In the past year, Panorama Global’s Collaborative Learning for Impact Philanthropy (CLIP) initiative analyzed data to better understand MacKenzie Scott’s giving and engaged grant recipients through peer learning. Directly beneath the enthusiasm expressed by Scott grant recipients, there is an ongoing acknowledgement of the power imbalances between funders and nonprofits.
Reluctant to voice their opinions in the open, fearing the repercussions of criticizing their primary sources of support, through peer learning communities, leaders authentically shared their experiences and activated a collective power and message.
Panorama’s findings underscore what nonprofits have been saying for decades: extraordinary power over financial, social, and technical capital by an elite few hampers the potential for impact across the entire philanthropic ecosystem. Through our Collaborative Learning for Impact Philanthropy (CLIP) initiative, we gathered and analyzed data to better understand MacKenzie Scott’s giving and engaged more than 110 Scott grant recipients during the past year. What we heard from nonprofit leaders is the need for deeper collaboration between funders and nonprofits to jointly solve complex social challenges. They also called for change in the areas of partnership, influence, and funding, signaling a world where big bet, trust-based partnerships are the standard rather than an anomaly.
Nonprofit leaders emphasized how critical trust and strong relationships with funders are in driving forward their impact. This includes the mindset with which funders approach the work, the empathy and understanding toward their nonprofit partners, and the way in which funders gauge progress.
Social change nonprofits understand that foundations rely on their work for success yet it’s not always a two-way street; too often philanthropic funding often carries a legacy of racism or colonialism. Scott grant recipients appreciated that her funding did not “underwrite foundation’s work or fund a foundation’s mission,” and that it respected the foundation’s expertise and relationships. One leader wearily expressed that most funders “spend way too much time developing their intellectual capital and trying to be thought leaders. Philanthropy should step back and let the community be thought leaders.” Another said, “Funders should see us as partners in a common mission… we help them access a level of society they cannot reach by themselves.”
Nonprofit professionals are overworked and underappreciated for the value they bring to society. They are paid substantially less than their counterparts in foundations and government. Leaders of color encounter added challenges – microaggressions and racism, fewer grants, and less trust than their white peers. Many nonprofit staff live in a space of persistent fear and job insecurity due to the sobering reality of funding ending. Nonprofits believe funders ask them to do work with “less time, people, and overhead than they would want for the same work.” Nonprofits rarely see those with power talking about – let alone working to address – these or other systemic issues.
Nonprofit leaders desire collaborative conversations about reaching milestones that point toward momentum and long-term progress. They recognize that reporting to funders can be helpful; it aids in evaluation of programming and deeper reflection. Yet almost every nonprofit, spends an extraordinary amount of time managing the differing reporting requirements and timelines for each funder. One leader put it this way, “Instead of micromanaging our tactics, funders should trust in our tenacity and talent to get the work done.” Another was more pointed in saying, “Funders, please abandon your need for immediate gratification and trust in us and our work.”
Peer learning community participants repeatedly emphasized that systemic problems require long-term investment. One leader said, “Funders often push for immediate, measurable results, but sometimes change takes years to occur and the result doesn’t manifest immediately.” According to another, “We are fighting for something that is achievable ultimately, even if the problem won’t be fully solved with a few years of philanthropic investment.”
Nonprofits value cultivating relationships with donors, emphasizing that non-financial resources are equally critical to accelerating change as financial ones. Building on the trust-based nature of the Scott gifts, peer learning community participants imagined the possibilities for funders to use their social and technical capital and power.
Nonprofits recognize that funders are often well-connected in the community and in specific issue areas. One of the real assets funders have is their convening power and ability to align support for an issue. Publicly backing nonprofits helps champion the issues they are addressing, while at the same time de-risking them for other funders.
Scott funding allowed for much-needed nonprofit investment in infrastructure. As funders look for measures of sustainability, nonprofits expressed a desire for non–financial support in areas that build their capacity – technology and data management, human resources and hiring, and leaderships development. One leader wished that funders “invest as much in our strategic planning and intellectual capital as they do in their own.”
Nonprofits feel that they are embroiled in systems – including philanthropy – that undermine their best work. Power imbalances between funders and nonprofits can perpetuate the same systems that manifest the issues organizations are working to solve. One leader suggested “if foundations really want to change and make our world better, they need to seriously invest with the intention to invest, not to beat taxes.” Another said, “We don’t have the right political coalition for us to push back on philanthropy. There is no safe space.” They urge their funders and other powerful individuals to help take up the fight.
Big grants are essential, but how funders fund matters too. Nonprofits described how – before the Scott grant – they acquiesced to funder requirements to survive. They didn’t feel grants came from a place of strength and confidence in their ability and work based on funder interactions. Scott’s grants allowed them to say no to bad grants – those that don’t align directly with their mission or had too many requirements to be worthwhile. The following are four wishes about funding nonprofit leaders want to convey.
Many foundations limit grants to a certain proportion of an organization’s budget because of concerns about sustainability or capacity. Organizations have long believed that this lack of absorptive capacity is a myth, and that Scott’s gifts should deliver the final blow. The median grant size in Scott’s first three rounds of giving was $8 million according to the Center for Effective Philanthropy. This is more than eighty times the size of the typical foundation gift. Yet we didn’t hear a single instance of a nonprofit overwhelmed by the amount. While these were the largest grants ever received by many organizations, leaders strategically allocated the funds to address short-term needs and set themselves up for the future. As one organization said, “Lack of trust has defined funding to organizations in Africa, assuming we don’t have the capacity or systems to handle large or unrestricted grants. The Scott grants prove we have the capacity.”
Flexible grants allow nonprofits to respond quickly to emerging needs, address unexpected challenges or cover operational costs and critical programs that other funders will not. There’s some indication that restrictions in both the application process and on funding are finally loosening.1 Unfortunately, these changes are too little too late, and nonprofits note that some foundations are becoming even more restrictive. Nonprofits simply cannot succeed under the current paradigm. Funders who do provide unrestricted grants report that it leads to open and candid discussions with grant recipients, greater insights into the factors that either hinder or promote social impact, and valuable lessons to guide future grantmaking. Scott grants were described as “a hope and a light” allowing nonprofits to “stay alive.” And it frees organizations up, with one leader saying this about Scott’s unrestricted funds, “WOW. We can now support the growth of our organization and concentrate on our work, not the fundraising needed.”
Nonprofit leaders see the connections across issues and organizations, even if funders do not. Scott grant recipients were thrilled when their collaborators received funding and dismayed when they didn’t. One grant recipient shared how limiting funder priorities were, saying “gender and racial justice is key for so many other issues.” Another said, “All of the issues we’re fighting for are interconnected and intersectional,” noting how important it is to help funders realize how social issues are intertwined and the need to fund the ecosystem to change systems.
Within the learning communities, we heard dozens of examples of how the Scott grants had a very real psychological and emotional effect. Philanthropic investment is a catalyst for change, helping to create evidence, test new ideas and scale what works. The Scott grants were long overdue and what nonprofits needed all along. Scott grant recipients are stronger organizationally and ready to do their most impactful work. Yet one grant was not enough. Several participants shared that the Scott grant was ten to twenty percent of the total they were trying to raise to fulfill their current strategic plan. If the global issues over the past several years haven’t highlighted the need for major increases in philanthropy, it’s hard to imagine what else it will take. As one organization leader shared, “We need to liberate ourselves from the donor starvation cycle!”
The organizations participating in the Collaborative Learning for Impact Philanthropy (CLIP) peer learning represent nearly ten percent of MacKenzie Scott’s grant recipients to date. They are relatively large and established organizations, and highly scrutinized, with strong leadership teams and results. Mackenzie noted “Because our research is data-driven and rigorous, our giving process can be human and soft.” This group of organizations bring unique perspectives that can inform the critical challenges of our time - economic inequality, racial inequity, climate change and the fight for democracy. They should also inform the long overdue transformation needed in the philanthropic sector.
The Scott grants allowed organizations to envision how, at their best, funders and nonprofits can collaborate on ambitious concepts to foster social change. One person phrased it this way: “It took a population of people who are conditioned to beg for money and having to justify every penny and it communicated that we trust you. It took the very untenable power dynamic that persisted and transformed it. It made us believe in the power of this way of doing philanthropy and disrupting the current system that had existed for so long.”
Although the Scott grants were among the largest, they’d ever received, a single grant is not a sustainable game-changer on its own. Philanthropy is currently falling far short of its potential. The current moment is philanthropy’s most critical and pivotal opportunity to shake up the system. It’s time to transition power, fuel generosity, and view philanthropy through a new lens. Only then can nonprofits play the role that’s needed to transform society.
Panorama is not alone in highlighting perspectives on inequitable funding practices.
