Examining The Transformative Effects Of MacKenzie Scott’s $16B Investment In Nonprofits

Created By: Craig Shelley, CFRE and Amanda Nelson
January 18, 2024

If you can remember back in 2020 when MacKenzie Scott embarked on her ambitious journey to add value to the sector by giving up philanthropic control, you’re likely to recall those who were skeptical of nonprofits’ ability to handle such significant and unrestricted investments. As we heard during the Great Recession of 2008 that banks were “too big to fail”, we were hearing that Ms. Scott had invested in nonprofits that were “too small to succeed”. Since that time, Ms. Scott has moved over $16B into the hands of over 1,900 nonprofits. And guess what? They are, for the most part, thriving.

To further explore the success rate and measurable impact of Ms. Scott’s giving to date, The Center for Effective Philanthropy recently published new research on The Effects of MacKenzie Scott’s Large, Unrestricted Gifts. Their survey sought to gain insights from recipient organizations in the following areas:

• Do nonprofits believe this gift has increased their impact and in what ways?
• How did nonprofits allocate the grant, and what was their decision-making process?
• Have nonprofits experienced unintended negative consequences of these gifts? What have been the downsides of receiving this gift?
• To what extent are funders’ beliefs and practices being influenced by MacKenzie Scott’s approach?

Several of the findings jumped out to us, both because of the inspiring outcomes in the sector, and also because they reinforce our own experiences and observations with our partner organizations, so many of which have benefitted from this generosity.

Leaders report that these funds not only allowed organizations to advance equity, but allowed them to do so more effectively than they could have otherwise.

It could be argued that the sector has focused more heavily on equity since the murder of George Floyd in 2020 than at any other point in our history, and we’d argue that Ms. Scott’s giving has fueled a lot of this shift. 90% of the leaders surveyed shared they used the funds to help advance equity. In our own work, we saw multiple organizations leverage this funding as a foundation from which to catapult wider efforts to raise capital for equity-focused outcomes. For example, Ms. Scott’s grant helped Grameen America complete its campaign focused on helping female entrepreneurs from historically unbanked populations start and sustain businesses a full year earlier than planned. They are now embarking on an even more ambitious strategy to increase their impact tenfold, which likely would not have been possible without the momentum and additional funders Scott’s gift helped to attract.

Nearly all nonprofit leaders surveyed changed their approach to fundraising after receiving a grant from Ms. Scott, most frequently by using the grant as evidence of their organization’s credibility.

Ms. Scott’s giving has undoubtedly served as a signal of credibility and sophistication, making recipient organizations worthy of additional investment from other high-net-worth philanthropists and institutions. More philanthropists are echoing her giving and making more substantive and less restricted gifts. Further, Ms. Scott’s philanthropic strategy has sparked a shift towards dynamic giving to meet the needs of the moment by funding nonprofits working on the frontlines. Internally, these initial funds from Ms. Scott have also allowed organizations to make additional investments in fundraising staff, systems, and strategy to build longer-term and more sustainable fundraising models.

The decisions nonprofits made regarding how to use the funds are resulting in what leaders describe as positive changes in their culture and the daily experiences of their staff.

Smart fiscal decision-making is foundational for successful nonprofits. In many ways, Ms. Scott’s gifts have provided organizations with the excess capital needed to make fiscal and budgetary improvements. The positive implications of these decisions as they relate to staff culture, retention, and growth are substantive. With current economic uncertainty, this feels like a major opportunity for these organizations to create stability for their team and culture. The Ms. Foundation for Women is a great example of an organization that, as a result of Ms. Scott’s generosity, has been able to invest in their team and strengthen a values- and work-aligned culture. In turn, this has resulted in increased fundraising, stronger donor engagement, and significant expansion in their grantmaking work with women-led grassroots organizations.

Many funders continued to express concern about smaller, newer, or grassroots nonprofits. Some worried that leaders who are younger or less experienced would be unable to handle the receipt of a large gift.

Despite this data demonstrating the success that organizations have had when given large, unrestricted funding, some donors are still worried about making ‘risky’ investments. While disappointing, these are hopefully the last whimpers of a generational cry that has plagued the sector. Ms. Scott and other mega-philanthropists continue to inspire others to embrace a trust-based model in an effort to transition decision-making power back into the hands of those doing the work. Amplifying the insights revealed in this study and bringing visibility to such organizations (and particularly those led by people of color or generations newer to leadership) is a good first step in changing this outdated approach to philanthropy.

It’s incredibly encouraging to see firsthand the scale of impact and growth that Ms. Scott’s generosity is yielding in the nonprofit sector, and we’re excited to see how her giving evolves over time. Nonprofits will need to be more ambitious in order to meet the scale of the problems we’re facing today, and large, unrestricted gifts are helping them do just that.

Orr Group has what it takes to help your organization meet its ambitious goals. We’ll draw from your core values and manifest your mission in its highest state, while also embracing real-world flexibility so you can adapt to a radically changing philanthropic sector. Contact us today to learn more.

Craig Shelley, CFRE is a Partner and Chief Growth Officer at Orr Group. Craig advances the missions of nonprofits by bringing a change-management and entrepreneurial approach to strategy, organizational development, fundraising, and board optimization.

Amanda Nelson is a Managing Director at Orr Group. With 20 years of professional fundraising experience, Amanda brings extensive expertise working with large, complex organizations and developing innovative and scalable fundraising solutions.