A risky new philanthropic approach or enlightened new revolution?

Date: 13 Nov 2024

Citywealth

Philanthropist and Giving Pledge signatory MacKenzie Scott launched her philanthropy-related website Yield Giving in 2022 to manage donations.

Scott, whose net worth has been estimated to over $40 billion, has not finished giving, but with more than $15 billion granted to nearly 2,000 organisations, some meaningful patterns have begun to emerge.

The organisation name highlights Scott’s laid-back giving mentality—most of her donations are unrestricted grants. “Established by MacKenzie Scott to share a financial fortune created through the effort of countless people,” the website states, “Yield is named after a belief in adding value by giving up control.”

As a consequence in the last five years, MacKenzie Scott has gone from relatively unknown in the US philanthropic community to arguably its single most influential figure.

When she signed the Giving Pledge in 2019 following her divorce with Amazon founder Jeff Bezos, and wrote subsequent blog posts explaining her giving, Scott’s approach suggested an impatience to give away her wealth, and a belief in giving as a way to empower the good works of others.

Many other donors establish perpetual foundations, focus on specific issues, and exercise considerable control through reporting requirements, and board seats.

In her grantmaking, Scott has sought out larger organisations that arguably have more resources and robust operations. That makes sense as they will have the ability to use such large unrestricted grants effectively. But what happens to those that don’t have the ability to use it wisely or to smaller charities who might not be able to absorb it properly?

As a charity, receiving unrestricted grants is the holy grail and well run charities have the ability to know how best to use those grants. But when a charity doesn’t have the correct infrastructure, what then happens? Slugs of grants of $10m can be used without sufficient control and oversight and charitable funds wasted. I guess it’s all relative-she may argue that when you’re gifting $15 billion you must allow for some wrong decisions.

Mackenzie Scott also talks about the collective empowerment of nonprofit leaders      as the pathway to achieving good. The premise seems to be that good efforts and the empowerment of others have a multiplying, healing effect. Maybe or maybe not. Sounds good in theory.

In America, citizens are asking for more insight into the methods and      strategies of her giving as there is no real clarity on the process and how charities are chosen. And since reporting requirements are also opaque, one does need to wonder about the proportion of funds that may not be as effectively used as those who advocate for trust based philanthropy.

If we think about this in terms of the UK, where there is a limited pool of major donors, what then does that mean around governance and compliance and effectiveness? What could or should be the role of the Charity Commission with charities receiving such proportionally large grants in one go?

MacKenzie Scott’s methodology has not yet set a trend in Ultra High Net Worth giving overall either here in the UK or globally. Some charities say the $10m gift appeared, almost dropped from heaven and allowed them to hire more staff, perhaps invest in a new CRM system etc.

But what some have found is that if they didn’t simultaneously continue to work on raising new money and educating their donor base that they still need their support for the long term, then after three years the funds were gone and the Scott gift was just a moment in time. Although some aspects of the charity had developed they found themselves back to where they were before the gift had been given.

Most significant gifts require impact reporting and oversight and are not gifted in one go. Additionally, where such large scale gifts are involved, offering guidance, advice and infrastructure is crucial to ensure the leadership within the organisation is able to make the most of the opportunity afforded to them.      Yet, what are the positives that we can glean from Scott’s methodology of giving?

The concept of trusting a charity to know best how to use funds is important. Giving core costs, and not restricting gifts unnecessarily really can empower a charity and allow them to grow and develop where needed. But many charities still welcome a partnership, where funds are gifted over a few years, with reporting showing impact. Even better offer flexibility, if actually a charity needs more funds before Year 1 is complete, consider topping up early. And of course, the key lesson from Scott is to give in lifetime – don’t hold onto funds – legacies should be ‘as well as’ not ‘instead of’. A donor will always gain in life more than they give.

About the Author

Anna Josse is the Founder and CEO of Prism the Gift Fund (Prism). She set Prism up in 2005 to administer the giving of individuals, groups and foundations making significant gifts to charities, not for profits and social enterprises globally.

The objective, almost 20 years on, remains the same. Prism was created to make the act of giving as  simple  and  straightforward  as possible,  to  help  donors  support  the  causes  they  value. 

At Prism, we believe that we all have the power to make a difference and we each have a responsibility to do what we can to enable meaningful, lasting positive change. 

Last financial year Prism had donation income of almost £115m and distributed almost £70m globally. Prism is now heading into its’ 20th anniversary with a projected cumulative income of $1b and distributions to charitable activities globally of nearly $500m.  

Anna focuses increasingly on building new clients, managing key clients, and overseeing the ongoing development and growth or Prism. Previously, she worked in the high-tech industry and set up the Yazam EU office as Director of Investor Relations. Anna set up and ran the British arm of a USA based charity.  

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