Cosmic

Philanthropist MacKenzie Scott Proved Unrestricted Funding Works. Follow Her Lead.

Funders: To truly help nonprofits maximize impact, you must provide unrestricted funding, no strings attached. Learn how Scott did it, then follow her lead.

Eric Ressler
April 1, 2021
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In 2018, a year after he was named the richest man in the world, Amazon CEO Jeff Bezos finally stepped onto the public philanthropic stage. He began with two major initiatives, but he treated them in very different ways.

One program followed the traditional, highly structured funding model, complete with grant applications and funding requirements. The other program featured unrestricted, no-strings-attached funding.

Essentially, Bezos A/B tested philanthropy.

So which philanthropic method came out on top?

In 2020 novelist and philanthropist MacKenzie Scott (and Bezos’ ex-wife) took a very visible side. Over the past year, Scott boldly made generous contribution after generous contribution — to the tune of $4.1 billion across 384 organizations in the United States and Puerto Rico.

And she’s far from finished.

Bezos is thought to be a disruptor in the business world. But Scott is proving to be a disruptor in her own right — and for a much greater reason.

Here’s what we’ve discovered from Scott’s revolutionary philanthropic philosophy and how funders can follow suit.

To Maximize a Nonprofit’s Impact, Unrestricted Funding Rules

Traditional funding methods are extremely hands-on. Lengthy applications, funding restrictions, and reporting requirements are a fact of life for nonprofits seeking funding. As a result of this model, organizations struggle to complete the real work because they’re jumping through hoops to meet the requirements of their funding.

Whereas an empowering approach provides income to financially starving nonprofits with a simpler application process, or none at all.

Unrestricted, no-strings-attached funding is nothing new. However, it’s still the exception and not the rule.

And sure, unrestricted funding means relinquishing some control for funders, something that Bezos no doubt learned when he tried it out. But gifting large sums without limitations gives social impact organizations more confidence and control over the changes they’re able to make — and more time to do so.

Effective Unrestricted Funding Starts With Research

If you’re a funder on board with this approach but don’t know where to start, don’t worry. Scott didn’t either. But she knew that identifying the right organizations to donate to was going to take research and collective brainpower.

Scott took some key steps to find the organizations that would make the most out of her contributions:

  • She assembled a team to identify, research, and vet the best-fit organizations. That team included representatives from historically marginalized communities. She asserted that “people who have experience with inequities are the ones best equipped to design solutions.

  • The research team focused on analyzing organizations tackling food insecurity, racial inequality, high poverty rates, and low access to philanthropic capital in their communities — all of which became more pressing in light of the events of 2020.

  • Together, she and her team interviewed field experts and nonprofit leaders alike, made phone calls to funders, and talked to volunteers with decades of experience. Gathering all of this data guided the team to discern where Scott’s money should go.

  • Ultimately, the organizations that qualified showed proof of impact, were well-managed, and made effective use of funding.

Scott and her team notified the chosen organizations that they would receive the money upfront, with no restrictions. And then they got out of the way.

In the open letter Scott shared about her philanthropic activity, she said it best: “Because our research is data-driven and rigorous, our giving process can be human and soft. Not only are non-profits chronically underfunded, they are also chronically diverted from their work by fundraising, and by burdensome reporting requirements that donors often place on them.”

4 Tips to Kickstart an Unrestricted Funding Method

Funders, it’s time to trust organizations with your donations so they have the time, energy, and resources to devote to turning their vision into reality.

Here’s what you can do to make the most out of your approach to unrestricted funding.

1. Do your research. When choosing the organizations that will receive your unrestricted funding, due diligence and research matter. Gathering data about the track record of organizations, how they are managed, and what progress they have made is crucial in identifying the causes and organizations that make the best use of their resources. Consider focusing your research on under-resourced organizations who are also poised to make a powerful impact in their communities with the right funding.

2. Form a team. Invite people who work in the ecosystem on which your philanthropy focuses to assist in your research. They will understand the issues on a deeper level and recognize which organizations have the potential to maximize impact.

3. Re-examine your parameters. When analyzing your approach to giving without limitations, your giving parameters shouldn't be set in stone. Rather, you should plan to refine and reexamine them often. If you always give one sizable donation to the same organization, for example, consider giving to organizations that don’t normally see larger dollar amounts.

4. Think of today’s issues. Be aware of the continued effects of the economic fallout of 2020 and how your funding could help organizations that have more pressing needs. At the same time, consider organizations that have seen increased momentum because of the events of the past year. As evidenced by grassroots giving campaigns, and millions marching in the streets, momentum is building behind systems-level change around issues like climate change, policing, and structural racism. Your contributions could help those organizations bound closer to the finish line.

Broadcast Your No-Strings-Attached Funding Approach — and Get Other Funders On Board

In her own words, Scott is distributing her wealth "back to the society that helped generate it". If that resonates with you, it's intentional. She's leading the funding sector by her own generous, bold example.

And she's not being quiet about it.

If you are in a position to give generously, you’re also likely in a position to influence others in your circle to take a disruptive approach with their philanthropy. Like Scott, you have the power to inspire like-minded funders in terms of how much and to whom they give — often more than you realize.

Take these steps to broadcast your unrestricted philanthropy and rally others to join you:

  • Don’t be shy. Use your brand to discuss an unrestricted funding approach to others who also have the ability to give generously. Talk openly to your network about an empowering model of giving in a way that encourages them to join you. Good begets good. Spark something good.

  • Amplify important voices. Funding isn't the only way to support the organizations you serve. Magnify their messages to attract more donors and engaged supporters. Tell their story. Spread the word.

  • Join the conversation. If your philanthropy is tied to a defined mission like climate change, join the conversation by adding your thoughts, opinions, and experiences to the larger conversation. Doing so attracts much-needed media attention and awareness to the issue at hand, inviting more supporters to be aware of and engage with your cause.

  • Be a partner. Facilitate cross-marketing efforts and grassroots fundraising events between the different organizations you’ve connected with. Earned media attention becomes much more likely the better your efforts are marketed. And, a bump in email list numbers is a bonus that comes with widespread attention. Another solution is cross-marketing, which is a great way to build community and synergistic relationships. All of these consensus-building actions are catalysts for change over time. Ideally, systemic change.

  • Join the Giving Pledge. Make a bigger commitment to philanthropy by joining the Giving Pledge, a commitment to dedicate the majority of your wealth to organizations in need around the world. You’d join Scott and others who know their fortune is better spent giving back.

When Scott unabashedly shared her philanthropic mindset and details of her contributions, she was at once heartfelt and strategic. She called on everyone to join her by contributing time, money, and voice to worthy causes across the country.

Funders, it’s time to follow her lead.

Be vulnerable in your giving, confident in your beneficiaries, and hopeful about the future. In all of this, there should be no strings attached.

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