MacKenzie Scott’s No-Strings Giving Reverberates Way Beyond the Direct Beneficiaries

MacKenzie Scott stormed the philanthropy world last year with $5.7 billion in unrestricted, one-time donations to hundreds of charities. For many organizations, the seven- and eight-figure gifts were the largest they had ever received — by far. Yet at the time, few observers understood the multiplier effect those gifts would have or how truly wide a net she was casting. The many tentacles of her giving are poised to touch charities far beyond those that received money directly from Scott.

Joe Neri, CEO of the IFF (formerly the Illinois Facilities Fund), had an inkling that would be the case late last year when his group received $15 million from Scott. Neri’s organization lends money and provides real-estate consulting services to charities focused on early-childhood education, human services, economic development, affordable housing, and the arts. Many of the loans it provides help nonprofits make capital improvements like purchasing a new building, replacing a leaky roof, or constructing a new medical clinic.

The Ripple Effects of MacKenzie Scott's Philanthropy

Scott donated an eye-popping $5.7 billion in 2020. It’s become clear that the impact of her donations extends well beyond the organizations that received the gifts. Read more:

• Does MacKenzie Scott’s Giving Approach Signal a New Era?
• Gifts From MacKenzie Scott Put Overlooked Colleges and Universities in the Spotlight
• Updated: MacKenzie Scott Surprises Scores of Nonprofits With $4.2 Billion
• MacKenzie Scott Showers $1.7 Billion on Nonprofits, Mostly Groups Fighting for Equity

When Neri found out the fund was going to receive a gift from Scott, he knew two things immediately: that his organization would lend much of that $15 million to the nonprofits it finances and that the impact of the money would end up being something closer to a $75 million donation over time, allowing his organization to help far more people.

Scott’s gift generates additional money because it is considered reliable equity by loan-making financial institutions, corporations, and foundations. That means Neri and his team can go to those lenders and borrow additional money — in this case around $60 million, he says — that his fund can then lend to charities. The money also generates income when the charities pay the fund back.

“I call it the gift that gives forever because as long as we take good care of who we lend to and good stewardship of our loan process, that money will be repaid, and it will be re-lent and repaid and re-lent, and of course it will come back with interest,” says Neri.

IFF

Another way Scott’s giving is extending beyond original beneficiaries: Many of the nonprofits that received donations are distributing portions of the money to their affiliates or smaller charities they’ve worked with over the years.

Easterseals, which assists people with disabilities, is a good example. Scott gave a combined $162 million to 22 of the group’s 67 affiliates, plus the national office in Chicago. Gifts ranged from about $1 million up to the $15 million that the national office received, says Angela Williams, CEO of Easterseals.

Many of the 22 affiliates that received direct donations from Scott are using the money to strengthen programs that suffered at the outset of the pandemic and to create new ones. The national office plans to use the $15 million it received for operating support and endowment, as well as to help some of the 45 affiliates that didn’t receive Scott donations. The goal is that a greater number of affiliates can benefit from the money.

Scott’s decision to let nonprofit leaders like Williams decide for themselves how and where to use the money shows that she trusts their expertise. Almost every charity leader who spoke to the Chronicle said the freedom to direct the money to where it was needed most was the characteristic of her giving that mattered most.

Williams plans to deploy part of Scott’s donation in a number of ways. For example, if an affiliate doesn’t raise enough money to meet its needs, it can apply to the national office for money to help close a funding gap. Affiliates can also apply for money to help start a new program or update an existing one, and Williams’s team intends to devote some of Scott’s money to match donations to the other affiliates from corporate donors.

“What this gift does is it really helps us to be able to provide more support for infrastructure,” Williams says. “When I talk about infrastructure, I mean increasing services that currently exist and shoring up what we do around early-childhood intervention, and specifically with autism services.”

Reluctant Public Figure

Scott, who is 51, is a private and seemingly reluctant public figure. She and her representatives did not respond to interview requests from the Chronicle for this article. According to media reports, Scott grew up in a wealthy San Francisco household. Her father ran an investment firm until filing for bankruptcy in 1987. With the family’s finances diminished, she worked multiple jobs to put herself through Princeton.

Scott played a prominent but backstage role helping her former husband, Jeff Bezos, build Amazon into the global behemoth it is today.

Easterseals

Since the couple divorced in 2019, she has attracted an extraordinary amount of attention for a post-divorce net worth that is now estimated at nearly $60 billion. A writer whose novel The Testing of Luther Albright won an American Book Award in 2006, Scott has shied away from speaking publicly about her philanthropy and has so far declined to talk to media outlets about her future giving plans.

Yet true to her craft, Scott provided clear written statements about what has motivated her philanthropy and a blueprint for her current giving philosophy in two Medium posts that were published in July and December. In them, she explained how she selected the groups to which she gave and why. She wrote that her life includes “two assets” that she can use to help others: the wealth delivered to her by an “imbalanced” social system that leaves some people very wealthy and others impoverished and “a conviction that people who have experience with inequities are the ones best equipped to design solutions.”

Indeed, one of Scott’s most important goals for her giving is to help historically marginalized people by supporting charities that focus on racial, gender, and social justice.

Scott’s emphasis on marginalized groups is “pretty exceptional,” says Ben Soskis, a historian and researcher who has spent his career studying philanthropists. “There just haven’t been a lot of top living donors who’ve really foregrounded racial justice and racial equality in that way.”

One case in point: Scott’s gift of $2 million to Borealis Philanthropy, a grant maker that supports grassroots social-justice groups led by people who have traditionally been excluded from leadership positions and forms of upward mobility.

It’s also another example of Scott’s effort to fan money beyond the immediate beneficiary. She directed the Borealis gift to the organization’s Fund for Trans Generations, which provides general operating support to nearly 60 small charities. The fund’s grantees are led by and serve transgender, gender nonconforming, and nonbinary people, especially Black transwomen; many have annual budgets of less than $100,000.

Many of the groups are advancing long-term social-justice efforts, implementing anti-violence and community safety programs, and helping trans and gender-nonconforming people develop leadership skills. Scott’s money will aid those efforts over the next three years, at a time when both violence and punitive laws aimed at trans people have increased, says Ryan Li Dahlstrom, who leads the fund.

But Scott’s money has helped in more immediate ways, too. The fallout from the pandemic has hit the groups the fund supports particularly hard as marginalized populations have seen a higher rate of job losses and other hardships. Scott’s money enabled Dahlstrom and his team to make grants to help charities respond to emergency needs.

“So many of them had to quickly develop food pantries and mutual aid networks to really respond to getting things like utilities and rent support to food and supplies out to communities,” Dahlstrom says. “That wasn’t necessarily their sole purpose or even something they had done before but were now needing to develop.”

Soaring Demand

After Covid-19 locked down the nation, Scott gave extensively to groups working to feed the hungry and eliminate food insecurity. She gave to Meals on Wheels America and 30 of its affiliates, as well as Feeding America’s national office and 43 of its 200-member food banks across the country. The $20 million Scott gave Feeding America’s national office helped the nonprofit launch its new Food Security Equity Impact Fund, a program that aims to address racism and other root causes of hunger, says Ami McReynolds, he organization’s chief equity and programs officer.

The fund will be used to deepen existing ties the network of food banks has with other nonprofits that serve people of color as a way to get those most affected by food insecurity more involved so they can have a say in eradicating hunger in their neighborhoods.

McReynolds says her team is working with member food banks to determine how the fund, still in the planning stages, will work. That’s a departure. Traditionally, when Feeding America runs a grant program, it outlines how the process will work and exactly how the money can be used.

Micah Highland

“We’ve stopped ourselves and said, ‘No, that’s not how we want to do this,’” McReynolds says. “We want to really flip the power dynamic in terms of the solutions that get funded and make sure they come from the community level.”

McReynolds says Scott’s $20 million gift is the seed money to start the fund and develop a plan for it. Feeding America will eventually raise money for the fund from other donors after it has given out its first grants so it can show potential donors the fund in action and how it is working with the groups it hopes to help.

“Money alone is not going to address racial equity,” McReynolds says. “There are a variety of systematic factors that are in play, but having the community have a voice as co-investors, as solution builders, as co-creators in this process is a real shift in what philanthropy can truly look like.”

Golden Harvest Food Bank, an Augusta, Ga., group that helps charities feed people in 25 counties in Georgia and South Carolina, received $9 million from Scott in December. It, too, is still planning how to use Scott’s money. The donation, however, has helped the charity’s leaders feel more confident about buying a new building in Aiken, S.C., to expand its food warehouse space, says Amy Breitmann, Golden Harvest’s executive director.

“It’s something we knew we needed,” Breitmann says. “Having this investment gave us the peace of mind to be able to go ahead and expand in Aiken.”

The new space increases the charity’s warehouse capacity by about 30 percent, which will help the food bank store the truckloads of food and related goods it receives from federal and state governments and that it buys. That, in turn, will allow the organization to quickly and efficiently move an additional 900,000 meals a year in the six South Carolina counties it serves, she says.

“We’ve seen, as a food bank, a 22 percent increase in food insecurity, and we know the economy does not bounce back overnight,” says Breitmann. “We’re just grateful to have this funding to be able to respond to what we know is going to be elevated food insecurity for the next few years. It helps us feel like we have some power to really make a dent in it.”

‘The Real Disrupter’

By giving charity leaders the freedom to choose how to use her donations, Scott is showing a striking level of humility not usually seen among ultra-high-net-worth donors who have made their fortunes in technology.

People who make extraordinary amounts of money, often at relatively young ages, “mistakenly think that they’re more brilliant than they are” and that their ideas will be equally successful in solving tough social problems, says Chuck Collins, a former wealthy heir who gave his fortune to charity in 1986 and today leads the Program on Inequality and the Common Good at the Institute for Policy Studies.

“That’s just, unfortunately, hubris that sometimes comes with the money,” he says. “She’s obviously modeling and acting out of a different view and basically saying, ‘You’re the experts; I trust you to go forward here.’ Coming out of the tech world and the whole notion of disruption, I would say she is the big disrupter of traditional billionaire philanthropy. She’s the real disrupter.”

Evan Agostini, Invision, AP

Many nonprofit leaders hope other wealthy donors will take note of Scott’s humble, hands-off approach and start giving more and bigger unrestricted donations — with an explicit recognition that it is charity leaders rather than wealthy donors who know best where to direct charitable dollars to do the most good.

“There has to be a recognition at some point that you have professionals on the ground that are close to the issues,” says Williams of Easterseals. “We come to this work with a level of understanding and sophistication to do the work. What we don’t come to the table with is an abundance of funds to get it done.”

In her two Medium posts, Scott said she and her advisers selected nonprofits that have a track record of carrying out their missions successfully and explained her decision to give unrestricted, general operating gifts as a way to give charity leaders “maximum flexibility.”

What she did not say — but is nearly as important — is she is not asking for reams of data or demanding that nonprofit leaders devote onerous amounts of time to strict reporting requirements. Charities say Scott’s representatives asked that once a year they send her a report describing how the money has been used and an audited financial statement, if one is available. Nonprofit leaders say these minimal reporting requirements are nearly as freeing as the unrestricted nature of the gifts.

“If all gifts were like this, it would mean less dollars going into accounting and compliance and report cards and more money going into mission,” says Neri, of the IFF.

Conversations With Donors

To what extent Scott’s gifts help — or hurt — recipients’ fundraising efforts remains to be seen. Several say some of their small but long-time donors and even some grant makers now think their money is no longer needed. That couldn’t be further from the truth, the nonprofit leaders say.

“We operate on thin margins, and the work needed is so important. Having that extra infusion of cash helps us to do things like long-deferred capital improvements,” says Williams. “When you think about most nonprofits, they’re not really operating with a lot of cash in the bank, so to have a rainy-day fund or an endowment is a luxury.”

Leaders at Walla Walla Community College, located in a rural part of Washington state, have found a thoughtful way to talk to donors who might assume their support is no longer needed after learning that Scott had given the college $15 million.

“If my first reaction was one of awe and being humbled by what we can do with the money, my second thought was how do I make sure that the donors we already have don’t feel that this somehow makes their giving irrelevant,” says Jessica Cook, executive director of college’s foundation. “One of the things that I’ve been focusing on with [donors] is that this is a continuation of the work that they’ve already been doing.”

She and the community college’s president, Chad Emerson Hickox, stress to donors that one of the reasons Scott decided to donate to the college is its track record of helping people who wouldn’t otherwise go to college obtain training or an associate’s degree so that they can improve their futures and that of their families.

“We’re able to celebrate this and take a victory lap for the community and say ‘We were able to receive this award because of all of you — because of your engagement, because of your commitment to our success and your support over the years,’” says Hickox

Cook says she sent email messages to the college’s donors to congratulate them for helping the college carry out its mission over the years. She and her colleagues also had intensive follow-up conversations with the college’s major donors to make sure they understood Scott’s gift would not have happened without their previous support.

“This $15 million is a remarkable gift. But it’s not the only generosity that we received over the years, so we’ve been trying to connect our donors to some of the excitement around what this means for our students,” Cook says. “It’s both true, and I think it means a lot to people to hear that.”