Despite Funder Concerns, Nonprofits Report Positive Impact of MacKenzie Scott Grants

CAMBRIDGE, Mass., Nov. 28, 2023 /PRNewswire/ -- MacKenzie Scott's large, unrestricted gifts are having dramatically positive effects on recipient organizations and the communities they serve and have so far rarely resulted in the challenges or difficulties that many predicted, according to new Center for Effective Philanthropy (CEP) research. Nonprofit leaders report positive results, including expanding and improving programs for greater impact and building stronger organizations.

"It is striking to see the disconnect between the concerns raised by many funders about potential unintended negative consequences of Scott's unconventional approach of giving massive and totally unrestricted gifts to nonprofits on the one hand and the lack of evidence to date that those concerns are playing out in reality on the other," said Elisha Smith Arrillaga, CEP's vice president for research and a co-author of the report, Emerging Impacts: The Effects of MacKenzie Scott's Large, Unrestricted Gifts. "While only time will tell the full story, so far Scott's giving seems to be greatly benefitting organizations and communities."

CEP's study is the most comprehensive research conducted on the impact of Scott's giving, which has been characterized by gifts that are, at the median, nearly $6 million, compared to the typical grant size of a staffed foundation of $110,000. The grants to vetted organizations are totally unrestricted in terms of use or timing of expenditure and are made with few, if any, reporting requirements.

Key findings from the research include:

1. Nonprofit leaders describe expanding and improving programs to pursue opportunities — often related to equity — resulting in what they increasingly see as demonstrable impact. One recipient organization, for example, increased the number of people served by 30 percent.
2. Nonprofit leaders describe using Scott's grants to strengthen their organizations' capacity and staff climate, translating into better support for the communities their organizations serve.  In fact, 88 percent of nonprofit organizations interviewed described the grant improving morale, feelings of empowerment, or capacity to think creatively for both staff and leadership.
3. Funders generally express positive opinions about Scott's giving, but many have concerns, particularly about the ability of nonprofits to handle large, unrestricted gifts. More than three quarters of the interviewed funders expressed concern about nonprofits' ability to handle large, unrestricted gifts, with some suggesting that organizations led by younger or newer leaders or grassroots organizations are not capable of handling such a gift.
4. Despite funder concerns, nonprofit leaders report few challenges or unintended negative consequences and are planning for the long term to minimize risks of a financial cliff. Fewer than two percent of survey respondents — 11 nonprofits — report having encountered a major challenge related to the receipt or use of their grant from Scott.

Scott, whose billions in assets originated in her ownership stake in Amazon, has already given well over $14 billion in just over three years. "She is challenging the historic default settings of many big donors by giving big and giving with humility and respect for the knowledge and abilities of talented nonprofit leaders doing great work in communities across the country and around the world," said CEP's President Phil Buchanan. "Every donor, even those who choose to give very differently, can learn from this fascinating natural experiment."

Scott's approach comes amid an increasing backlash against top-down approaches to philanthropy and more of a focus on what some have labelled "trust-based philanthropy." Still, "it is clear from our interviews with funders that many still retain a deep sense of unease and distrust about the ability of even carefully vetted nonprofits to handle large infusions of resources," said Smith Arrillaga. "We hope this research provokes introspection as to why that is."

About The Center for Effective Philanthropy

The Center for Effective Philanthropy (CEP) is a nonprofit organization with a mission to provide data, feedback, programs, and insights to help individual and institutional donors improve their effectiveness. We do this work because we believe effective donors, working collaboratively and thoughtfully, can profoundly contribute to creating a better and more just world. For more information on CEP's work, including its research, assessments, advisory services, and programming, visit www.cep.org.

SOURCE Center For Effective Philanthropy