We’ve been researching foundations and donors, and the way they interact with the nonprofits they fund, for two decades. We have heard many funders announce their arrival by declaring they’re taking a new, innovative approach to philanthropy: charting a new path and rejecting the old approaches.
Almost invariably, it’s not true. What they’re doing may be new to them, but it’s not really new at all. And, almost invariably, the “new” approach doesn’t work out as planned. Effective philanthropy, it turns out, is complicated.
But when MacKenzie Scott entered the scene, in the summer of 2020, we thought, OK, this really is new — and unprecedented. It’s true, on the one hand, that no single element of her giving is new. Other donors and foundations have given large, unrestricted gifts and sought to prioritize equity (see, for example, the Ford Foundation’s BUILD program). Others have streamlined proposal and reporting processes or given surprise, out of the blue gifts. Others have made an effort to support organizations led by people who share demographic characteristics or life experiences with those they serve.
While none of the particulars of Scott’s giving approach are new, she has combined them at a scale and in a way that is unprecedented, and that has captured the attention of nonprofits and donors alike. Consider this: the median gift in Scott’s first year of giving was $8 million, according to responses to a survey we conducted earlier this year; the median grant of large foundations in CEP’s extensive Grantee Perception Report (GPR) dataset is $100,000. And to most of the nonprofits that received these grants, the experience has certainly felt different. “The amount of money didn’t even feel real,” said one leader of a recipient organization. “What felt more real was the pride and validation that the work I was doing mattered, and somebody had noticed.”
That’s why we decided Scott’s approach needed to be studied, in a three-year effort we began nine months ago. Our first report on findings from that study, Giving Big: The Impact of Large, Unrestricted Gifts on Nonprofits, is out today — and we believe it holds important lessons for donors at all levels of giving.
After all, some have wondered whether nonprofits would crumble under the weight of these grants, worrying that they would not be able to effectively allocate these sums of money — that they would lack capacity — or that other funders would pull back their funding to those that received gifts from Scott. Others, of course, have praised her approach as the ultimate embodiment of “trust-based philanthropy,” a repudiation of a top-down approach that had characterized much “big philanthropy.”
So how is it going for recipients of these massive grants? What did we learn?
Our findings suggest that, for the organizations that received massive gifts from Scott between summer 2020 and summer 2021, the effects have been dramatically and profoundly positive, at least so far and at least in the eyes of their leaders.
These large sums of unrestricted money have allowed organizations to fulfill basic, unmet needs — from expanding programs to strengthening financial sustainability to improving operations. Organizations have been able to quickly determine uses for these funds, and there have been few, if any, unintended negative consequences to date. On the contrary, the leaders we surveyed and interviewed report a new sense of empowerment and agency that they believe has positively affected their organizations, their fundraising ability, and their own personal leadership.
As one nonprofit leader told us, “This will put us in a much stronger strategic position going forward, as we will be able to focus on funding that is better aligned with our strategy.”
It is too early, of course, to render definitive conclusions about Scott’s giving and its effects.
Like all research, our study is limited by the moment in which it was conducted and by its scope. We don’t explore in-depth, for example, the effects of Scott’s giving on fields or movements. We don’t explore concerns about the vetting process, and the lack of transparency about that process, that some have critiqued. And, just because we don’t see unintended negative consequences for recipient organizations now doesn’t mean they won’t appear later on or with later years of recipients.
Still, there is much in our report that those who are considering giving in a more unrestricted, and perhaps bigger, way may find reassuring. And there is much to be learned from how the nonprofits we studied are using the resources they have been provided. This report provides, to our knowledge, the most comprehensive picture yet of how the money is being spent.
Scott’s efforts, and their effects, are worth watching, studying, and learning from — now and in the years ahead.
Phil Buchanan is president of CEP and author of “Giving Done Right: Effective Philanthropy and Making Every Dollar Count.” Ellie Buteau, PhD, has served in various capacities at CEP for nearly two decades. Now the director of research projects and Special advisor on research methodology and analysis, she is the lead author of the Giving Big report and is overseeing the three-year study.