MacKenzie Scott’s bold leap into philanthropy— an influx of over $17.3 billion in unrestricted grants in less than four years — disrupted a pervasive starvation cycle for more than 2,300 nonprofit organizations.

Panorama Global, through our Collaborative Learning for Impact Philanthropy initiative, has worked with more than 200 leaders of these groups as they navigated putting the gifts to work. We heard and documented important insights from these leaders that illustrate the impact of this large, unexpected gift.

Almost without exception, the recipients of Scott grants we spoke with are ready to act boldly to achieve their missions. The Scott funding, which came with no strings attached, was generally allocated after discussions with an organization’s board. Almost every organization started by addressing some long-overdue infrastructure challenges, whether it was updating technology infrastructure or topping up salaries.

Some organizations chose to create endowments or rainy-day funds, while others went deeper or wider in a program area. Many organizations used their gift to strengthen collaborations in their community or field, often making sub-grants to others who had not received a Scott gift.

As a result, these organizations felt poised to make a greater impact on whatever issue or geography they were focused on. For many, the Scott gift felt like an endorsement of many years of hard work, and/or recognition of an organization’s leadership and focus on equity.

As the excitement and novelty of the unexpected gift wore off, many leaders were faced with new challenges. While the Scott grant was seen as a ‘seal of approval’ for some donors, others took it as a sign their funds were no longer needed and could be better utilized by smaller organizations.

How do Scott’s gifts fit into the broader charitable landscape?

The 2,300 organizations that received gifts from Scott are often thought of as the lucky ones by their peers. But even the largest and best positioned organizations are still facing an uphill battle in the overall fiscal landscape for nonprofits.

While the latest report by Indiana University’s Eli Lilly School of Philanthropy projects an increase in giving in the next two years, the trends have varied widely recently, due to COVID and economic uncertainty, making it a challenging task for organizations to anticipate how giving trends will impact their bottom line each year.

These projections may also be misleading, due to the recent surge in charitable gifts to Donor Advised Funds (DAFs), which now handle over one third of charitable giving. Money going into DAFs is now outpacing individual gifts to charities by a margin of 4:1. Of the top seven largest charities in the U.S., six are DAF sponsors managed by financial institutions like Fidelity and Schwab. And the increase in assets in these wealth-holding vehicles have been growing annually.

So, while on paper it can look like philanthropic funds are flowing, once money is given to a Donor Advised Fund (and the donor receives their charitable deduction), there are no requirements about when these funds must be spent. The Chronicle of Philanthropy reported that ‘DAFs held nearly $230 billion in assets by the end of 2022 and distributed some $52 billion to charities that year.’

There are several other trends that point to the challenging fiscal landscape for all nonprofits. Last year, Giving USA reported that individual giving to nonprofits in the U.S. has dropped by 13.4 percent when adjusted for inflation, partly due to changes in tax deductions. And a survey by Candid found that more than a quarter of foundations plan to decrease their giving.

Poised for impact

When we began tracking Scott’s grantmaking three years ago, we anticipated assessing the impact on the philanthropic sector as well as the nonprofit sector. To date, the impact on the philanthropic sector has been limited.

However, we believe the 2000 plus organizations that received Scott’s gifts are poised for increased impact.  Each organization is heavily vetted by Scott’s team in advance of a grant being announced, so donors can feel confident that the organizations are sound. Within months of receiving her gift, most organizations report significantly stronger organizational health and feel well-positioned to continue operating at the increased annual budget that the Scott gift allowed. Scott lists all the organizations that receive her gifts on the Yield Giving website, which has excellent functionality for sorting by geography or one of the 50 plus issue areas.

We believe there are lessons for funders to learn from Scott’s giving even if they don’t choose to support one of the organizations in her portfolio. She has adopted long-discussed, but little-utilized, best practices in philanthropy: Give bigger gifts.  Provide funding without strings attached. Trust your partners.

We hope that Scott’s funding is a spark for change in increasing the flow of philanthropic capital to nonprofits, allowing them to have the impact they are poised to achieve.

Gabrielle Fitzgerald is the Founder and CEO of The Panorama Group.