MacKenzie Scott has lessons for philanthropists. Are they listening?

MacKenzie Scott has given away billions to nonprofits in the last few years. But her signature approach and message has not yet caused strong ripples among other philanthropists, a Devex event on philanthropy heard yesterday. Gabrielle Fitzgerald, founder and CEO of Panorama Group, which helps philanthropists and nonprofits develop strategies to tackle social problems, said that her organization had researched Scott’s work extensively — but had not seen others follow in her footsteps. Scott is famous for her “trust-based” approach to philanthropy, which involves large unrestricted gifts to organizations. “The unrestricted funding was absolutely mind-blowing to people because it's so against the trend of the way philanthropy gives,” Fitzgerald said. She said most philanthropists gave away no more than 20% of their funds without restrictions. She also said that she had hoped other organizations would support the same organizations that Scott had backed. “So much credit to MacKenzie Scott for just putting money out the door and getting it to great organizations,” she said. “When we started our research, we really hoped we'd be tracking other philanthropists following in her footsteps, and we have not seen much of that at all.” Fitzgerald was joined by Anne-Marie Harling, managing director of philanthropic collaboration at Co-Impact, which brings together multiple funders to work together across the world. She talked about the importance of long-term, flexible funding and greater acceptance of the need to make changes in the middle of a grant program as circumstances changed and to properly resource overheads. “When is a business ever asked what their overhead cost is?” she said. “It just doesn't happen. Nonprofits are often taking on the most complex challenges that this world has to offer, and yet we hamstrung them with very specific funding, very focused line item reporting. It just boggles my mind that there isn't even more of a move towards more flexible funding, or an unrestricted funding model.” Harling also talked about the importance of more collaboration among funders. She said often many foundations would back the same organization, but would not coordinate effectively among themselves to provide support in the most helpful way. Both speakers also talked about the importance of foundations using every aspect of their influence, including their ability to speak out and advocate, and their ability to use the money they have invested, as well as the cash they give away. Both agreed that it was important for philanthropy to work closely with institutional donors such as the U.S. Agency for International Development, and multilaterals such as the U.N. agencies, to supplement, support, and influence. And both raised the issue of showing proper respect for organizations and individuals who were funded, particularly in the global south. Harling questioned the idea that capacity building work was always needed to help organizations get ready to receive cash. “I take issue a little bit with this concept of lack of capacity,” she said. “I don't actually think that's really the case at all. I think there's huge capacity and talent. I think a lot of it goes back to you know, these organizations have been underfunded for a really, really long time. And so actually the fact that they exist and are … achieving great outcomes, talks to their ability to work in a really resource-constrained environment.” Both speakers also addressed the need for philanthropists to work hard to transfer more power to a local level, including via participatory grant making, which involves local experts in all decision making. This was particularly true, they said, of governance, and how important it was that board members reflected the community that the foundation served. Harling talked about how when she had started a new fund, at least half of the board members had been recruited from the area the fund was working in. “Decision making; voice; power; sitting at the table; that really that really matters in these type of discussions,” she said. The panelists also discussed the rise of a major force in philanthropy: Donor-advised funds, which allow philanthropists to make a contribution immediately, and in many cases collect the associated tax breaks. But money can then be given away later. Both speakers cautioned that money from these funds was being given away too slowly in many cases. “I would encourage any philanthropists who are watching to really try and put some of these best practices, that are well established and proven, into practice sooner rather than later,” Fitzgerald said. “And if you have money sitting in donor-advised funds, there are many many groups that would be happy to accept it and spend it very effectively.”