Unrestrictedly Changing the Philanthropic Landscape

It’s a typical day at the office at your nonprofit job. Things have been a little stressful; COVID has significantly impacted your organizational budget. You have some potentially difficult decisions to make. The phone rings. A person begins to tell you that a donor wants to give an unrestricted grant with no time frame for which it must be used; it’s for 14 million dollars.

Overnight, everything changes. You still have tough decisions to make, but they’re no longer about layoffs and program rollbacks—they’re about team expansions and program innovations.

This may seem like a far-fetched situation, but it is exactly what happened to Lysa Ratliff, Executive Director of KABOOM!, a nonprofit that is all about building community through playspace making. I had the honor of hearing her and others speak about Mackenzie Scott’s philanthropy and how it has altered their organization’s capacity at the Center for Effective Philanthropy (CEP) Conference in Boston.

The CEP research team compiled research about Scott’s giving and its impact and perceived impact from both the nonprofit and founder standpoint. At CEP, their team shared some of this research in a panel that included Lysa Ratliff from KABOOM! Of course, when the CEP report* is officially released, you can read more—but here are a few things I found especially impactful from this talk.

1. Stronger Nonprofit Organizations: Almost universally, nonprofit leaders who had been funded by Mackenzie Scott were able to speak to the value of the gift, not only in their ability to do the work they were already doing but also to take the leap and do the work they couldn’t do before. They also largely expressed how this gift allowed them more room to collaborate with other organizations.

• Percent that nonprofit leaders report the grant will “moderately or significantly” strengthen:”
  
  • 94% - the organization’s ability to achieve their mission
  • 90% - ability to innovate or take risks
  • 88% - fields or communities served
  • 50% - ability to collaborate with other organizations

2. Mixed Funder Reactions: Funders perceptions were more mixed. Despite this, 70% of funders interviewed said that Mackenzie Scott’s philanthropy influenced them in some way. Some were very receptive to her philanthropy and even changed some ways they gave. On the other hand, some reported concerns such as lack of accountability, transparency, and problems with financial management capabilities of nonprofits. Some of these concerns were amplified for smaller nonprofits, grassroots nonprofits, and nonprofits with younger/newer leadership.

3. Increased Nonprofit Organizational Capacity: Despite foundation concerns, very few nonprofits reported any financial issues–only 2% reported additional challenges. On the other hand, 90% reported a financial benefit such as increased fundraising due to increased capacity from the gift.

To me, Mackenzie Scott’s philanthropy is an exemplary case study into the organizational capacity benefits of unrestricted funding. One of the most interesting takeaways to me was the difference in reactions overall between foundations and nonprofits–especially as it relates to trust. One of the “TPFisms” that I always go back to is “change happens at the speed of trust.” The study and panel mentioned that not every funder can—or even should—give exactly like Mackenzie Scott. However, I think this study and Mackenzie Scott’s philanthropy, in general, ask funders to look introspectively; are they giving in a way that demonstrates their trust in the nonprofits they fund? And beyond that, are they giving in ways that inspire nonprofits to think big and innovatively? That’s the collaboration that makes change happen.

*To learn even more about this report, CEP is having a webinar about it on November 30th, 2023.