Philanthropists Like MacKenzie Scott Could Help Nonprofits Survive A Funding Freeze
MacKenzie Scott is showing the world how philanthropy is done. The Center of Philanthropy's (CEP's) three year study 'Breaking the Mold: The Transformative Effect of MacKenzie Scott's Big Gifts' found that Scott's gifts have been instrumental in uplifting nonprofit organizations. Scott's $19 billion in donations has benefited over 2,000 nonprofits, and according to CEP's findings, 86% of nonprofit leaders reported that Scott's gift will strengthen or has strengthened the communities their organization seeks to impact.
Nonprofit organizations play a major role in community empowerment and development, and many nonprofits in the U.S. rely on private funding like Scott's to survive. These organizations also rely heavily on government grants. According to nonprofit data provider Candid, in the U.S., 100,000 nonprofits receive a total of $303 billion from government grants and $107 billion from private foundations annually.
Yet, with a U.S. federal grant freeze looming, many nonprofit organizations remain uncertain whether they'll continue to receive government funding. In January, the White House Office of Management and Budget (OMB) released a memo that was issued, rescinded, and later revised. In the revised memo, the OMB demands that federal agencies 'temporarily pause, to the extent permitted by law, grant, loan or federal financial assistance programs that are implicated by the President's Executive Orders.' This would effectively freeze government funds for DEI, LGBTQ+, women's rights and green energy programs that President Trump's executive orders target.
The Trump Administration's efforts to withhold federal funding have since been put in limbo after two federal judges blocked the freeze. However, if the freeze were to move forward, it could negatively affect a large swath of U.S. nonprofits. According to Candid's research, private foundations would have to increase donations by 282% to make up for the loss of government grants. This isn't to say that philanthropic efforts aren't doing enough to fund nonprofit organizations, but philanthropy and impactful investing are becoming more important now than ever before. If the government funding freeze moves forward, gifts such as Scott's could become the only way for many nonprofits to survive.
Moreover, it'll also be critical that major players in the nonprofit sphere continue their support of DEI, LGBTQ+, women's rights and green energy initiatives. After all, these programs would be most vulnerable if a funding freeze took effect, and unfortunately, larger foundations have already begun eliminating such programs. The Chan Zuckerberg Initiative (CZI), the charity organization founded by Mark Zuckerberg and his wife Priscilla Chan, announced in a company email that it would end its internal and external DEI efforts.
NEW YORK, NEW YORK - SEPTEMBER 26: Melinda French Gates attends the Clooney Foundation for Justice's ... More The Albies at New York Public Library on September 26, 2024 in New York City. (Photo by)
Thankfully, not all larger nonprofits or foundations are following Zuckerberg and Chan's lead. Melinda French Gate's nonprofit, Pivotal Ventures, has doubled down on its support for businesses that promote DEI, social equity and abortion rights. As previously reported, Pivotal Ventures is committed to advancing women's rights through advocacy work for female founders, abortion rights and paid family leave, and the nonprofit is sticking to its values. In an interview, Pivotal Ventures' senior director of investment Erin Harkless Moore told CNBC, 'We're open for business. We have capital to deploy' specifically for companies that are focused on supporting women and diversity initiatives.
Based on the OMB's revised memo, around 1,480 or more of the over 2,000 organizations that receive Scott's gifts could be impacted by a funding freeze in the U.S. It's very possible that funding from Scott will be what keeps these organizations' doors open. And while investments like Scott's and French Gate's could make a huge difference, they can't be the only ones that do.
Without philanthropic efforts and impact investing, many nonprofits and programs focused on women, diversity and the environment could fall by the wayside. What CEP's research makes clear is that philanthropy, when strategic and targeted, can make a transformative impact. And with government funding for these causes under threat, impact investing becomes even more vital, with the potential to not only make or break these organizations, but the lives of the people they serve and the realization of a more equitable future as well.
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