MacKenzie Scott donations avoided feared pitfalls: New study

Nov 15, 2022, 8:07 AM | Updated: 10:08 am
El Pasoans Fighting Hunger volunteers distribute food at a center in El Paso, Texas. The nonprofit ...

El Pasoans Fighting Hunger volunteers distribute food at a center in El Paso, Texas. The nonprofit received $9 million from philanthropist MacKenzie Scott in December 2020, shoring up the food bank's financial health after soaring food-assistance needs forced the charity to expand faster than it could handle. (Lonnie Valencia/El Pasoans Fighting Hunger via AP)

(Lonnie Valencia/El Pasoans Fighting Hunger via AP)

MacKenzie Scott’s big gifts have been a boon to the charities who received them, and widespread fears in the nonprofit world that her gifts would lead other donors to pull back their support or that small groups wouldn’t be able to handle them 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 2020 and 2021. The center received responses from 277 nonprofits.

Among the findings:

o Nearly 90% of respondents said the gift from Scott was the largest unrestricted donation their organization had ever received.

o Almost all of the nonprofits — 98% — said they were directing the funds toward improving their existing programs and starting new ones.

o Almost three-quarters — 73% — said they were hiring more staff or consultants to take on that new work.

o More than 90% said they were using the donation to improve their charity’s financial stability.

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. It shored up her group’s financial health after soaring food-assistance needs forced the charity to expand faster than it could handle. The organization had taken out a loan to buy a building it could turn into a food-storage warehouse.

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

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 more food to meet the growing needs in El Paso.

“It was really a shot in the arm at a time when this organization was in incredible need,” Goodell says. “Frankly, I don’t know what we would have done without this gift.”

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. Slightly more than half of the respondents in the study — 52% — said receiving a donation from Scott made their fundraising efforts easier, and 35% said it had no effect at all on their fundraising.

The possibility that other donors might rethink their support was on the mind of Akil Vohra, executive director of Asian American Youth 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.

“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.

Like nearly 60% of survey respondents, Vohra says Scott’s gift gave the charity a boost to improve its infrastructure. 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% of respondents said Scott’s support made possible.

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

About 75% 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.

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.

o Nearly 70% 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.

o 65% of the survey’s respondents identify as women and 40% as people of color. Among the latter, many said that receiving a donation from Scott was especially galvanizing.

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.”

Nonprofits in the study received donations from Scott of $1 million to $250 million. The study puts the significant size of those gifts into 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.”

_____

This article was provided to The Associated Press by the Chronicle of Philanthropy. Maria Di Mento is a senior reporter at the Chronicle. Email: maria.dimento@philanthropy.com. The AP and the Chronicle receive support from the Lilly Endowment for coverage of philanthropy and nonprofits. The AP and the Chronicle are solely responsible for all content. For all of AP’s philanthropy coverage, visit https://apnews.com/hub/philanthropy.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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MacKenzie Scott donations avoided feared pitfalls: New study