Kimberly Lewis couldn’t remember where she’d heard the name MacKenzie Scott when she received a call about a multimillion-dollar gift headed to her East Texas Goodwill branch. When she learned the size of the grant — $5 million with no strings attached — she said she nearly swallowed the phone.
“It was a great pat on the back to say: I see you. I see what you’re doing, and I approve of the work that you’re doing to uplift your community,” said Lewis, recalling that the large donation came during the first year of the Covid pandemic when “everyone was feeling unseen, unheard, and disconnected.”
In the past five years, MacKenzie Scott has surprised hundreds of nonprofits with $19.2 billion in large, no-strings-attached gifts, sparking an impassioned debate across the philanthropic world. A new report released Tuesday by the Center for Effective Philanthropy reveals that Scott’s gifts have been a boon for grantees, enhancing their long-term finances, leadership, and local communities — bucking skepticism about the downsides of unrestricted giving, namely that it could lead organizations down an unsustainable financial path.
The report is the culmination of a three-year survey of 813 grantees and 243 foundation leaders. It comes at a time when nonprofits across the country, including many of Scott’s grantees — about 45 percent of which focus on social-justice issues — are coping with uncertainty over federal funding and the backlash against DEI-related initiatives.
“This data is, in some ways, a call to action” for foundations and donors, many of which stepped up their giving in the aftermath of the pandemic but are still plotting their response to the current turmoil, said Elisha Smith Arrillaga, vice president of research at the Center for Effective Philanthropy and a co-author of the report. “The data shows this type of grant making works. We need to do more of it, and we need to do more of it soon so that nonprofits have the resources they need, especially at a moment like this.”
Likewise, for Lewis, a founding member of Goodwill International’s diversity and inclusion committee, gifts like Scott’s — which offer organizations the flexibility to freely invest in their values — may be even more important today than when she received that call almost five years ago. Since receiving the gift from Scott, which allowed the group to expand its programs and other revenue streams, the nonprofit has grown its operating budget from $11.9 million to $17.1 million.
“A gift like this for organizations that continue to live their culture and their mission would be a fantastic message to the world that we shall not be moved,” she said. “We’re going to continue to treat people like people. Not like numbers. Not like enemies.”
The Center for Effective Philanthropy report highlighted five effects of Scott’s large, unrestricted grants.
Scott grantees fared better financially.
Of those surveyed from 2020 to 2024, the typical MacKenzie Scott grantee was a direct-service organization with a budget of around $7 million — larger than the average nonprofit’s $1.8 million, according to CEP — and a staff of roughly 50. The median Scott gift was $5 million, representing a massive chunk of grantees’ annual budgets.
Yet by and large, according to the survey, nonprofits did not spend down their grants right away. According to publicly available tax documents, two years after receiving a MacKenzie Scott gift, organizations had twice as many months of operating expenses in cash as comparable nonprofits.
Almost 90 percent of leaders said the grant had moderately or significantly strengthened long-term financial sustainability. Nearly 60 percent reported their organization planned to spend down the grant over two to five years; 36 percent would spend it down over six years or more.
In 2022, the nonprofit Kaboom received a $14 million gift that helped the organization launch a major shift in its revenue model — from one that relied almost exclusively on funding from corporate donors and volunteers to a more sustainable model that relies more on foundation funding and partnerships with municipalities and school districts to ensure communities have access to playgrounds for their children nationwide.
“We talk about transformative gifts, and sometimes that word is used lightly, but in our case, it transformed everything,” said Lysa Ratliff, the group’s CEO. “The way that we work, the way that we organize ourselves, the kind of talent we recruit. It allowed us to move into what we needed to do to have a path to achieving our mission.”
Scott’s no-strings funding approach had few drawbacks.
Some philanthropy experts argue that large, unrestricted grants could send nonprofits over a funding cliff, as the money could be used too fast or scare away potential funders. A relatively small portion of grantees — roughly 13 percent — said the gift from Scott hurt their ability to raise money, while about half of organizations said the gift made fundraising easier.
Although some donors may see Scott’s gifts as a reason to pull back — why donate to an organization that just received $5 million? — many viewed them as a roaring endorsement of a nonprofit’s credibility and effectiveness by one of philanthropy’s biggest stars. Over 60 percent of grantees in the report said they used Scott’s gift as evidence of their credibility with other funders, while nearly two in five said they now ask for larger and less restricted grants from funders.
Soon after receiving the Scott contribution, “other grants began to flow in as well,” Lewis recalled. “It also gave us a platform to speak more about our mission and what we do in our culture and what we stand for.”
Scott’s gifts were a confidence boost — and burnout balm — for nonprofit leaders.
Around 80 percent of nonprofit leaders said Scott’s grants increased their own confidence in their leadership, with leaders of color especially likely to say so.
More than a third of those leaders said the gift reduced their level of burnout, and almost 40 percent said they planned to stay in their position longer than they would have without the grant, a major victory at a time when the sector’s leadership has been plagued by high levels of turnover and stress.
Goodwill of East Texas likely appeared on Scott’s radar in part because of Lewis’s reputation across the organization.
“We tend to put our heads down and just work, but the public needs to know who you are and what you stand for,” she said. “Donors want to know more and more and more who’s leading the organization and what they stand for because that is going to be a reflection of how they serve, who they serve, and when they serve.”
Scott’s grants resulted in positive ripple effects for local communities.
The vast majority of grantees said Scott’s donation helped strengthen their causes or local communities. About 93 percent said the gift had moderately or significantly strengthened their mission, and almost all directed at least some funding to strengthen or expand their programs.
After an eight-month planning process, Lewis was able to double the size of a warehouse the nonprofit runs, which allowed the organization to employ dozens more residents with severe disabilities across East Texas. It was also able to invest in technology upgrades that she said vastly improved the organization’s efficiency.
“Our focus was really on what is going to give us sustainability and long-term impact,” said Lewis. “We were very methodical, very thoughtful with how we communicated, and very transparent.”
Foundation leaders are more skeptical of Scott’s approach.
Of the foundation leaders who participated in the survey, only 7 percent said they had been influenced by Scott’s giving, even as her approach remains a major topic of conversation among leaders and staff. Only one-third said Scott’s approach has been quite or very effective at increasing nonprofits’ impact, though nine in 10 grantees said the gifts helped them accomplish their missions.
Although about half of the 243 foundation leaders surveyed reported they hoped to experiment more with unrestricted grants, around 60 percent expressed reservations about the possibility of funding cliffs or that groups would over-rely on large grants. That contrasts with the 90 percent of grantees who said that their large, unrestricted gifts had no negative impact.
For nonprofit leaders, that disconnect reflects a lack of trust, said Ratliff at Kaboom, one that can interfere with building genuine and mutually respectful relationships between foundations and grantees.
Unrestricted funding “shouldn’t be such a foreign concept” in philanthropy, she said. “It’s surprising to me that this approach continues to not be fully embraced because we should trust our leaders who are living and breathing this work, are so close to the problem, and are best equipped to solve it.”
That’s a lesson that Smith Arrillaga at the Center for Effective Philanthropy hopes more donors and foundations take to heart.
“Every single one of us has the capacity to do this kind of grant making,” she said, noting that for the smallest nonprofits, even a $1,000 gift can be transformational. “I hope that people don’t see the data and think, ‘Well, I don’t have a billion dollars,’ because everyone can give in this way that transforms an organization.”
