Has the MacKenzie Scott effect come to naught?

When MacKenzie Scott began an epic giving spree in 2020 that, to date, has resulted in more than $14 billion in grants to over 1,600 nonprofit organizations worldwide, many philanthropy watchers were hopeful it was the dawn of a new era. However, three years later, Scott’s style of giving, which provides large sums of money without any restrictions on how recipients spend it, is still the exception in a world where many of the wealthiest people give away less than 10% of their annual income, if at all. And with economic concerns growing globally, the odds of more donors joining her rank seem even slimmer. “When MacKenzie Scott started making those gifts, I was among many people who were hopeful that maybe this was going to be the beginning of a new resurgence of funding and that other philanthropists were going to say ‘look at all these amazing organizations that have already been vetted and are ready to be funded,’ Gabrielle Fitzgerald, founder of Panorama Global, a philanthropy advisory firm that has examined the impact of Scott’s giving. “We haven’t seen that. And, sadly, there’s now talk of a nonprofit recession,” she said at an event on windfall grants hosted by Panorama and the Ford Foundation during last week’s United Nations General Assembly. About 27% of U.S.-based foundations expect to decrease their giving in the next year, Fitzgerald noted, referring to a recent survey. Meanwhile, a growing number of funders are using donor-advised funds where they can deposit charitable money and receive a tax break under United States law without a deadline to pay out of the funds, she said. Overall, charitable giving in the U.S., where many of the world’s wealthiest donors live, declined last year by 3.4% in current dollars, or roughly the equivalent of more than 10% after adjusting for inflation, Giving USA data showed. Philanthropy experts are concerned about how nonprofits will fare during the downward trend, which follows surges in donations during the COVID-19 pandemic. “Declines in giving like those we saw in 2022 have a tangible impact on nonprofit organizations, especially those that rely on charitable dollars to support their daily work,” Amir Pasic, dean of Indiana University’s Lilly Family School of Philanthropy, said in a statement about the Giving USA data. This doesn’t mean that the well of large, unrestricted gifts has completely dried up. Scott hasn’t made any public announcements about her giving since December of 2022 but has quietly released at least $146 million total in grants ranging from $1 million to $15 million during the first half of this year, according to a tally compiled by The Chronicle of Philanthropy. However, Scott’s giving alone isn’t enough to head off a potential scarcity cycle for nonprofits. Even those nonprofits fortunate enough to have received a Scott gift in the past “are facing the reality that it’s unlikely that they’ll be able to get another grant of that magnitude,” Fitzgerald said. There are a few other major funders who want to keep up the momentum. The Ford Foundation’s $1 billion program, Building Institutions and Networks (BUILD) initiative that launched in 2015 and was renewed in 2021, aims to provide multi-year, unrestricted grants that support “organizational resilience” within the nonprofit sector, according to Victoria Dunning, a senior program officer on the BUILD team, who also spoke at the UNGA side event. Programs like BUILD and models of giving like Scott’s have been developed to “understand and recognize the true costs of project-based funding,” and they will likely continue to influence the rest of the sector, even if the size of grants decreases amid economic concerns. “It’s true that times of economic uncertainty have been associated with reduced grantmaking, but our sense is that funders increasingly are focused on not only how much they are giving, but also how they are giving,” Dunning told Devex.