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Wednesday, May 26, 2021

Analyzing MacKenzie Scott's Giving: Observations and Hopes

Six billion dollars. 

In and out of philanthropic circles, MacKenzie Scott’s $6 billion gift in 2020 has caused quite a stir — and that’s putting it mildly. Divided among a reported 500 organizations, the novelist and philanthropist’s generosity in 2020 was directed to Historically Black Colleges and Universities (HBCUs), tribal and community colleges, as well as organizations committed to social and human services, equity, climate change, and democracy. 

The dollar amount itself is staggering. Not only for its sheer size, but for the number of its beneficiaries, and the speed at which it was distributed. There’s also something else that was interesting. From what we could glean from Scott’s posts about her giving, these were unrestricted funds — a surprise for some considering the affinity many funders and grantors have historically had toward restricted funding prior to the COVID-19 pandemic. 

Mackenzie’s Scott giving wasn’t random. In fact, she worked with a team at the Bridgespan Group to find the nonprofits that best met her interests and philanthropic investment strategy. By giving unrestricted funds to these organizations, Scott is demonstrating trust-based philanthropy - she trusts that these organizations will make a difference in the cause areas she’s passionate about and will know best where to allocate the funds received.

At Charity Navigator, we applaud donors that are intentional in their giving. Unfortunately, working with a consultant often isn’t within reach of millions of American donors.  Scott’s giving strategy inspired us to analyze her giving to see how the organizations she supported aligned with Charity Navigator’s ratings. So, we broke down the data relative to our rating methodologies and cause/category information. 

Before We Get Started

  1. For the purposes of this analysis, we will be using a round number of $6 billion as the total amount donated by MacKenzie Scott in 2020. 
  2. We will also be using 460 as the total number of beneficiaries of Scott’s gift. From the organizations mentioned in her Medium articles, we could only determine Employee Identification Numbers (EINs) for 460 of them.
  3. We currently rate more than 160,000 nonprofits. Still, there are hundreds of thousands of nonprofits we don’t currently rate due to not having enough data (e.g., length of operations, minimum annual revenue, etc.) and limitations of our current criteria and methodologies.

Scott’s Giving Compared to Charity Navigator Ratings

Of the 460 nonprofits that received donations from Scott, we were pleased to see a healthy representation of Star rated and Encompass rated, as well as some unrated organizations.

  • 199 nonprofits were Star rated, which accounted for 43% of the total

            - 125 were 4-Star rated 

            - 69 were 3-Star rated 

            - Combined, 42% of all the charities received a 3- or 4-Star rating

            - 5 had a 2-Star Rating

  • 227 (49%) nonprofits were Encompass rated

            - 222 (48%) of all the charities received a passing Encompass rating of                 75 out of 100 or higher

            - 5 had a Encompass ratings of less than 75, falling short of earning a                 “Give with Confidence” attribution

  • 34 (7%) of the total we cannot rate using our Star or Encompass Rating System methodologies due to the aforementioned reasons (#3 in Before We Get Started section)

We have placed a spotlight on the number of 3- and 4-Star rated nonprofits since we often refer to such rated organizations as “highly rated”. This means, we can attest that they have strong Financial Health and Accountability & Transparency practices. Organizations scoring 75 and above within Encompass, also exhibit good Finance & Accountability, Impact & Results, or Community & Culture practices, and with that assurance, we recommend donors can "Give with Confidence." What can be learned from Mackenzie Scott’s Giving 90% of the nonprofits selected by MacKenzie Scott are highly-rated by Charity Navigator (3- and 4-Star rated or with passing Encompass rated scores of 75 and above out of 100). While we don’t have insight into the analysis that Bridgespan did in selecting the organizations supported, it’s galvanizing that her carefully planned and executed philanthropic strategy aligns with organizations we have vetted for three reasons:

  1. Efficient and transparent organizations were given significant funding and can now make a difference in pressing social issues;
  2. These donations came at the height of the pandemic and subsequent economic downturn making them even more critical to both the sector and the constituents these organizations help;
  3. Charity Navigator users who don’t have access to consultants to help with philanthropic strategy gain an added sense of trust, knowing that our ratings align with deep assessments by another trusted third-party.

To be clear, there’s tremendous value in working with a philanthropic advisor like Bridgespan - they help you assess your own passions, beliefs, and values and find organizations that align with them. Additionally, they can help foster conversations about specific areas of investments and to manage expectations of the recipient charities.

Major philanthropic gifts are increasingly being relied upon to provide necessary services within our communities. We hope that other high-net-worth individuals will follow MacKenzie Scott's lead in 2021 and beyond. Donations like hers can fundamentally change the ability of nonprofit organizations to accomplish their mission and help their local, national, international, and global communities. Authored by Stacy Steele, Director of Marketing and Communications, and Matt Dragon, Director of Engineering. The authors would also like to thank Kevin Scally, Chief Relationship Officer, and Moustafa Elshaabiny, Full Stack Developer, who assisted with the data collection referenced in this post.


Unknown said...

Thank you, MacKenzie Scott and Charity Navigator, for the gift of fresh perspectives in giving. Despite the extraordinary size of this philanthropy and the speed with which it was accomplished, there is much for all of us to take away from this example. For me, it is an even deeper appreciation of the vast and diverse network of operating charities that are more than worthy of our public support. We as Americans should never take this charitable landscape for granted.

Unknown said...

Thanks for sharing the information on this generation donation. The breakdown compared to Charity Navigators ratings was very insightful. It is great to know that Charity and MacKenzie Scott's giving were aligned and the rating system works.

Unknown said...

MacKenzie Scott for the new cabinet post, Secretary of Philanthropy. What a thoughtful and humane initiative. Congratulations.

Unknown said...

Thank you for this. This information is not only very helpful, but gives one encouragement during these seemingly dark days. Have a Blessed day.

Unknown said...

Impressive analysis by CN, and again further confirmation as to why I always consult CN's ratings before donating to a agency requesting support, and also why I support CN!