“We don’t want to hire someone and then we have to fire them because the money runs out, right? We want to create something that’s meaningful and potentially self-sustaining.”

“Sometimes managing the dollars is a little more difficult, because it’s not necessarily their background, or maybe they just don’t have the staff to handle it.”

The contrast between what funders think will happen when nonprofit organizations are trusted with large, unrestricted grants and what these organizations actually do with the funds is on full display in a new research report from CEP titled Emerging Impacts: The Effects of MacKenzie Scott’s Large, Unrestricted Gifts. The first quote above is from a nonprofit leader discussing the long-term implications of hiring additional staff after receiving significant funding from MacKenzie Scott. The second is from a funder expressing concerns about how nonprofits, especially grassroots organizations, would utilize such funding.

At Co-Impact, a global philanthropic collaborative focused on improving people’s lives through just and inclusive systems change, we are a grantee and we are a funder. As a grantee, we have received grants from over 65 funding partners, including Scott. As a funder, we provide large, flexible grants to our program partners. Given this unique vantage point, I was eager to learn from CEP’s research.

From the first year’s report, released in 2022, we know that the leaders of nonprofits receiving Scott’s large, unrestricted grants found them to be transformational for their organizations and leadership and that few were experiencing the unintended negative consequences that many worried might come from Scott’s largesse.

In year two of the research, we’re seeing more of the same. Nonprofit leaders continue to describe expanding and improving programs, strengthening operational capacity, and few negative consequences. 90 percent of respondents also report deepening work on equity (racial, gender, economic mobility) in their programming. Significantly, almost all of the nonprofit leaders report that they are better able to achieve their missions, with many already able to report specifically on impact.

This feels right, and it is consistent with our own experience and with what I personally have heard in conversations with leaders of other recipient organizations. For us, Scott’s gift has been transformational in enabling us to be thoughtful in considering whether we are able to accept restrictions from other funders, such as limitations on operating costs; from the data reported, we are not alone.

Yet, there’s a major disparity between what nonprofits report and what other funders believe.

In this new report, CEP shares the results of an additional area of inquiry: funder perceptions, based on interviews with leaders and program staff at private foundations, community foundations, and United Ways. The overall finding is that more than three-quarters of the interviewed funders have concerns about the ability of nonprofits to handle large, unrestricted gifts.

Read the full article about the trust gap by Pam Foster at The Center for Effective Philanthropy.