Are We Brave Enough to Rethink Restricted Giving?
Lessons from MacKenzie Scott
In just five years, MacKenzie Scott has given over $19 billion in unrestricted funds creating a huge impact in the nonprofit world (Center for Effective Philanthropy 2023)
When Scott began giving large unrestricted gifts to nonprofits, there was fear in the funding world that nonprofits would not be able to handle the influx of money without restrictions on how they spend and in what time frame. Scott has been quoted as saying that she believes those closest to the work best know how to deploy the funds.
This is a novel belief in the funding world.
I have seen the opposite in play in many situations. I know when I was sitting in the Executive Director or Chief Operating Officer roles in nonprofits, often the reporting on grants was so cumbersome that sometimes I regretted applying for the $5,000.
Additionally, many nonprofits keep starting new programs rather than fund their core programs that are working well, have stood the test of time, and that have taught them so many lessons about how to do the work. They do this because often donors and funders are enticed by new programs and approaches.
Scott’s approach allows nonprofits to invest the funds in sustaining what works rather than creating new programs just to meet the funders focus areas.
There are four key findings in this report but the two that stuck out most for me were:
Nonprofit leaders feeling an increased sense of confidence in their leadership, reduced burnout, and increased innovations and improvements in how they did programming and fundraising.
Despite three years of nonprofit leaders consistently reporting positive effectives of the large, unrestricted gifts, foundation CEO’s continue to have mixed feelings on Scott’s approach.
Scott’s gifts don’t come with a specific timeline for spending the funds, so Executive Directors report that they can be more thoughtful, intentional, and use the money gradually which supports sustainability.
Some people had a fear that a large gift might damage their ability to procure small donations from donors. But instead, 75% of the people who received gifts from Scott indicate that the large gift actually made donors feel their organization was more credible based on the gift.
This report, by the Center for Effective Philanthropy (https://cep.org), is filled with goodness. I personally would love to see every donor, foundation, and government official understand that it is time to listen deeply to those who are closest to the work. And that making nonprofits jump through so many hoops with all of this reporting is actually having a negative impact on innovation, collaboration, and the ability to make positive impact.
I encourage you to read this regardless of your role.
Donors, board members, funders, and both aspiring and current nonprofits leaders need to discuss this and share it with others.
My hope is that we can begin to loosen the reins that restrict nonprofits and begin to trust them fully to do the work that they are the experts in.
I’d love to hear your thoughts on this topic. (Get in touch!)