changing world. That feels to me like a giant responsibility. And so I really don’t want to make any mistakes.”

What the foundation does would likely come as a surprise to the man for whom it is named. Born in Pennsylvania in 1897, one of seven children of an impoverished preacher, John D. MacArthur grew into one of the nation’s shrewdest businessmen. In 1935, in the midst of the Great Depression, MacArthur snapped up an insurance company called Bankers Life and Casualty for the bargain price of $2,500. He expanded the business dramatically with his second wife, Catherine, later branching out into lucrative Florida real estate.

According to his biographer, Nancy Kriplen, MacArthur became interested in starting a foundation on the advice of his lawyer, mainly as a way to avoid estate taxes. He signed papers establishing the organization in 1970, and when he died eight years later, most of his billion-dollar-plus estate went to it. However, the tycoon offered no direction on how the money should be spent. According to a history of the foundation on macfound.org, he told the first board of trustees, “I made the money; you guys will have to figure out what to do with it.”

In his indifference, MacArthur left behind a neat historical irony: He was politically conservative and by many accounts quite greedy—Kriplen calls him a “compulsive tightwad”—but the interests of the foundation have tended to be fairly liberal, in every sense of the word. There could hardly be a more liberal grant, for example, than the MacArthur Fellowship.

Most fellowships come with more strings attached than a grand piano, stipulating everything from what recipients can and cannot spend the money on to what kind of project recipients must complete and when. MacArthur’s fellowship requires only that recipients be U.S. citizens or residents with high potential who do something creative. Winners—typically 20 to 30 each year—can spend their $625,000 however they like. “We want the funds to enable people to do some things they couldn’t do otherwise, to put more attention to their creative work,” explains Cecilia Conrad, who runs the fellowship program.

The foundation uses the term “creative work” broadly. Last year’s class of winners included cartoonist Alison Bechdel; Ai-jen Poo, who organizes domestic workers in New York City; and Pamela O. Long, who studies the artisanship and technology of early modern Europe. Also, two mathematicians. (For more on the grants, see the “Genius Spotting” sidebar, above.)

Within the Marquette Building, an 1895 landmark that houses MacArthur’s headquarters, the outsize fame of the genius grants—a term that the foundation officially eschews, by the way (“The award is really about exceptional creativity,” Conrad clarifies)—is cause for pride but also a certain bemusement. After all, the grants constitute only 5 percent of the $220 million or so that MacArthur gives away each year (see “Where That $220 Million Went.”).

To meet its commitment to build “a more just, verdant, and peaceful world,” the foundation has been particularly generous to its hometown. It spends $10 million a year on routine grants to some 300 cultural organizations in Chicago: theaters, dance companies, museums. General operating support, nothing flashy. What’s more, it has spent hundreds of millions locally to support affordable housing and community development.

Given the foundation’s leanings, it’s perhaps fitting that most of its presidents have been academics, including former Princeton dean Adele Smith Simmons (1989 to 1999) and her successor, Jonathan Fanton, former president of the New School for Social Research in New York City. It was Fanton who, two years into his tenure, would hire Julia Stasch.

Stasch’s corner office is decorated simply, with a few knickknacks she has collected over the years: an award she received in 1991 from the YWCA for her work on racial justice; some furniture she picked up that same year, when she was president of a real estate development firm, and has lugged from office to office ever since. On her desk is an intricately detailed metal sculpture of the head of the Mad Hatter, created by her sister’s husband, an artist. Says Stasch: “I like to have a few things around that, when I’m thinking of something, I can just sort of stare at them.”

In conversation, Stasch, who lives in Lincoln Park with her husband, Stanley, a retired academic, comes off as much a wonky policy analyst as the leader of a multi-billion-dollar organization. She likes rhetorical questions, sometimes whole series of them: “What’s the most important thing to be working on now? What’s the most opportunistic thing? Where’s the thing where forces are converging that make it more likely that grantees could have more policy impact?” She knows the details of every initiative inside and out; she is happy to explain them. She wants you to know how important the work is.

But Stasch can be a little impatient when talking about herself, even in the face of what you think is a benign question. When I ask about her college workstudy program—she was at a Boston hospital—she says, “That’s too deep. Let’s stay at one level up, OK?”

I do glean the outlines of her formative years, including the rather surprising fact that this self-possessed, conservatively dressed woman took nearly a decade to get through college. An idealistic child of the ’60s who was raised in the affluent western suburb of Hinsdale, she dropped out of Ohio’s Antioch College in 1965 to join the Peace Corps’ domestic equivalent, VISTA, tutoring on a Native American reservation in Arizona. She returned to Chicago for a brief spell at Roosevelt University but dropped out again in 1967 “at the height of Haight-Ashbury” and headed to San Francisco. “I was just drawn by the counterculture nature of it all,” she says.

Stasch took a desk job to pay the rent, calling herself a “stockbroker’s secretary by day, hippie by night.” What sorts of things did she do by night? “Everything that folks did at that time,” she laughs.

Thanks in part to parental pressure—her father was an executive at the ad agency McCann Erickson; her mother the director of admissions at John Marshall Law School—she “got straight.” In 1970, she again moved back to Chicago and enrolled at Loyola University, majoring in history. During her time there, she began dating a marketing professor named Stanley Stasch; in 1973, the year she collected her bachelor’s degree, they married. (They have no children.)

Stasch earned a master’s degree in teaching from UIC the following year and found work teaching history at a high school on the South Side, but she didn’t think she was very good at it. So she quit. Somewhat randomly, she became a secretary at a three-person real estate firm run by an ambitious developer, Richard Stein.

The job would change Stasch’s life. Stein was, she recalls, “one of those guys who said, ‘Oh, yeah, sure—go ahead and do that. Go negotiate those mortgages in Virginia, or go do the specs for this part of the building.’ ” As Stein & Company won contracts to develop the Gleacher Center, the United Center, and the AT&T Corporate Center (now the Franklin Center), Stasch didn’t have to climb her way up the ladder, she says: “I just sort of floated up with the growth.” By the early 1990s, Stasch found herself president and chief operating officer of a 200-employee company.

In 1993, thanks in part to her efforts to steer contracts toward women- and minority-owned businesses, the fledgling Clinton administration came calling. Stasch moved to Washington, D.C., to become deputy administrator of the General Services Administration. After two intense years, which included the Oklahoma City bombings (the GSA was responsible for assessing copycat threats to federal buildings throughout the country), and weary of her commuter marriage (Stanley was still working in Chicago), Stasch left.

She rejoined Stein, but only briefly. Her next gig—running the community development bank ShoreBank, with branches on Chicago’s South and West Sides—didn’t last long either. “It’s funny how, working in the federal government, you get a taste for a big platform,” she says. “And so working at ShoreBank, as vital as it was to the community revitalization—it felt tiny to me.”

Next stop: Mayor Richard M. Daley’s administration. She became Chicago’s housing commissioner in 1997 and the mayor’s chief of staff in 1999. In those years Stasch worked largely behind the scenes, seemingly content to leave the spotlight to others—“the woman of substance behind the man of power,” says her friend Marilyn Katz, a public relations executive.

In city government, Stasch oversaw the beginnings of the Plan for Transformation, a program to tear down neglected, dangerous public housing high-rises and relocate the residents. It’s a subject she was passionate about. When an offer to run U.S. grant making at MacArthur came along in 2001, she realized that it would allow her to continue to work on the Plan, overseeing $65 million worth of grants to planning bodies, resident advocacy groups, and independent evaluators. “The opportunity was absolutely an offer I couldn’t turn down,” she says.

At the time, MacArthur was also funding an ambitious initiative to help struggling Chicago neighborhoods. Called the New Communities Program, it involved partnering with the Chicago branch of the Local Initiatives Support Corporation, a nonprofit that supplies grants, loans, and investments at the community level. MacArthur devoted more than $60 million from 2002 to 2012 to implement the program in 16 neighborhoods across the city. “If there were a problem that couldn’t be solved, that’s when our counterparts at MacArthur would bring in Julia,” says Susana Vasquez, the executive director of LISC Chicago. “She has this amazing ability to size up a problem, and not tell you what the answer is, but really help whoever’s in that meeting get to an answer, or if nothing else move the ball one step forward.”

Among Chicagoans who appreciate a well-run meeting, Stasch is held in high regard. It is, in fact, a little spooky how on message people who’ve worked with her are with respect to this quality, which came up repeatedly in interviews—along with such terms as “strategic,” “disciplined,” and “goal oriented.” Adds Terry Mazany, the CEO of the Chicago Community Trust, who often collaborates with Stasch, “She has the big vision.”

Another asset: Stasch brings none of the smell of scandal that often trails people proximate to city politics. Indeed, she’s the person you call when you need some credibility. As Daley’s chief of staff, for example, Stasch was tasked with reforming contracting practices after the procurement scandals of the late 1990s, when the city was found to be giving lucrative contracts, intended to have been set aside for women- and minority-owned businesses, to businesses owned by politically connected white men. Later, when Mayor Rahm Emanuel was searching for appointees to two particularly touchy bodies—one a panel to figure out what to do with the 50 public school buildings he shuttered in 2013; the other to suggest reforms to Chicago’s tax increment financing practices—he tapped Stasch for both.

In 2009 Stasch’s boss at MacArthur, Jonathan Fanton, stepped down after a steady decade at the helm. Continuing its tradition of hiring academics, the foundation’s board of directors appointed Robert Gallucci, the dean of Georgetown’s School of Foreign Service, as MacArthur’s new president.

Overall, the organization that he had inherited functioned well, Gallucci says in an interview. (He did do some fiscal tightening: total grant spending fell from $299 million in 2009 to $228 million in 2013.) He received no instruction from the board to do anything drastic, he maintains: “I wasn’t brought in and told, ‘Go change things.’ ”

Somewhere along the line, however, board members decided that change was exactly what they wanted. “We were trying to keep up with the times,” explains Marjorie Scardino, a former CEO of the British media giant Pearson who has been on MacArthur’s board since 2005 (she is currently its chairwoman). “We decided that the culture of philanthropy was changing. . . . We needed to see whether we were really making an impact.” When Gallucci’s contract ended in July of last year, the board did not renew it.

Gallucci refers questions about his departure to the board, saying only that he wanted to make clear that it wasn’t his choice. “I didn’t want the [public] statement to say that I wanted to go off and spend time with my grandchildren,” he says, laughing. “I said, ‘Let’s say it’s what it is: The board wanted new leadership.’ ”

Stasch took over on an interim basis as the board sought Gallucci’s replacement. The search lasted eight months, with the then-10-person board (including Jack Fuller, former president of Tribune Publishing, Chicago’s parent) scouring its considerable networks and engaging a headhunter. But in the end, as Scardino told The Chronicle of Philanthropy in March, the board “kept measuring everybody against Julia.”

Stasch’s take on her career—what she sees as the unifying theme—is that she likes to work on “tough stuff.” The kinds of big bets that she’s currently making are certainly tougher than the old sprinkle-the-money-around approach. There are fewer chances to get it right.

The most head-snapping of those bets, of course, is the one with $100 million attached to it. Unusually for a Stasch initiative, progress appears slow. Sometime next year the foundation will announce details on what it’s seeking: a big idea, a radical idea, to solve an actual problem. There’s “nothing more we can say at this point,” a MacArthur spokesman told me in early August.

Stasch says that her inspiration for the $100 million competition was this: “Maybe there’s something that we ought to be supporting that we’re not even thinking of. Isn’t there a process by which we can say, ‘Maybe we’re not the smartest people in the room’? We want to make resources available in a way that isn’t screened through, necessarily, our values, our history, the things that are comfortable.”

Vague stuff, you might think. But Inside Philanthropy’s Callahan, for one, is applauding. He describes the $100 million challenge as “maybe just the thing MacArthur needs to get more mojo.”

One of Stasch’s other moves has been to earmark $50 million more for climate change mitigation. She’s also “exploring something bigger” in nuclear security. The idea isn’t a “rhetorical, zero-nukes sort of campaign,” says Stasch, but rather to ask: “Can you actually choke off the pipeline of material that can be used in nuclear weapons by stopping the production of fissile material and over time eliminating the stockpiles of it?”

Of the major Stasch-introduced initiatives, the one that’s furthest along is the $75 million Safety and Justice Challenge. The program “arises from a sense that—and this is not a secret at all—the United States is the most incarcerating country on earth,” Stasch says. The locus of the program is the municipal jail, the typical entry point to the criminal justice system. (A study released earlier this year by the nonprofit Vera Institute of Justice, funded by MacArthur, found that while 630,000 people enter the nation’s prisons each year, a magnitude more—12 million—enter its jails.)

“You start looking at, well, who are the people in jail?” says Laurie Garduque, the foundation’s director of justice reform. “And we very quickly see that it’s become a debtors’ prison. It’s where people who are homeless or who have mental illness are. It’s where people who’ve committed low-level nonviolent offenses are held. And it’s where people who can’t make bail, often as little as $500, are held.” And there they languish.

In May, Stasch announced the recipients of 20 planning grants: 16 counties (one of them Cook), three cities, and one state (Connecticut). All receive $150,000 to study strategies for reducing the populations of their jails: eliminating cash bail, for instance, or diverting people with mental health needs toward more appropriate resources. “[The announcement] was an electrifying moment for my field because they took on squarely something that people have taken on only indirectly,” says Jeremy Travis, the president of John Jay College of Criminal Justice at the City University of New York.

Next spring, says a MacArthur spokesman, the foundation will give more money to those 10 of the original 20 recipients judged most likely to deliver measurable results. Together with a CUNY research institute, MacArthur will set target numbers for jail population, length of stay, and inmate demographics. If a grantee doesn’t meet those standards, its funding will vanish.

The money for these new initiatives has to come from somewhere, of course. That means the often painful process of cutting off money to some existing grantees. Garduque recalls what happened when the foundation stopped funding research into mental health and the criminal justice system about 15 years ago. “I was not a happy camper about exiting,” she says, “because we just exited. We didn’t try to figure out a way to capitalize on what we were doing—how to secure and sustain that progress, what the capacity was in the field—and in many respects we created a vacuum.” The foundation has learned from that experience, she says.

So where is MacArthur cutting? It’s winding down its investments in juvenile justice. (Garduque assures me that the foundation is trying to help former grantees find other sources of funding, such as the government or public-private partnerships.) It will also stop funding the study and creation of affordable housing, an area where it has spent more than $271 million over the past 15 years. Those cuts will hit Chicago particularly hard: More than a quarter of that money went to people and organizations working in the city. On the positive side, grants for the arts in Chicago appear safe, at least for now. And Stasch calls the “genius” grants “an enduring commitment.”

The heads of local organizations I spoke to whose funding is on the chopping block are putting on a brave face. “Even as [MacArthur] begins to withdraw, they’re leaving behind a good infrastructure for ongoing work for the preservation of affordable housing,” says John Bouman, the president of the Sargent Shriver National Center on Poverty Law. Since 2002, MacArthur has funneled $3.8 million in grants and investments to that organization, largely to promote affordable rental housing in Cook County.

In any case, handwringing over tough decisions isn’t Stasch’s style. On the contrary, MacArthur staffers tell me, their boss finds value in thinking about the foundation’s initiatives as finite because that knowledge fosters a sense of urgency. “When you as a grantee know that you have five years [of funding], it forces you to think, What are the most important things to do in that time period?” Stasch says.

“It seems to me—and this has been my personal philosophy—that most things benefit from an understanding that there is likely an end.”