MacKenzie Scott’s Donations Boosted Beneficiaries and Avoided the Pitfalls Some Feared, New Study Says

Widespread fears that MacKenzie Scott’s big charitable donations in 2020 and 2021 would lead other donors to pull back their support or that small groups wouldn’t be able to handle the gifts were largely unfounded.

That’s according to a study by the Center for Effective Philanthropy, which surveyed more than 700 nonprofits that Scott identified as grant recipients in Medium posts she published in July and December 2020 and in June 2021. The Center for Effective Philanthropy received $10 million from Scott in 2021 and did not include itself in the survey or a handful of other Scott recipients that could not be reached. The center received responses from 277 nonprofits, and center officials conducted interviews with leaders of 40 of those groups, about half of whom identified as people of color. Among the findings:

• Nearly 90 percent of respondents said the gift from Scott was the largest unrestricted donation their organization had ever received.
• Almost all of the nonprofits — 98 percent — said they were directing the funds toward improving their existing programs and starting new ones.
• Almost three-quarters — 73 percent — said they were hiring more staff or consultants to take on that new work.
• More than 90 percent said they were using the donation to improve their charity’s financial stability.

Just in Time

Susan Goodell, chief executive of El Pasoans Fighting Hunger, a food bank that received $9 million from Scott in December 2020, said the money came at a pivotal time in the then 5-year-old charity’s development. It shored up her group’s financial health after soaring food assistance needs forced the charity to expand faster than it could handle.

“Looking toward 2021, we were terribly afraid we were going to have to scale back when need was still incredibly high,” Goodell says.

A border town hundreds of miles into the heart of the Chihuahuan Desert, EL Paso produces little of its own food supply, so the food bank must bring in most of what it buys by truck. That means the charity is paying for food, diesel fuel, and labor to transport the food.

The demand for food assistance had been growing steadily since 2018 when El Paso’s neediest were hit hard by the December 2018 government shutdown, a mass shooting, the first wave of a massive influx of refugees, and then in 2020 the pandemic. To meet those ballooning needs, the organization took out a loan to buy a building it could turn into a food-storage warehouse.

“We bought it for a fairly modest price, but it needed $1 million in repairs and it didn’t have the capacity to hold the volume of refrigerated and frozen foods we needed to feed the community,” she says. “We had to build industrial-size coolers and freezers and fix the roof, and at that point we were tapped out.”

Instead of scaling back in 2021 as Goodell feared, Scott’s $9 million infusion in late 2020 meant Goodell was able to pay off roughly $2.6 million in debt the food bank had taken on and buy much more food to meet the ever-growing needs in El Paso.

Lonnie Valencia, El Pasoans Fighting Hunger Food Bank

“It was really a shot in the arm at a time when this organization was in incredible need. Frankly, I don’t know what we would have done without this gift,” Goodell says. “It was a pretty heavy burden to carry all that debt, so to suddenly be debt-free was a miracle.”

Effects on Fundraising

Slightly more than half of the respondents in the study — 52 percent — said receiving a donation from Scott made their fundraising efforts easier, and 35 percent said it had no effect at all on their fundraising. Most of the respondents said foundations and individual donors didn’t change their support because of the Scott donation, something many nonprofits and philanthropy experts had worried about.

The possibility that other donors might rethink their support was on the mind of Akil Vohra, executive director of Asian American LEAD, which received $2 million from Scott in 2021. So far, however, his organization hasn’t experienced a decrease in support from other donors or foundations.

“It’s still a concern for me about what that [gift] means for new funders moving forward,” he says. “But I think that’s kind of my responsibility to continue to talk about the work we’re doing and what impact it’s having and the need in the AAPI community.”

Vohra’s group provides after-school academic programs, leadership development, mentoring, and summer programs to underserved Asian-American and Pacific Islander youths in D.C., Maryland, and Virginia.

Scott’s donation came at a time when many youths and families his nonprofit serves were experiencing more harassment and bullying as violence toward Asian Americans and Pacific Islanders increased, Vohra says. But because of that, his group saw a surge in donations and he says the Scott gift helped to bring more attention to the threats some of these families were facing. It also helped to upend common assumptions that Asian Americans and Pacific Islanders don’t need help, that they are all successful, highly educated, and well-off.

Bang Co, AALEAD

“Her investment put a spotlight on a community that is often seen as this model minority but that in truth has great needs,” says Vohra, who points out that the majority of the youths his group serves are on free or reduced-cost school meals, and many are recent immigrants. “Historical investment from the philanthropic sector to the AAPI community has not been commensurate with the kinds of needs that we’re actually observing on the ground.”

Like nearly 60 percent of survey respondents, Vohra says Scott’s gift gave the charity a boost to carry out infrastructure improvements. In his group’s case, that has meant purchasing new and better laptops, phones, and development technology. He was also able to give employees significant raises, something 62 percent of respondents said Scott’s support made possible.

Scott’s gift also enabled Asian American LEAD to expand its programs. As a result, the charity now serves 30 percent more youths.

“We’re going to continue to grow and have these needs,” Vohra says. “The MacKenzie Scott funds have really provided a cushion that allows us to invest for future growth and impact.”

About 75 percent of respondents said receiving a donation from Scott changed their approach to fundraising because it bolstered their confidence when asking foundations or individuals for support. Some said Scott’s gift made them feel confident enough to ask foundations for larger grants than they had in the past, or it gave them greater courage to ask for larger annual gifts from donors.

The International Association of Blacks in Dance, which serves dance companies, scholars, administrators, and other Black people in the dance world, was in a healthy financial position before it received $3 million from Scott in the spring of 2021, says Adriana Ray, the organization’s development director.

Landing a large, no-strings-attached donation from such a high-profile philanthropist felt like a stamp of approval, which Ray says helped her have deeper conversations with grant makers about the value of unrestricted, trust-based giving.

“It does help us to have a different type of conversation with potential funders around how we are hoping to utilize the money and the type of conversations and openness we want to be able to have around our goals and the need for more trust in us,” Ray says.

Emphasis on Equity

Scott started giving big in the summer of 2020 when she announced her first round of unrestricted, mostly one-time donations to hundreds of charities. For many organizations, the seven- and eight-figure gifts were the largest they had ever received, and her subsequent giving has continued to follow that model.

Scott has supported a number of large, well-known charities like Easterseals, Goodwill, and Boys and Girls Clubs of America. But she has also given significant sums to historically Black colleges and universities; nonprofits led by people of color, women, and those who identify as LGBTQ; and other overlooked charities that help underserved populations.

To date, she has given more than $13 billion to charity. Nearly $8.6 billion of that went out in her first three rounds of giving, on which the study, Giving Big: The Impact of Large, Unrestricted Gifts on Nonprofits, is focused.

Advancing racial, gender, and other types of equity is an important part of the missions of many organizations that received Scott gifts.

• Nearly 70 percent of survey respondents said Scott’s gift allowed their organization to advance racial equity more effectively, and nearly two-thirds said they were better able to further economic mobility.
• 65 percent of the survey’s respondents identify as women and 40 percent as people of color. Among the latter, many said that receiving a donation from Scott was especially galvanizing.

“That was a pretty incredible moment for me as a Black woman working in a nonprofit space because of some of the inequities and imbalances around how philanthropy shows up,” Ray says. “There was something really powerful and affirming to see a really large donation from someone at that level.”

Kathleen Enright, CEO of the Council on Foundations and former head of Grantmakers for Effective Organizations, says Scott’s funding choices are especially important because they go against a historical trend.

“She is prioritizing nonprofits led by women and people of color for enormous unrestricted grants, whereas historically, nonprofits led particularly by people of color and sometimes also women are required to go over a higher bar of proof and oftentimes receive smaller grants,” Enright says. “So that is a positive move.”

Whether other donors and foundations are watching Scott’s giving closely and adopting her giving approach is still unclear, philanthropy experts say.

Other than the ultra-wealthiest donors, not many people in the philanthropy world see themselves as direct peers of Scott, says Michael Moody, a philanthropy professor at Grand Valley State University who has studied and written about giving for more than two decades.

“If you’re a smallish or medium-size foundation or a family foundation, you’re probably not giving $10 million grants, so there’s less seeing her as a peer because it just feels so much bigger than what they’re able to do,” Moody says.

But there are areas in which Scott’s example might be making a difference. Moody says her giving has energized proponents calling for more unrestricted giving and greater support for equity. “They see in this an illustration of the benefits of the approach to philanthropy that they’ve been advocating, and this helps them make their case for that.”

‘An Order of Magnitude Different’

Nonprofits in the study received donations from Scott of $1 million to $250 million. The study puts the significant size of those gifts in context. The median grant from Scott was $8 million, a monumental sum when compared with $100,000, the median grant most staffed foundations give to nonprofits, according to the study.

“This is an order of magnitude different. Even big foundations that make big grants, at the median give around $500,000, maybe $1 million at the outside,” says Phil Buchanan, president of the Center for Effective Philanthropy. “These are $8 million gifts, so I don’t think the scale of these gifts relative both to the size of the organizations and to what is typical of other major donors can be overstated.”

The study notes that restricted giving has been the prevailing approach for foundations over the years, with the share of unrestricted grants hovering around 20 percent before 2020. That’s despite the fact that nonprofit leaders have for years advocated for more unrestricted giving and lamented the challenges restricted funding poses.

Scott upended the prevailing approach of big grant making by eliminating onerous application requirements, giving unrestricted large gifts, and demanding few reporting requirements. None of these are new approaches on their own, Buchanan says, but together they are game-changing.

The center’s Ellie Buteau, who led the study, says the findings make a strong case to grant makers and other philanthropists that Scott’s approach is one that helps rather than hinders nonprofits in carrying out their missions.

“We hope that more funders could take lessons from her and think differently about the types of grants they’re giving, their expectations for application and reporting, and that they start trusting nonprofits to make the judgments they see as best for how to use money they receive,” Buteau says.

Buteau and Buchanan point out that it can take many years to know the full impact a large gift can have on a nonprofit. They stress that the study’s findings represent the first year of what will be a three-year study of Scott’s giving. They add the research project could be extended to five years or more.

“It’s important to be careful not to draw definitive conclusions too early when things are still playing out,” Buchanan says. So far, he says, the data suggests the money has been put to use for important efforts leaders think will benefit the organizations, advance their mission, and help the people they serve. “But I think we’ll know a lot more in year two and year three.”

To learn about other big donations from Scott and other donors, see our database of gifts of $1 million or more, which is updated regularly.