The Impact of MacKenzie Scott’s Transformational Giving | Orr Group TALKS

With the release of the third and final report in the Center for Effective Philanthropy’s (CEP) three-year study, Breaking the Mold: The Transformative Effect of MacKenzie Scott's Big Gifts, we now have a comprehensive look at the impact of MacKenzie Scott’s transformational philanthropy. While these large, unrestricted gifts have created unprecedented opportunities for nonprofits, many organizations continue to face challenges in sustaining their impact. At the same time, Scott’s approach has sparked new conversations about how nonprofits can best leverage significant funding—and what funders can take away from this model to maximize impact.

In this TALKS, Elisha Smith Arrillaga, Ph.D., Vice President, Research at CEP and Orr Group's Amanda Nelson, Managing Director, explore the findings from this landmark study and discuss what’s next for funders and nonprofits navigating large-scale, unrestricted giving. They examine a range of topics, including nonprofit sustainability, fundraising strategy, governance, and the implications for the broader philanthropic sector.

KEY LEARNING OBJECTIVES:

• Understand the key findings from CEP’s final report on MacKenzie Scott’s giving.
• Explore the challenges and opportunities nonprofits face after receiving large, unrestricted gifts.
• Gain insights into how funders can maximize the impact of their giving strategies.

WHO SHOULD WATCH:

• Nonprofit executives and board members.
• Funders and philanthropic leaders.
• Development and finance professionals managing major, unrestricted gifts.

FEATURED SPEAKERS:

Elisha Smith Arrillaga, Ph.D., Vice President, Research, Center for Effective Philanthropy

Elisha manages CEP’s Research team, leading the creation, development, analysis, and release of various research projects and initiatives relevant to the philanthropic sector’s most pressing issues. Prior to CEP, Dr. Smith Arrillaga was a faculty fellow and professor of practice in philanthropy and education policy at the University of Texas, and she served as executive director of several national and state level nonprofits, including the Dana Center, a national center on math and science education equity and the Education Trust West. Dr. Smith Arrillaga has also served on a range of state and national advisory groups including Google’s Equitable Artificial Intelligence Research Roundtable and has spoken widely at conferences, published articles and op-eds and has been interviewed by various media outlets, including Forbes, the New York Times, and CNN.

Amanda Nelson, Managing Director, 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. She currently heads the planned giving efforts at Orr Group as well as manages multiple large-scale comprehensive campaigns in partnership with our nonprofit clients.

Amanda most recently served as the Associate Dean of External Affairs at The Columbia University School of Professional Studies. In this role, she oversaw alumni engagement, development, board relations, public relations, and communications. As a member of the Executive Committee, she advised the Dean and peer leaders on strategic outreach, business development, and management decisions. Previously, Amanda worked at The Wharton Business School, and started her career at Orr Group, where she launched her career and passion for the nonprofit sector.

Transcript

Amanda Nelson:

Okay, I think we are going to slowly get started as people are joining this live. Really thrilled today to have this conversation. My name is Amanda Nelson. I'm a managing director here at Orr Group, and this is such a timely topic, and we're really excited to be exploring the findings from this landmark study on the impact of MacKenzie Scott's Transformational Philanthropy, which was conducted by our friends at the Center for Effective Philanthropy. This is a special day, not only because I get to talk to Dr. Elisha Smith Arrillaga, but also it's my daughter's 10th birthday. So Elisha, I'll have you introduce yourself a little bit more about your role and your work at CEP, but just a couple of quick housekeeping items for this conversation today. We do have some slides with data that we'll be reviewing. Please know that we'll be sharing these out after our talks along with a recording of this.

Please also include your questions along the way in the q and a section. I'll try to get to them in real time, but we also have time at the end of this conversation dedicated for q and a. And now, Elisha, I'm going to turn it over now to you and would love if you could start in addition, thank you, Diana, to talking about your role, but also the goal of this study originally. And it would also be really great if you could help set the stage with everything going on in the nonprofit sector more broadly for why this matters now more than ever.

Elisha Smith Arrillaga, Ph.D.:

Well, thanks so much, Amanda for having me today, and happy birthday indeed to your daughter. I too have a 10-year-old. So exciting times. But I am really excited to be with you here today. As I said, as you noted in your introduction, I'm the Vice President of research at the Center for Effective Philanthropy, and we do independent research across the sector. And I'll just say that we are in an unprecedented moment. Some of the data that I'll be sharing with you today is primarily about recipients of MacKenzie Scott's Quiet Gifts. The Center for Effective Philanthropy was also a recipient of one of MacKenzie Scott's Quiet Gifts. But we decided over three years ago, wouldn't it be interesting to really try to understand what happens to the organizations who received these gifts over time? How did they morph and change, and how were they able to shift their work and their leadership over that time?

And so that's what really incited our interest in the project, and I'll talk mostly about that today. But I did want to start by saying we've been doing research in the sector for the past 20 years at the Center for Effective Philanthropy. And the data that I'm going to start out sharing today is from one of our most recent studies conducted in February, just about this current moment and what it means for nonprofits. And so I'm going to start by talking a little bit about that and then we'll dig into some of the Scott data and why it's so important more than ever in this moment, I'm going to share my screen.

So before we dig into the Scott data, I wanted to share these themes that came from every year. The Center for Effective Philanthropy for the last many years has done a study called the Nonprofit Voice Project, where we survey and sometimes interview this representative sample of nonprofits across the country that received foundation funding. This year, we had a 68% response rate, which is the highest response rate we've received in 12 years. And a lot of folks wrote in when they finished the survey saying that they felt it was more important than ever to share their current experience, what was top of mind for them. And some of the main things we heard in that data were that this political context is impacting the majority of nonprofits. Many nonprofits said that one of the things that they are looking for most is communication from their funders.

And then when asked specifically about what other kinds of things will be helpful for funders, we see that they're asking funders to fund courageously to connect folks who are working in the same space. And then one of the most frequent responses is that the context is changing so rapidly that there's now more of a need than ever for flexible, unrestricted, general operating grants so that folks are able to be responsive as the environment is changing. And so that's why this data that I'm going to dig into today on the MacKenzie Scott gifts is so important because it's all about the transformative impact of unrestricted large gifts.

Amanda Nelson:

Those themes are absolutely things that we're hearing and seeing with our clients. Many of our clients have been recipients of her funding and also other large transformational gifts. And part of our goal here today is to address these exact themes and try to get information out to all of you to help in supporting you navigating such a challenging time and with your funders. So we're hoping that you walk away with some call to action and also some really interesting data to help support you in those conversations. Elisha, I know this first finding is really, really interesting. So appreciate you going through this.

Elisha Smith Arrillaga, Ph.D.:

Yes. So to start and dig into the findings and to get some context about the study, this study, this is the third year of the three year study and the final year in the study. And this project has been supported along the way by many funders that you see listed here. And then we couldn't have done this of course, without the great feedback from the advisory group who was with us every step of the way, and many of whom represented either funders or grantees themselves who receive Scott gifts. So when we think about how MacKenzie Scott's gift is different from other grant makers, and when I say other grant makers here, I'm referring to over 10 years of data from thousands of grantees and foundations from thousands of grantees. What we see is that MacKenzie Scott's gifts are larger, they're unrestricted, they have few to no application requirements, and perhaps one of the biggest differences is that there is no specified grant period in which the Scott gifts must be spent.

Now, the data that I'll dig into today, and when we start talking about finding one, this is what it's really based on, is this year we were able to survey 813 of the more than 2000 grantees that have received Scott gifts through the quiet process responded to the survey. We also did a national survey of foundations that do over $5 million in grant making. 243 of those foundations responded. And then this year we're also able to add an analysis of nine 90 data to really dig into how organizations were using the funds. So key finding one, most leaders report managing grant funds to ensure their organization's long-term financial sustainability and few anticipate a financial cliff. Here we see that recipient organizations are financially stronger after receiving the Scott gift specifically here, we see that many organizations use the funds to increase their reserves, especially if we compare this to a comparable sample of nonprofits over that same time period. We also see that many grantees use the funds to invest in things like technological infrastructure, building their reserves, creating a fund for special opportunities and increasing staff salaries or providing professional development to staff. And if we look at the investment assets of organizations that received a Scott Giff, we see that many organizations are contributing to their investment assets over time. In addition, we see that many recipients reported that receiving one of the grants from Scott either had made their fundraising somewhat or much easier.

Amanda Nelson:

Just a quick point here, this is something we've heard from organizations having mixed experiences on. Some have really found this as an opportunity to leverage and to talk about being validated in this way with other funders. Other organizations are getting questions and concerns from their board members and maybe other funders that say, well, you don't really need me now. Do you have any more thoughts on how to answer that type of question? If organizations do find themselves in conversations with funders or board members who question that?

Elisha Smith Arrillaga, Ph.D.:

Sure. I think one of the things that we have found, or I know that we've found consistently over the three years of the study, and one of the main pieces of pushback that we hear from funders is that nonprofits who receive these gifts will hit some sort of financial cliff, right? So that they either that they will hit a financial cliff or there's concern about how organizations will use the funds over time. And I think the thing that's really powerful about this data is it shows actually that most leaders who receive this grant, few of them encounter difficulty covering ongoing expenses. And many of them report that the grant had no negative consequences. And so I think using this data as a tool to show the other funders, one that organizations are being strategic and investing in their reserves and their endowment funds or thinking about their underlying balance sheet in different ways is really important. And I think that's one way, Amanda, definitely to kind of counter some of those arguments.

Amanda Nelson:

We have a question from Jen Gibbons. If you could explain a little bit more about what you mean around the term financial cliff.

Elisha Smith Arrillaga, Ph.D.:

So many funders, when we first started doing the study, I mean in other just general, the general public as well feared that if you have this large infusion of capital into an organization that once that capital had been spent, there would be difficulty for an organization to fundraise or to keep their operations going really in some ways concerns about a financial cliff. Our concerns about ability to manage finances, and I think especially what this nine 90 data shows us is that that just does not bear out. I think for anyone who works in a nonprofit, that nonprofits are always strategically thinking about how to use funds. What we see in how people use the funds is that because there was no time limit, they were able to spread it out over time in ways that made sense for them. And so what we don't see, I think what a lot of people feared is that, oh, the funds will come in and then organizations will not be able to figure out how to keep up the things they have invested in. And we just see that that's not the case, that organizations have built programs in ways that are really responsible and strategic.

Amanda Nelson:

I think the second finding really reinforces that around organizations being stronger and more stable. So maybe we could skip to that so that we can share a little bit more data around this. This is really powerful.

Elisha Smith Arrillaga, Ph.D.:

Sure. And this is just a quote that illustrates some of what we were talking about from one of the leaders. And now key finding too many organizations are collecting information about the impact of this gift and are observing meaningful change created for communities. What we see in this slide, in this data is that when we ask organizations how they're using the funds on programmatic uses, they're doing everything from improving existing programmatic work to starting new initiatives to increasing the number of constituents they serve. And then a lot of folks are also using the funds to innovate or take risks that they couldn't before or to collaborate with others.

We also see that the percent of leaders who report that their efforts have been somewhat or very successful is quite high. And we see that that is the case, whether they're doing new programmatic initiatives or expanding to new populations or new geographies. And one of the main pieces of feedback we heard the first few years of the study were a lot of questions around how organizations were thinking about measuring impact this year. We asked organizations whether and how they were collecting information to understand the impact of their efforts funded by the grant. And 68% of leaders reported that they are, and leaders reported they were doing everything from randomized control trials to surveying beneficiaries to other sorts of studies as well to understand the impact of these grants.

We also heard from leaders this year that 86% report the grant were moderately or significantly strengthened the fields and communities in which they seek to have impact. And here's one example. Through this grant, we were able to open a new clinic expanding care to 12,000, many of whom are experiencing homelessness live at or significantly below the federal poverty level, and have historically had limited access to the comprehensive and compassionate care we provide. So we see the findings there and finding too really support that recipient orgs are stronger and more stable after receiving this type of funding.

Amanda Nelson:

And this anecdotally doesn't seem surprising, but it's so powerful that you've aggregated so much data here and that you can share some really specific insights around impact, for example. But one question I have is, okay, with this data and with all of these findings, funders are still, they're admiring this, but they're still not necessarily following in her bold action here. And a question I have is maybe what do you think or what do you have insights into is preventing that? And then also are there recommendations of what organizations can do proactively? We have some ideas, but would love to hear from you on this area in particular.

Elisha Smith Arrillaga, Ph.D.:

Sure. So one of the things, and we'll talk a little bit more later in the presentation about some of the general sentiments of funders and the reactions are really quite mixed to her giving. But one of the things that we hear from big funders and small funders alike is that MacKenzie Scott, she's given away over 19 billion in a short amount of time. And often people hear that, nor they see the size of the gifts. And most of these gifts were to organizations who had an average operating budget of $5 million. So larger nonprofits, and the reaction folks have is, I don't have $19 billion and I can never give a gift of $10 million or 20 million or 30 million. And I think that that can sometimes prevent and get in the way of folks aren't seeing the pieces of what she's done that they can do. So for instance, you don't need 19 billion to give MacKenzie Scott, right?

Part of what the average grant size for these Scott gifts, as we saw earlier in the presentation, is about 70% of an organization's operating budget now 70% of 5 million. That's not an insignificant amount, but we know that most nonprofits in this country have operating budgets of less than $1 million. And so I think helping funders understand that that sort of giving is possible at all different kinds of levels is super important. And then I think the other thing that's really important too is folks often think, well, I can't do all the things she did. I can't do general operating support and a large grant and few restrictions. And our response to that is actually, well, you have to start somewhere. So are there tenants of some of those four ways that she's giving that you could shift or change that are within your control? And our hope in doing these presentations is that it also empowers nonprofits to make those ask of funders like, okay, maybe you can't do a gift of 70% operating budget, but can you lower the restrictions? But maybe you can't lower the restrictions, but can you think about streamlining the reporting requirements? And so I think there's this kind of push and pull that sometimes prevents people because they get overwhelmed by the scope and scale of what she did when actually there are these discrete practices that I think we can all really learn from and that could transform the way that we give.

Amanda Nelson:

I think it's so timely now as well with funders really trying to figure out how to support their grantee partners, how to get more funding out the doors to nonprofits. And I think this is something in the next finding, it's going to be a new moment, right? And so are there opportunities, like you said, for nonprofits to feel more empowered to talk to funders about unrestricted giving, about more trust-based principles around potential earlier disbursements to help with cashflow issues that organizations might be experiencing right now? So those are I think some really important tactics. And again, having this type of data I think is really empowering to go to those types of funders and supporters and have a conversation. And that's something right now we're really encouraging our clients to do is go talk to your funders. Your program officer is your best friend, so appreciate you helping us share this data more broadly With so many of the nonprofit leaders on this call today, I think it would be great to talk then and transition into talking more about your third finding and specifically the insights that you've gathered with foundations.

Elisha Smith Arrillaga, Ph.D.:

Sure. So our third finding in the study was about leaders. The report that Scott's gifts increased their confidence in their own leadership, reduced their burnout and sparked innovations in their programs and improvements in fundraising. And what the data shows here is that leaders reported that the Scott Grant, in terms of their own confidence, either somewhat or significantly increased their own confidence. We also see that why this is important, and some of the things leaders talked about in their responses were having increased confidence, made them more likely to be innovating and taking risks, expanding to new program areas, asking for larger grants, engaging in new collaborations, and pursuing grants that better align with their organizational values.

These grants really provided more breathing room for leaders. So more than one third of leaders indicated that receiving a grant, this grant reduced their level of burnout, and nearly 40% of leaders intend to stay in their current role for longer because of the grant. This quote illustrates much of what we were hearing from leaders. I got the call about the award when I was about to quit my job. I had reached my breaking point, and then I was reminded that I am more than confident and I have done not just good but great work. I was also reminded that there is so much more to do and now I have the means to do it.

Amanda Nelson:

Similarly, I have a client that was a recipient of one of Mackenzie Scott's gifts, and they are heavily dependent on federal funding. And I had a conversation with the CEO that her gift has allowed them to stay open right now while then navigate this and continue to be able to pay their staff and to have that ability to continue their important work. And I thought that was incredibly powerful and coming from this particular leader, really, really important. And I think a lot of nonprofit leaders see that. And again, we would love to encourage more of that if possible. I want to just turn to two questions that we have here, Elisha, in the chat. One is from Palomo, Melo, sorry if I'm not pronouncing that correctly, but grants are usually one-time gifts. Have you seen a second round of investment happening outside the United States? That's the first question.

Elisha Smith Arrillaga, Ph.D.:

So the number of grantees who responded to the survey that were international was definitely a much smaller percentage. So I'm hesitant for us to make any kind of draw any sort of themes from that. I think one of the things that I didn't mention at the top, but I think it's important to mention, is that one of the things that we did in addition to releasing the overall report this year was that we also released seven in-depth profiles of organizations who received the grants. And I think the thing that's super powerful about those profiles is one, we tried to be actually really intentional about including some orgs that were outside of the us. And then the other thing that's really important about those profiles is one of the reasons we wrote them was in response to a lot of the pushback we were getting around impact.

I think impact can be, even as a researcher, an interesting word because often people say impact, and they're thinking about did you do a randomized controlled trial and show there was impact? And I think there are a lot of conversations about this, but we also have to think more broadly about impact. And so these stories actually go into detail on how organizations thought about impact, what was the impact they saw? And it spans the spectrum from doing randomized control trials to other things like organizations that were serving five to 10,000 people before meals who went to now serving 20,000 to 30,000 people meals. And I would argue, even if you don't have a randomized control trial, if you're feeding 15,000 more people, I would see that as definitely a positive impact. And so I think those story, those profiles do a really great job of lifting up some of what's happening outside the US as well as inside the US as well.

Amanda Nelson:

We have another question here from Greg Elmer and I have some thoughts on this as well, Elisha, but if you could start, so the question is maybe you'll get to this, but do you think the recipients are spending wisely for the long term? A huge gift can provide an immediate impact, but will they be able to sustain it or perhaps more simply what happens when the money is gone?

Elisha Smith Arrillaga, Ph.D.:

Yeah, I mean, this is one of the questions we get asked a lot. And I think that one of the most powerful things from this year for me was actually looking at the data on investments and the number of organizations who invested in their endowments. And it is not an insignificant amount. It's between, I want to say 30 and 50%. I can't remember the exact numbers from that slide, but a large number of organizations actually took some portion of the funds and did things like invest in there increase the number of months of reserve funds. They either started an endowment or they contributed to an existing endowment. And then many organizations that hired new staff, they did it in ways that were really thoughtful. So when we asked them this year, if you hire new staff, have you had to let them go or do you still have them?

Many of the organizations still have been able to support those positions in perpetuity because they did it in ways that people describe things like expanding in existing program in a way they thought about for a really long time that fit into their existing strategic plan. So it aligned. And so what we saw was that organizations were making really wise decisions about the funds for organizations that, and then one of the other things that came up on one of the earlier slides, we saw a lot of organizations are starting what they call a special opportunities fund. So if folks had ideas they wanted to implement for a long time, they could come to the CEO and the board and pitch those ideas, and then the funding for that idea would come out of the special opportunity fund. And that has seemed to work well for a large number of organizations too. So what we saw less of was just a huge infusion of capital and people spending it all right away and then trying to figure out what to do, but instead really being planful, bringing in consultants to think about how they wanted to spend the funds over time or investing in their long-term, just financial stability as well

Amanda Nelson:

For us in the clients that we've worked with, a lot of times we are the consultants that come in after as they're trying to figure out how to scale and sustain these fundraising efforts. So some successful tactics that we've been able to collaborate on are launching campaigns, for example, and in launching that campaign, utilizing this gift as a lead gift, but also being able to bring a more comprehensive lens to that fundraising and galvanize a new generation of donors and to get them excited about it. So I think that's been one way that we've seen our clients utilize this type of gift to help build and scale those fundraising efforts to continue having that increased impact and growth. We also very much see the opportunity here for helping nonprofit leaders in helping support their staff and helping minimize burnout and to provide more opportunities for the staff.

I mean, just such a huge thing culturally and these gifts have absolutely been able to support that. And in our own work, we can see that with teams where they've been able to invest more hire people where they've had open roles, for example, or in launching a new campaign or a special fundraising effort to invest in a team beyond our own capacity for long-term scalability and growth. So I think that's just such an important thing that it's really not about the cliff. It's very much about how can this catalyze continued growth and scaled fundraising efforts. Let's see. I think we have a couple of more questions here. So we have a question. Do you know if recipients are hanging onto their existing donors who might think they don't need any other help after receiving a large one-time gift? Do you want to talk through that? I mean, I have some thoughts here as well, and I think we touched on this a little bit earlier too.

Elisha Smith Arrillaga, Ph.D.:

Yeah, I mean, overall the responses we got are that folks are seeing the receiving one of these grants make their fundraising easier. However, that's not the case for everyone. So they're about 10% of organizations or 10% or less that say that that was not the case for them. And I think one of the things that often happens when we share this data is when we end up talking about this, I always just try and caution folks that if we think about the scale of what Scott has done, and this is just the quiet giving, right? We're not even talking about the Lever for Change process, which was the open call where smaller organizations could apply. So this $19 billion is just these quiet gifts the organizations did not know that they were receiving. And over 2000 organizations receive these gifts. So often we'll hear folks say, that's great that she gave these gifts to 2000 people, but don't the tale of that organization that went down in flames when they got this gift.

And our response to that is whether you are talking about nonprofits or whether you're talking about corporate businesses or retail, if you fund 2000 of something, it is likely that there will be some within that number that are not able to be as successful as others. And so what we just try and caution people here is I think the thing that's so powerful about this data is it shows us that is not the case for the majority of organizations, although of course there are some organizations where that has happened and it has not been as successful. But I think that's why the data is so important because it shows us the difference between the anecdote versus the majority of what's happening with the majority of folks.

Amanda Nelson:

We had a question about that, about cautionary tales, and we've got a couple of other questions, but why don't we go to the last finding and then come back to those questions.

Elisha Smith Arrillaga, Ph.D.:

Okay. So our last finding is that over the past three years, nonprofits have consistently reported positive effects of these large unrestricted gifts, but foundation CEOs have mixed perspectives on the approach. So most foundation leaders say that their staff or board or leadership has discussed Scott's giving, but then only 7% report that Scott's approach has had some or a lot of influence on their own giving. There is also some mixed perspective around the effectiveness of Scott's approach to giving in terms of whether it increased the impact of funded nonprofit organizations. For the most part, foundation leaders report that they think her giving has been somewhat white or very effective, and then there's a small percentage who either don't know or just are unsure.

There are also mixed views from leaders on nonprofits ability to handle large unrestricted gifts. What we see here is that 41% said somewhat able and 40% very able when asked about the ability of nonprofit organizations to handle large gifts with no restrictions, and then when asked if they would be open to providing more transformative gifts, 52% of foundation leaders believe that their own foundations should be giving more in this way than they currently do. When asked why they aren't giving it in this way, here are some of the most common responses that foundation leaders shared. Either the foundation's currently exploring this type of funding and they already do it, but they want to do more. Some said they lack the financial capacity or resources to provide this type of funding, and then others worry that pre-com permitting funds in this way could create financial risk. This quote from a nonprofit leader, although we see these concerns from foundation leaders, really sums up kind of the difference between what we were hearing, which is that if the world had a thousand MacKenzie and it does, what a wonderful world it would be, we are trying to do so much with so little and this type of vetted giving is what we all need.

Amanda Nelson:

That's a really powerful quote, and we have a number of questions popping up here, but I think to go back to the slide that highlighted why other funders are not exploring this model, I think it's worth acknowledging how much we rely and how much gratitude we have with all of these funders, and in particular right now, progressive funders that are working to mobilize behind the scenes to get more funding to nonprofits as quickly as possible. But could you talk a little bit more about these barriers in your conversation, in your studies with these foundations eligibility frameworks? We have a question about that, even the board mindset and internal risk. Could you just help share a little bit more detail around this finding in particular?

Elisha Smith Arrillaga, Ph.D.:

Sure. So if we look at, let me go back to that slide. Some of the main reasons that folks, the foundation leaders were sharing, I think the one this piece around foundations like the financial capacity resources to provide this type of funding. What we see there, and even in this last one about being worried about pre-committed pre-com permitting funds. Some of what we saw in the responses that folks talk about is if, and I think a really great example is there's a foundation often when we do a webinar using this data, we'll bring on a foundation leader who shifted some of their grant making to be more aligned with the way that Scott gives. So either they now are giving longer grants than they used to, maybe they're doing more unrestricted grants. And at the Center for Effective Philanthropy Conference back in 2023, we did this, Jamie Allison was on the panel and she talked about actually the more than five year journey.

She took the whole foundation and board through to think through what does it mean to give differently in this way? Because I think some of what we see showing up in terms of the lack of financial capacity or pre-com permitting funds is if you've been giving, for instance, three year $150,000 grants, that is a very different role for a program officer than giving seven year, 2.5 million grants. It shifts the whole operating structure of how the foundation or what people's day-to-day jobs are, what the board's role is, because approving a smaller number of grantees. And so I think that's probably some of what we see showing up there is folks just wrestling with, well, how do we make that change? I think Jamie at the Haas Fund is an amazing example of really taking folks through a process of understanding why it was important to do their grant making different in this way.

And then she's also an example of, this is not all or nothing, right? Like Haas doesn't do all of their grant making in this way. There's some portion of funds that use some of these principles, and then there's some portion of funds that's done in another way. And so I think too, sometimes what can happen for funders is folks can get caught up in, we have to either do it all like mackenzie Scott or nothing. I think as with many things in life, there's this area actually in between where you can take on some of the principles and try and be more creative in the way that you're doing your grant making. So I think that's some of the tension that we see showing up here in this slide.

Amanda Nelson:

I think that's a really interesting point about it not having to be all or nothing. And we've certainly seen a lot of large foundations in particular develop differentiated strategies, or even, for example, the size of grants that need to go to a board vote and what the threshold is in order to not have to go through that process, but to be able to secure funding faster. So again, I think these conversations with your current funders are really important to understand if they have new strategies coming out, a number of foundations are announcing that right now, or if they're doing something more quietly and how potentially they could help support you with some of these tactics we're talking about. But there's a call to action on both sides. I'd love to hear a little bit more, Elisha, about what you recommend that nonprofits can do, right? We're talking a lot about what the funders can do. We have so many amazing nonprofit leaders here today in this audience. We'd love to hear a little bit more about what you think they can do, and then we'll go through some of the questions that we see coming through here, which are great. We really appreciate all of these thoughtful questions.

Elisha Smith Arrillaga, Ph.D.:

Yeah. Well, our hope really with this data is that one thing that nonprofits can do is use this data to make the case. So we often hear if funders haven't provided general operating support before or they're not sure if it works, this is three years of data in this last year, including nine 90 financial data that shows that it works, that organizations invest wisely, that make strategic decisions, and they have amazing outcomes. I think the profiles, they're great examples of living breathing examples of what that impact can look like. So one thing is our hope is that nonprofits can use this data is tools and conversations. If folks are not aware of this data or, I mean, this is only one of many studies that show the importance of and the impact, positive impact of large unrestricted gifts, but our hope is that it's a tool that folks can have in their toolbox.

And then the other thing that we hope nonprofits can do, and they see this data too and just feel more empowered to ask about funders shifting any one of those principles, right? So maybe you haven't asked before for a gift of 70% of your operating budget, but our hope is this data empowers you to do so, or maybe you're not there, but maybe you haven't asked for a general operating grant before. Maybe our hope is this data empowers that ask. Or maybe it's asking about the time restrictions on the grant or the reporting requirements or the application requirements that this data is a tool to be able to make those asks. And especially in this moment, because the other thing that I'll say about all those principles that I just talked about, there are also things that foundations did right after Covid when we were in a moment of intense, just intense alarm of needing to move flexibly and quickly. And we are in a very similar moment right now. And so being able to make that connection for folks for funders and making those asks and showing that this data shows that giving in that way works. And not only does giving in that way works, but we know funders can do it. We have data that shows that they did it in 2020 and 2021. And so really trying to encourage folks to return to that type of giving at this moment when we are there is so much urgency.

Amanda Nelson:

We've got a question here that's along the lines of this about loving the trend of foundations making those larger, more transformational gifts. But is there any concern around that, meaning that there'll be less grant recipients total?

Elisha Smith Arrillaga, Ph.D.:

I mean, it's interesting, right? Because the complex thing is one would hope that if one funder decides to give in a different kind of way, right? Then there are other funders who are stepping up because we know there's this great intergenerational wealth transfer that's happening. So yes, philanthropy is not, philanthropy for instance, can never fill the gap of government. We know that those things are not parallel, but we also know that there is a large infusion of capital coming into philanthropy. So it's not a zero sum game, although I think at times it can seem that way or for a variety of reasons. But definitely there are, even if one funder decides to fund in a different way, it doesn't mean that there are not other funds out there. They can also be, our hope would be activated as well.

Amanda Nelson:

We know too, from our work with a number of funders that right now they are trying to mobilize and they are trying to partner with organizations and they're still looking to invest in other organizations, but it's a different time. It's not status quo, it's not even covid. So they're trying to think of new ways, but also trying to think about this in other creative ways. So one thing that we've heard is these funders are also talking to each other and they're trying to help find funding for their nonprofit partners, and maybe they can help make introductions. And so that's something we're talking to our clients about right now. Ask for introductions they might have, even if they aren't able to fund you or they're not able to continue funding. You see if in their own network there are other funders that maybe you wouldn't have access to otherwise, but your current funding partner could make that introduction. And we're seeing that really start to build some momentum, which is encouraging. I've got a question here. Oh, sorry, Elisha, were you going to add to that?

Elisha Smith Arrillaga, Ph.D.:

No, no, I was just agreeing with you. Well,

Amanda Nelson:

Okay, good. One thing here, we've got a question, I think more focused on the data and the nonprofits that you were serving. Are the grantees typically small to medium nonprofits? My organization submitted a number of applications from markets throughout the country and none were successful. Is it the case that large nonprofits shouldn't submit, given that they are not really eligible? Will there be another round of lever for change application cycle?

Elisha Smith Arrillaga, Ph.D.:

Well, this is a great question, and I know less about the Lever for Change process. I think at this current moment, at least in the last conversations we've had with them, there is not a current plan for another iteration. And we know that these gifts, this data that I presented today, the average budget of organizations that received these grants was $5 million, which is on the larger side for nonprofits, given that over 90% of nonprofits in this country have operating budgets below a million dollars, the Lever for Change process was targeted for organizations that were smaller, but I'm not sure if they will be repeating that process or not.

Amanda Nelson:

Let's talk a little bit about this question around donor fatigue and actually publicizing that you were a recipient of a MacKenzie Scott gift. This is something we see organizations navigate differently from posting on their website right away, celebrating this to really quietly waiting to announce it in the right moment to a broader audience, to being afraid of not announcing it at all. And so this question is about what can organizations do? What strategies would you recommend to avoid a perception of being fully funded?

Elisha Smith Arrillaga, Ph.D.:

Yeah, it's a great question, Amanda, and one of the things that I think is super important is just helping funders understand that the issues that nonprofits are working on, they're not 2, 3, 4 year issues. So even if you have great support, you get one of these some infusion of capital and you're able to use it to keep making progress. That doesn't mean that you solved homelessness or that you've solved hunger or whatever the issue is that you're moving forward. And so I think it is just important to, there's a lot of work that goes into just helping folks understand that sure, you received a Scott gift, but that doesn't mean the issues that we're working on are like they have solutions, and that means it is one of the most important reasons that they need to be funded in this way. And so being able to make that case using this kind of data, I think is super important and hopefully helpful too.

Amanda Nelson:

This is something that seems really timely right now. You had referenced that there's not enough philanthropy to fill the gap left from the risk and removal of federal funding. And I think that's something that we're all still processing and navigating and trying to go as fast as we can and having to make a lot of adjustments, difficult decisions, a lot of scenario planning. But I think this is something especially given right now, it would be worth thinking about, again, for everyone joining this, what can they do? What would you recommend, especially if they have lost federal funding, how can they position themselves best to other philanthropists, other donors that are making these transformational gifts or the great advice you gave earlier, what other things could they be asking for other donors for that could happen faster, could happen now, could help shore up those challenges that they're facing, that to your point, are not going to be solved now and theoretically many of them are going to get bigger without the support of some federal funding.

Elisha Smith Arrillaga, Ph.D.:

Yeah, it is definitely. It is a crucial moment, and it's a moment more than ever where communication is super important. I think for me, that was one of the more disappointing things that we saw in that very first data that I shared where, and I didn't share. I can send a link so folks can access it. The short report we published that shows one of the main things nonprofits are looking for is communication from their funders. But one of the things they haven't received consistently is communication. And I think it's a moment where we have to be communicating more than ever before. So if a nonprofit has lost federal funding, they have need to be in conversation with their funders about that. There are funders who are working together to think about where they can come together and partner with folks. And so I think one, it's important to just communicate, which likely goes without saying, but sometimes I feel like it's worth just saying.

And then I think it's a moment also that's more important than ever for collaboration. One of the things we saw with these grants is over 40% of organizations that received the grant use the fund the funds to engage in new collaboration that was collaboration with either government or business or other nonprofits. And that's because collaboration is not, it takes time, which means it takes resources to do that. And so I think being creative in terms of ways to collaborate with others, highlighting that to funders, even working with funders to figure out where the collaborations are happening, if ever there was a moment for that. That is now,

Amanda Nelson:

That's a really great point, and that's something we're hearing from funders as well very consistently. We have another question here. The focus of the style of giving centers and infusion of funds. However, there's a strategic capacity building aspect of Scott's giving as well, which is essential due to her influence. Was this covered in your analysis? What are the data surrounding recipients were offered non-financial gifts?

Elisha Smith Arrillaga, Ph.D.:

Well, in our analysis for the quiet gifts, now, I'm not sure about the Lever for Change process that likely that could have come with some other, but these gifts were really, organizations received a call. They were asked, it was kind of an anonymous call. They were asked to provide some budgetary information and talked with a leader. Maybe they got one or two of those calls, maybe three. And then some months later, they get a call out of the blue that says, you are receiving $10 million. There was no, what we would call capacity building that came also with that. However, what we saw a lot of organizations do was either they had already been working on a strategic plan or they were about to renew their plan. A lot of folks, once they received news of the gift, they either brought on consultants or worked internally to develop either their own a strategic plan or a plan just with their board for the spending of those funds.

And so that's what we saw a lot more of in terms of organizations know best what capacities they need to build. So often they'd invest in through that process in something that built their own capacity where there was a lot of folks invested actually in technology. We saw some really innovative technology things happening. Others invested in professional development of staff to upskill folks. But I think the beautiful thing about that this data shows is that organizations, because they know best what they need, they were then able to use the funds to invest in the source of capacity building measures that they needed. But there was no kind of required overall capacity building. I will say that Panorama has done a great job of convening groups of grantees to talk about how they're spending, the gift things they're thinking about. And I think that some grantees have found that process really useful. And we've definitely been in conversation with Panorama throughout this research to make sure we're all aware of what others are doing. But in terms of these quiet gifts, no specific capacity building support.

Amanda Nelson:

Along those lines, we have a question if you could make any recommendations around what you heard from cautionary tales. You've just highlighted what organizations did effectively, anything that you saw that wasn't effective and you would recommend to all of our attendees here? Like make sure you're thinking through that and don't repeat that mistake that we saw.

Elisha Smith Arrillaga, Ph.D.:

Yeah, I mean, there are some orgs. The majority of organizations have spent some portion of the funds or they're thinking about what to do with the funds. There are a small number of organizations who they're still think, they still, and many organizations spent six months to a year to figure out, okay, how do we want to be really strategic in using these funds? There are other organizations who've taken a lot longer than that are feeling a lot of angst around doing anything with the funds. They're not many organizations that fall in that category. But I think what the data shows us is that when you activate with a plan, you can have powerful results. So I would just urge one of the main things that we see in this data is having a plan and then activating on it can lead to powerful results. So I don't know that it's a cautionary tale, but I would just say have a plan and then do the work, which is often is the great work the folks were already doing, but with just added extra boost.

Amanda Nelson:

Having a plan is something as well that we've experienced with our clients that when they did get that call, they had a plan, they knew what more they could do, they knew what greater impact they could achieve with more funding, and this was the opportunity to finally have that, but it still isn't enough to solve all of those problems. We have a question here that I think is really interesting about approaching funders proactively asking for support for a program with two to three organizations operating together. I love this idea. I think it's a really great idea, and we're hearing funders ask for nonprofits to partner and to come to them in that partnership. And that's great because it does make it easier for the funder, but it also makes it pretty challenging for these nonprofits trying to operate together. Have you seen any examples that you would want to highlight of organizations putting themselves together in that way and being able to secure this type of funding?

Elisha Smith Arrillaga, Ph.D.:

I mean, I don't have a specific example that comes to mind, although I've definitely heard of organizations taking this approach. I mean, I would imagine, especially in this historical moment, we will see more. I would hope that we would see more of that, but no specific examples from this particular data.

Amanda Nelson:

What I think we have, and Panorama is a good example of this, of funders coming together and creating pooled funds and collaborative funds to focus on certain mission areas that might be outside of their strategic investment areas right now. And so I think in the coming months, we'll see more funders using different tools, whether or not it's a foundation and a donor advised fund and a collective over here, and sort of mobilizing funds in different ways. But also, I think there is this opportunity for nonprofits to collaborate together to secure that type of funding, but it's really, really challenging and determining which nonprofits to partner with and how to partner. And the governance behind that is something that as everyone is trying to manage resources and scarce resources, having funders help support that and give more guidelines would certainly be really helpful because it is absolutely a challenge we have. I think one final question here about whether or not you've seen organizations put these gifts into their endowments.

Elisha Smith Arrillaga, Ph.D.:

Yes, we definitely have between 30 to 40% of organizations report that they use the funds to contribute to their endowments, which is a super important use of the funds. And actually, we published a report last year where we did a national survey of foundations to understand how many funders were doing endowment grant making, so giving grants to organizations specifically for the purpose of starting or contributing to their endowment. And only 30% of funders in that study report doing that kind of grant making. So I think it's pretty powerful that we see in the Scott data that that's how a lot of organizations use their funds. And I think in this moment when we're looking for all different kinds of tools to work on intractable problems that could be are escalating, this is a moment where especially that kind of grant making is super important as well.

Amanda Nelson:

That's a really interesting finding. Let's see. Yeah, why do you think that number is so low? Is it a priority for most donors? I mean, I can say that in our own campaign work, we really recommend launching comprehensive campaigns and including endowments as part of that. So you're not just building a building, but you're investing in the funds that you'll need for the programming that takes place in that building in the future. I think it's really just a concern about how that money will be utilized, which is why it's so low. Elisha, we are about out of time. Is there anything else that you want to make sure that you share with this audience? Any other calls to action that you recommend here?

Elisha Smith Arrillaga, Ph.D.:

I just want to thank you for having me today and just say again that this type of giving is more needed than ever, especially in this moment. And my hope is that folks are able to use this data to make the case for getting the resources they need to do the important work that they are doing now. So thank you for having me.

Amanda Nelson:

Thank you so much for joining us today and for sharing these findings and for making them available publicly and for free to all of these nonprofits, just go to their website. You can see so many other surveys that they've aggregated. We will send out this recording and these slides and some of the resources that Elisha mentioned. But thank you everybody for joining this talks today. We so appreciate you being here. And again, Elisha, thank you so much for joining us and for sharing this really powerful information for all of our nonprofit partners.

Elisha Smith Arrillaga, Ph.D.:

Thank you so much.

Amanda Nelson:

Thank you.