To many nonprofit organizations that have received an unexpected gift from MacKenzie Scott it has been like going from living paycheck-to-paycheck to winning the lottery.

Most nonprofits live on the edge, with no more than a few months’ worth of reserves to cover payroll. Leaders and staff dedicate massive amounts of time to raising funds week after week, year after year. Those funds often come with conditions: spend on this, not that; demonstrate impact, don’t just document activities. So, when a relatively large amount of funding (for some nonprofits, an amount larger than their previous year’s operating budget!) is offered without the usual relationship-building and proposal-writing — and that one-time funding can be used for any organizational priority — it feels like winning the lottery.

Which might make us worry about the curse of the lottery. We’re all familiar with stories of jackpot winners who enter into periods of wild spending — the mansion! the luxury cars! — or are taken advantage of by avaricious friends and relatives. About 70 percent of lottery winners spend or lose it all within five years of the win. In a wink, the windfall is gone, and the winners are doomed to eke out a meager existence for the rest of their regret-filled life.

Will that be the fate of Scott grantees? Will nonprofits cast caution to the winds and make big, unwise spending decisions that leave them beyond their means in the medium-term? Will the grant permit them to drift from their mission, or somehow become less accountable? These concerns have been voiced by some, and perhaps wondered about by many others. The people who are most skeptical of this mode of giving may indeed be those who follow a different, more conventional model of offering small, restricted grants with renewals contingent on performance against agreed goals. But these are questions that also are being asked by grantees themselves. As the CEO of an organization that received a Scott grant in June 2021, I know I feel the pressure to maximize the benefits and minimize the risks of a large one-time grant.

The Center for Effective Philanthropy’s (CEP) report Giving Big: The Impact of Large, Unrestricted Gifts on Nonprofits” provides an answer to the question of whether the Scott grantees are risking the lottery curse. And the answer, as of now, is a resounding, convincing “no.”

  1. Are organizations that received a Scott grant focused on consumption versus saving for a rainy day? No.
  2. Are organizations that received a Scott grant spending the money foolishly? No.
  3. Are Scott grantees drifting from their mission? No.
  4.  Are organizations that received a Scott grant in a worse position to obtain funding from other sources? No.

Read the full article about MacKenzie Scott's giving by Ruth Levine at The Center for Effective Philanthropy.