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What Can Funders Learn from MacKenzie Scott’s Giving?

Date: December 8, 2022

Yvonne Belanger

Director of Learning and Evaluation, Barr Foundation

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The Center for Effective Philanthropy’s (CEP) new report, Giving Big: The Impact of Large, Unrestricted Gifts on Nonprofits, offers a range of insights regarding the short-term impacts on organizations benefitting from MacKenzie Scott’s philanthropic efforts. The scope and scale of Ms. Scott’s giving (in the vicinity of $13 billion so far), both in the aggregate and relative to other gifts to the same organizations, have generated huge interest.

Much of the public commentary about her giving — praise as well as questions and critique — has consisted of anecdote and speculation, due in part to limited transparency about the rationale for selecting recipients and process of making the grants. This new research from CEP provides an opportunity to draw conclusions based on the experiences and voices of many nonprofit leaders, collected in surveys and interviews with executive directors who received one of the first three rounds of these gifts.

As a leader of learning and evaluation in the private foundation space, I offer a few reflections on the findings from this first phase of the research as they relate to learning from our work at the Barr Foundation. I also share hopes for what and how we might continue to learn about the longer-term effects of this giving. My reflections are guided by CEP’s three primary study questions from the report:

1. Do nonprofits believe this gift has increased their impact? In what ways?

The answer is a fairly predictable “yes” — a large majority of leaders reported that the funds furthered their organization’s mission and strengthened their financial and organizational capability for the long term. It is far too soon to see whether these impacts on organizations and communities will persist; however, this research also points to an important effect that these large, unrestricted gifts had on the mindsets of these leaders. Apart from the primary impact of the gifts, the leaders’ describe how these gifts provided validation of their leadership, particularly due to the size and lack of restrictions in a particularly difficult period. Interviews surfaced several shifts in leaders, such as from scarcity thinking to an abundance mindset, and a welcome sense of relief.

At the Barr Foundation, we focus across our work in arts, climate, and education on leadership and supporting leaders. Throughout the pandemic and racial justice reckoning, Barr supported many leaders of color in overburdened communities as they responded to a range of unprecedented challenges and opportunities. And well before that, thanks to the efforts of Barr’s grantee Race to Lead and others doing similar research, the particularly difficult journey of leaders of color in the social sector has been well documented. The voices of these leaders as they describe the impact of these gifts are particularly powerful. For example, one leader told CEP, “this grant … positioned being a woman of color leader as an asset, not a liability,” while another noted, “The significant part is her centering me as the leader of the organization and the work that we do with our young people. That’s priceless. That’s a feeling I’ve never had before.” Beyond tracking the long-term organizational impacts, learning about how this experience changes these leaders over the long term could be an important focus of future research.

2. How did these nonprofits allocate the grant? And why?

Many nonprofit leaders described ways they are now able to invest in their own talent and infrastructure. Many used the funds to address well-known challenges in the social sector such as equitable compensation (62 percent) and reserves to build financial stability and resilience (73 percent). Interestingly, a majority also reported that they will advance their mission by investing in evaluation and measurement (58 percent), an area that is often not supported by other philanthropic dollars (see “After Removing Grantee Burden, What’s Next?” for more on investing in grantee learning). Most recipients also expressed a belief that these gifts will result in ecosystem level effects via new partnerships, regranted funds to strengthen the capacity of others (a use reported by 40 percent of respondents), or by fueling collaborative efforts that so often fall by the wayside without unrestricted funds to support them. Whether these regrants and partnerships result in meaningful impacts on these organizations’ broader ecosystem could be an important area of learning in future phases of the research.

3. Have the nonprofits experienced unintended negative consequences? What have been the downsides of receiving this gift, if any?

Due to the deep gratitude typically expressed by the leaders and the positive changes they felt they were able to make, it isn’t too surprising that these leaders offered little in the way of criticism. While they did cite challenges in the immediate aftermath, such as pressure to deliver results, questions about long term sustainability given the one-time nature of the funds, or frustration with the inability to communicate with the donor about peer organizations that they felt would be equally worthy of support, these surveys and interviews revealed that most leaders were elated to receive sufficient funds to finally address unmet needs, to remedy years of scarcity, and to accelerate strategic plans that they had otherwise imagined might take years of fundraising to execute. Some leaders shared that fundraising slowed initially, and that they heard from some donors who weren’t sure their donations were still needed. They also reported that these effects did not seem to last very long. Whether recipients can sustain the positive organizational changes and ambitious agendas jump-started by these funds over a longer span of time (or find other funders to step up to sustain them) remains to be seen.

As this story unfolds, a key question remains: Do giving practices like these truly result in transformational and sustainable changes for these organizations and for their communities? And are there particular conditions or actions nonprofits and funders can take that make this more likely to happen? Evidence is essential to make the case for philanthropic practices that CEP and others study and advocate for: more trust, greater flexibility, a focus on equity, and funding with a view toward the long term. I look forward to the findings from future phases of this research, as well as holding out hope that Ms. Scott and her team will recognize the tremendous opportunity of sharing the stories that these organizations will relay back to them in the brief reports that they plan to collect. The accumulated one-page stories from these organizations would make for a fascinating and valuable read for our collective learning about the effects of large, unrestricted giving. CEP can also play a role in field learning by potentially allowing other researchers with different perspectives access to the rich dataset that they are collecting.

In the end, large, unrestricted gifts with minimal reporting requirements are a dream come true for many nonprofits. Given the incredibly hard, frequently undervalued, and exhausting but essential work that they do every day, it seems the absolute least that philanthropy can offer.

Yvonne Belanger is director of learning and evaluation at the Barr Foundation. Find her on Twitter at @ybelanger and on LinkedIn.

Editor’s Note: CEP publishes a range of perspectives. The views expressed here are those of the authors, not necessarily those of CEP.

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