So, MacKenzie Scott gave you a grant. Now what?

Billionaire MacKenzie Scott’s approach to philanthropy has been unorthodox. Notably, she decided to forgo establishing a foundation and is instead giving huge grants directly to nonprofit organizations. Her giving is shaking up the philanthropic sector not only by raising questions about how quickly billionaires should donate their money, but also by leaving recipients to figure out how exactly to spend the largest one-time grants many have ever received. Scott’s announcement last month that she and her schoolteacher husband, Dan Jewett, had donated more than $2.7 billion to 286 organizations only added to her growing acclaim as one of a few billionaires giving money at a breakneck pace. Scott, whose net worth is estimated to be more than $60 billion, vowed to give away at least half of her wealth when she joined the Giving Pledge in 2019, shortly after divorcing Amazon founder Jeff Bezos. She has donated roughly $8.5 billion to charities since July 2020. She is now giving away more money annually — and faster — than billionaire philanthropists such as Warren Buffett, who recently said he’d largely held off on charitable donations until later in life to allow the interest on his wealth to compound. Scott is showing that as philanthropy evolves, there can be different ways of giving that are not modeled after major institutions such as the Ford Foundation, Open Society Foundations, The Rockefeller Foundation, or the Bill & Melinda Gates Foundation, said Ford Foundation President Darren Walker. Scott has said that she looks for organizations that have been “historically underfunded and overlooked” and tends to select grantees that serve marginalized communities, such as civil rights advocacy and refugee resettlement groups. “As a philanthropist, my hope is that more philanthropists will emerge and fund using the lens of justice, equity, and addressing historic norms that have marginalized far too many people,” Walker wrote in a statement to Devex. The Ford Foundation, for its part, has tried to build more flexibility into its grant-making in recent years. No-strings giving Scott grantees now find themselves in the unusual position of benefiting from a new model of philanthropy that skips traditional steps such as grant applications and reporting requirements. “Normally, when you are talking about any sort of significant grant, you’ve had time to develop a proposal and sort out the priorities,” said IDinsight CEO Ruth Levine. “And so once you get the money — and it’s often less than you think you’re going to get — the money already has a home.” IDinsight, which provides global data and research on development issues, received a $12 million grant from Scott last month. The organization is still “sorting through” the best ways to spend the money, Levine told Devex shortly after the grants were announced. The Center for Effective Philanthropy was another beneficiary in this latest round and received a $10 million grant. The organization provides data and other services on how donors can be more effective in their giving. Phil Buchanan, CEP’s president, said the group is still determining how to handle the sudden influx of cash, which he describes as “roughly the size of our budget.” “As a philanthropist, my hope is that more philanthropists will emerge and fund using the lens of justice, equity, and addressing historic norms that have marginalized far too many people.” --— Darren Walker, president, Ford Foundation Still, he said he already has some ideas. For example, CEP isn’t planning to use the money for its ongoing operations because it has revenue to cover those costs. “So we’re going to use these resources for things that we wouldn’t have been able to do otherwise,” he said. Work will fall into three categories: entirely new initiatives that are consistent with with CEP’s mission and goals, investments in the transformation and improvement of existing efforts, and improving the organization’s long-term financial stability. He also said CEP has begun reaching out to past recipients of Scott grants in search of guidance on how to spend the money. A prestigious grant Living Goods, a past Scott grant recipient, is among those groups that have been approached by newer grantees. One of the big questions has been how to celebrate the prestige of receiving an award from Scott while also making it clear that they may still need additional funding, said Living Goods Executive Director Lisa McCandless. “I’ve definitely had some folks approach us just around how to hold both of those realities and communicate both of those realities,” she said. Scott also has encouraged other donors to continue giving to the hundreds of organizations on her lists. Living Goods was among the grant recipients in the first round Scott announced in July 2020. McCandless said the confidentiality agreement the group signed prohibits her from disclosing the dollar amount that Scott provided. But it was enough to free the organization from having to fundraise for most of the past year, she said. Living Goods supports community health workers by collaborating with government partners to offer training. McCandless said the grant from Scott was for “quick, real-time, rapid” COVID-19 response, which made it easier to discern how best to spend it. She also said that Living Goods was able to discuss the level of funding needed when it was contacted by a Scott representative. “I really just think it overall bolstered our COVID response and allowed us to save lives because we were able to move more quickly at a time when time really mattered,” she said. McCandless said that Living Goods was able to halt proactive fundraising last year after receiving the grant and, in some cases, was able to suggest that existing partners provide money to other organizations instead. She also said that because the grant didn’t include reporting requirements, the staff has been given “breathing room” to focus on other priorities for the organization. Reporting requirements While nonprofits appreciate the flexibility of Scott’s approach, not all donors feel comfortable lifting reporting requirements that help them track how their funds are being spent and providing unrestricted money, known as general support grants, according to Cynthia Rowland, an attorney that advises donors and nonprofits. She said that is often the case with smaller foundations with more limited funding, as well as those that only want to fund specific projects. “I have some lovely clients that run wonderful foundations, and they have as a policy position that they’re not going to do any general support grants because they want to know exactly how their money is deployed,” she said. Larger foundations in which staff members have to answer to a board also are more likely to prefer reporting requirements that can help them demonstrate the work that they did throughout the year, she added. But the downside for nonprofits is that restricted grants don’t often include much funding for overhead expenses, such as staffing, Rowland said. The kind of unrestricted grants being provided by Scott give charities the freedom to do what they and their boards think needs to be done. “And that’s huge,” Rowland said. “That is just huge.” The grant that BRAC — an international development organization based in Bangladesh — received from Scott last year was a “tremendous gift,” according to Shameran Abed, who heads programs related to microfinance and lifting people out of extreme poverty. BRAC received $65 million from multiple donors through The Audacious Project, an annual competition sponsored by TED that asks nonprofits to propose “bold ideas.” The largest portion of that funding came from Scott, according to Abed, who also said he couldn’t disclose the full amount of the grant. BRAC has been using the funding to work with government partners on a plan to lift 21 million people out of extreme poverty. The flexibility included in the grants provided by Scott and other donors has been very helpful, Abed said. “This is the kind of thing that can really spur innovation and new ideas and testing,” he said. “Usual grants come with so many specifics that it’s really hard to build in learning and innovation, even though every grant says we want something innovative.”