5 lessons from Mackenzie Scott’s modern approach to philanthropy

Treasure Valley Family YMCA CEO David Duro was floored when he got a late-November call telling him to expect a $10 million gift from Mackenzie Scott, according to The Idaho Statesman. “I had to repeat back the number a couple of times to make sure,” Duro told the Statesman.

The gift came amid a very challenging year for the YMCA, based in my community of Boise, Idaho. With most facilities closed for months, the Y lost millions in revenue forcing it to weigh furloughs, layoffs, program cancellations, and taking on debt. And it was hardly alone. The Y was one of 60 YMCA and YWCA organizations and 384 nonprofits nationwide to share in Scott’s astounding generosity. Not only was the amount of her largesse—$4.2 billion in four months—astounding but so were the speed and process by which she gave it away.

For those of us who work in philanthropy, Scott—a philanthropist, novelist, ex-spouse of Amazon founder Jeff Bezos, and Amazon’s first accountant—is the donor we all dream about who makes a transformational gift without years of cultivation. When I was a fundraiser, we called those gifts “bluebirds.” Ones that just fly in the window when we need them the most. An occasional bluebird makes up for all of those gifts we work so hard for that just don’t happen, and their impact reminds us why we’re in the philanthropy business in the first place. Bluebirds may be a surprise to the recipients, but they certainly are not random. Someone like Scott is very intentional about making those gifts.

What can we learn from Scott’s approach?

Lesson 1: Transformational philanthropy is a team sport.

Scott used a team of advisors that sought information from hundreds of partners including subject experts, nonprofit leaders, volunteers and other funders. The selection of recipients benefitted from extensive collaboration, multiple perspectives, and the collective knowledge of all involved producing well-researched decisions with solid rationales.

That approach is more typical of women philanthropists who often believe it’s critical to thoroughly educate themselves before making funding decisions, according to research by the IUPUI Women’s Philanthropy Institute. They do this through consultation and research.

Lesson 2: Giving is both data driven and compassionate.

In addition to seeking knowledge from others, Scott’s team took a data-driven approach to identifying organizations with strong leadership teams and results, with special attention to those operating in communities facing high food insecurity, racial inequity, and high local poverty rates. The extensive data helped to winnow a pool of 6,460 potential recipients down to 384.

In a recent study by the Charities Aid Foundation, respondents said they give primarily out of a moral and ethical sense to help those in need and they feel an obligation to use their abundance to meet those needs. In Scott’s blog she refers not only to her sense of responsibility to use her abundance for good, but also to her excitement about the proliferation of individuals stepping up and doing whatever they can to help in the pandemic and the hope that inspires her. The excitement and hope were the impetus to get her process rolling and the data-informed decisions made it work.

“Because our research is data-driven and rigorous, our giving process can be human and soft,” Scott wrote.

Lesson 3: Trust the recipients.

At 2020’s pre-pandemic conference of Philanos (the national association of women’s collective giving organizations) I heard several speakers, including representatives of the Bill and Melinda Gates Foundation, advocate a simpler giving process. They promoted making well-informed grants but eliminating the complicated applications, unnecessary reports and multiple attached strings that burden already-stretched nonprofits and serve as barriers to more inclusive and diverse philanthropy. If the organizations are run by competent professionals and are doing good work, trust them to know how to keep doing it with additional resources.

Scott described her approach as doing due diligence on the front end so that she and her team could select the organizations to assist and “get out of their way.” This philosophy allowed her to “pave the way for unsolicited and unexpected gifts given with full trust and no strings attached.”

Lesson 4: Philanthropy is a driver of societal change.

The Council on Foundations last March released its “call to action pledge” in response to the global pandemic. The pledge called on foundations to make eight changes to how they give including increasing unrestricted grants, reducing reporting requirements and focusing on those communities most affected by the pandemic including racial and ethnic minorities, people with disabilities, and the poor. Almost 800 foundations have committed to the pledge.

The Center for Effective Philanthropy in December released a report on how these foundations have made changes to address racism and inequities. While there is still much work to be done to address the challenges of racism and inequity in grantmaking, there has been considerable progress. The percentage of respondents that reported implementing mechanisms to listen to grantees and communities least heard from increased 24% since the pandemic. Those supporting organizations led by people from racial and ethnic minority, disabled or poor communities increased 22%. Meanwhile, 66% have loosened or eliminated restrictions on existing grants, 64% have reduced what is asked of grantees, and 57% are now making new grants as unrestricted as possible since the pandemic began.

Scott and her team selected her recipient organizations for diversity in leadership so that the organizations could “bring lived experience to solutions for imbalanced social systems.” She realized that she had assets of particular value to nonprofits–money (which she acknowledges is a result of collective effort and social structures from which she benefitted), a “conviction that people who have experience with inequities are the ones best equipped to design solutions,” and the attention she can “call to organizations and leaders driving change.”

In a mid-year update, Scott reported that of the 116 recipient organizations she had selected by July, 91% of the racial equity organizations were run by people of color, 100% of the LGBTQ equity organizations were run by LGBTQ leaders, and 83% of the gender equity organizations were run by women.

Lesson 5: It’s all about impact.

Quoting Emily Dickinson’s poetry on hope, Scott was able to imagine beyond what is to what could be. That was not an easy task in a global health crisis, which she called a “wrecking ball on the lives of Americans already struggling,” but a shared ability of those engaging in transformational philanthropy.

Long gone are the days when donors gave out of loyalty, with no expectation of continued communication and engagement. Modern philanthropists see their donations as investments in a greater good. They want to know that their investments will have impact. Scott’s approach of thorough research and deep diligence to select the recipients of her philanthropy was designed to identify organizations with high potential for impact.

Her approach looked for organizations with strong leadership and a track record of results. She and her collaborators sought organizations with visible determination, creativity and compassion that were tackling the complex challenges of the pandemic while, at the same time, fulfilling their purposes to provide for basic needs and address long-term systematic inequities. As these organizations deliver on their missions, Scott predicts her philanthropy will continue for many years to come.

Laura and GG+A can help your organization apply and benefit from the lessons learned from Mackenzie Scott’s approach to philanthropy. To explore how, contact Laura at lsimic@grenzglier.com.