MacKenzie Scott grantees share tips for managing her windfall grants

Getting large, unrestricted grants from funders is a rarity for most nonprofits: Normally, they spend hours toiling over lengthy applications for small grants that provide just enough to sustain their programs and pay their staff, with little to nothing for overhead costs. And the funder is still largely in control of how the money is spent. That’s why so many organizations have been intrigued by the emergence of billionaire philanthropist MacKenzie Scott, who has given away billions of dollars in unrestricted grants since 2020 with the ethos that nonprofits know best how to spend the money. Scott has given away more than $14 billion to more than 1,600 organizations. Most are United States-based groups, including 48 that reported working globally or in another country. Individual grants from Scott, who had a net worth of $21.7 billion as of Wednesday, typically total more than $1 million. Unlike most funders, Scott also hasn’t required the funds be spent in any specific way. So far, research has shown that the gifts have had “profoundly positive” effects on grantee organizations, particularly in improving their financial stability. But the impacts of Scott’s gifts, which could help sustain recipients for many years, are still being revealed. Scott doesn’t have a foundation and instead works with advisors to distribute gifts quickly and quietly from her donor-advised funds, usually without giving recipients more than a few weeks' notice. Leaders of some nonprofits have said these surprisingly large gifts have shifted the way they work and prompted them to re-evaluate their organizations’ strategies, including their communications and spending plans. “After receiving a large, unrestricted gift, leaders face a cascade of decisions across their organizations,” according to a new report from Panorama Global, a Seattle-based philanthropic advisory firm that has been researching the impact of Scott’s grants on the nonprofit sector. The firm’s “90-day roadmap” for organizations receiving large, unrestricted gifts released this week includes insights from more than 100 executive leaders from organizations that have received a grant from Scott. Panorama convened six groups of 20 nonprofit CEOs to conduct the research, Panorama CEO Gabrielle Fitzgerald told Devex. Each of those six groups became a “learning community” where CEOs could share lessons learned and compare notes with their peers, she said. Panorama expects to present its findings at the Skoll World Forum happening in Oxford, United Kingdom on Thursday. Among the key tips is for organizations to decide how best to talk about the work that led to them receiving the grant and who should be involved in telling that story. “Feature a range of people who contributed to this milestone, such as board members, early funders, and organizational leaders,” the report stated. Additionally, organizations should “reflect” on what the gift means for them and the communities they serve, it said. “Use the energy of the gift to plan,” Sheila Davis, CEO of Partners in Health, wrote in the report. Partners in Health is a global organization based in the U.S. It has received $52 million from Scott since 2020, including for its work in Africa, the Caribbean, Latin America, and the Middle East. “There will be a lot of pressure to spend the funds right away but that’s when thoughtful reflection with the organization’s leadership and staff about culture, priorities, and goals is most important,” Davis said. For many, Scott’s grants were the largest-ever unrestricted grant they ever received. Receipt of such a large gift also warrants “thoughtful engagement” with an organization’s board about whether there should be updates to current operations, according to the report. In some cases, leaders decided to continue with previously board-approved strategic plans after receiving a large gift. Yet others adopted a new approach of providing monthly updates to the board on how the grant was spent and some opted to create ad hoc board committees to develop a specific strategy for spending the grant. “When we received the gift, it was pretty clear to us as Co-CEOs how we wanted to allocate the funds,” Julius Mbeya and Ash Rogers of Lwala Community Alliance wrote in a statement for the report. Lwala Community Alliance is a community health work research and advocacy group with offices in the U.S. and Kenya. The group received a $7 million grant from Scott in 2021. It was “absolutely essential” for Lwala to create a special committee of its board after receiving the grant and bring in a third-party to facilitate a planning process that resulted in a full board vote, Mbeya and Rogers said. “While this took about three months and $8K towards the consultant, the end result was a strategy our board was 100% behind and it added confidence to other stakeholders - funders, staff, partners,” they wrote. Some boards encouraged leaders to “do something big” like create an endowment or financial reserve, or to increase staff salaries, the report found. Kenya-based humanitarian and development aid group Adeso previously told Devex that it would use its $5 million grant from Scott to create an endowment. Other organizations also have worked with their boards to create new funds for particular strategic opportunities. Nonprofits also need to develop an internal communications plan for talking about the grant regardless of whether they plan to publicly announce their gift, the report said. Not all of Scott’s grantees have made public statements about their grants, and some who have issued statements have not disclosed the total amount of the grant. A Devex analysis of reported data found that at least 446 organizations had not shared their grant amounts. Public communications plans around the grant may differ, but internally, it is important to inform staff about the grant because it will be “energizing and will likely boost morale,” the report said. Internal messaging is also instrumental in managing staff expectations about how the grant will impact the organization, per the report. “While awardees need to take time to carefully deliberate how they will put the award to use, we think it’s useful to be nimbler in articulating what the award represents and in naming the key principles that will guide future deliberations about the award use. These can help organizations to avoid internal confusion and celebrate more fully,” Vivek Maru, CEO of Namati, said in a statement. Namati is a U.S.-based social and environmental justice group that works in India, Kenya, Mozambique, Myanmar, and Sierra Leone. It received a grant from Scott in 2021 and has not disclosed the amount. Existing donors also should be informed about the gift and thanked for their support before any public announcements are made, the report said. It should be explained to them that their funding is still needed “even after this windfall gift.” Additional tips were to develop a financial strategy for using the grant funding that considers how best to address short- and long-term needs and to be slow and deliberate with their decision-making if they are flooded with new offers from vendors offering services. The period following receipt of a large grant will include growth and “discomfort” as many organizations will find themselves adding staff, restructuring, and making program changes. “This may also be a welcomed opportunity to re-cast and redefine organizational values and culture,” the report said.