Reimagining philanthropy: Learning from the MacKenzie Scott experiment

MacKenzie Scott’s distinctive approach to giving is an ongoing experiment, one that stands out as an outlier in the world of philanthropy. Despite its unique nature, Scott’s method offers invaluable lessons for philanthropists globally. In the relatively few years since she began, Scott has given away more than $16 billion, granting staggering sums to non-profits that often exceed or even double the recipient organisation’s annual budget, and doing so without burdensome application or reporting processes. As we digest the findings from the second year of our three-year study at the Center for Effective Philanthropy (CEP), it’s important to explore the broader implications of this experiment for the philanthropic sector, and to include these findings in conversations about funding models and assessments of the merits of flexible funding, such as the one that our colleagues at Philea have put forward in this recent article.

An experiment in unconventional philanthropy

Scott’s giving, characterised by sizeable, unrestricted grants with minimal reporting requirements, challenges common philanthropy norms. This experiment in unconventional philanthropy has shown promising results with almost all non-profits describing these grants as strengthening their organisation’s ability to achieve their mission and their ability to reach the fields or communities where they seek to have impact.  For philanthropists around the globe, this model presents an opportunity to reassess the balance between oversight and the freedom for non-profits to direct funds where they’re needed most.

Despite the largely positive opinions expressed by fellow funders, Scott’s strategy has also been met with concerns and a certain level of mistrust by funders regarding the capacity of organisations to manage and utilise large funds responsibly. The CEP study, however, shows that only a small fraction of non-profits report encountering significant challenges: 80% report no challenges, 18% minor challenges and only 2% report encountering major challenges. This suggests that, even if Scott’s approach remains an outlier, there is merit in considering larger, less restricted grants as a viable option for impactful giving.

Credibility and fundraising in the wake of large grants

Scott’s experiment and the CEP research has also shed light on the effects of large grants on non-profit fundraising efforts. For many organisations, Scott’s contributions have served as a seal of approval, enhancing recipient organisations’ credibility and attracting additional funding. This indicates that large grants can serve as powerful endorsements, catalysing further investment and encouraging other philanthropists to consider how their own giving could leverage additional funding for the organisations they support.

Strategic use of funds for long-term impact and pursuing equity

One of the key concerns with Scott’s approach has been the potential for a financial cliff, given that her gifts, though large, are one-time grants with no renewal process. However, the majority of recipient organisations have used the grants to expand their programmes, while anticipating no or minimal difficulties in covering ongoing costs after their Scott grant is expended. This aspect of Scott’s philanthropic experiment offers a crucial lesson in the importance of strategic, future-focused funding that ensures lasting impact.

Scott’s experiment has also placed a strong emphasis on equity, an aspect that resonates deeply with global shifts in philanthropic priorities in the wake of the COVID-19 pandemic. The study highlights how organisations have utilised Scott’s grants to intensify their work on equity, which can serve as a blueprint for philanthropists looking to contribute to systemic change and social justice.

Unrestricted giving and sector learning

The absence of rigorous reporting requirements in Scott’s giving model might seem counterintuitive to learning and accountability. However, the experiment reveals that such freedom can lead to innovation and valuable insights for the sector. This serves as an important lesson for global philanthropy — that learning and impact can flourish under conditions of trust and flexibility. And, make no mistake, trust and flexibility does not mean going blindly into funding organisations; Scott engaged knowledgeable advisors to conduct the necessary due diligence and vet the organisations that received grants.

The transformative potential of flexible funding

Scott’s giving experiment has underscored the transformative potential of flexible funding. The grants have not only enabled organisations to expand their reach and impact but also to strengthen internal capabilities and adapt to changing circumstances. This reinforces the idea that philanthropic giving, when approached thoughtfully, can have a profound and lasting effect, and that trust can play a crucial role in creating philanthropic impact.

Reflecting on the outlier

While Scott’s giving is indeed an outlier, its outcomes offer a spectrum of lessons. It challenges philanthropy globally to reflect on the power of trust, the value of strategic flexibility, and the importance of designing grants that enable sustainable growth and systemic change.

As this philanthropic experiment continues, it presents a unique opportunity for the global community to learn, adapt, and potentially reimagine the future of giving. By acknowledging its experimental nature, philanthropists can proceed with a blend of caution and optimism, taking the best from Scott’s approach to enrich the broader practice of philanthropy.