The Revolution Will Not Be Funded | Part 4: When Funders Actually Trust Nonprofits, Organizations Get Stronger from Letters to the Housed by Paul Asplund of SecondGrace.LA
Transparency goes both ways. When funders trust nonprofits with the full picture, everyone wins.
The Revolution Will Not Be Funded What Actually Works: The Evidence for Trust-Based Funding
Part 4: When Funders Actually Trust Nonprofits, Organizations Get Stronger
In March 2020, nonprofit leaders across the country started receiving unexpected phone calls and emails. There was no application to fill out. No budget narrative to write. No theory of change to diagram. No site visit scheduled. No hoops to jump through. Just this: "We're giving you money. Unrestricted. Multi-year. No strings attached. Use it however you think best."
MacKenzie Scott had just given away $1.7 billion to 116 organizations. By the end of 2020, she'd given $5.8 billion. As of 2025, she's given away $19.2 billion to over 2,000 nonprofits. Completely unrestricted. With minimal reporting requirements. And something remarkable happened. Almost no chaos and little waste (the two big fears when we hear "unrestricted funding") and none of the mission drift that happens when organizations aren't allowed to do what they do best. What happened was the opposite. Organizations got stronger.
The MacKenzie Scott Effect: What the Data Shows
The Center for Effective Philanthropy conducted a three-year study (2022-2025) surveying 813 nonprofit leaders and 243 foundation leaders about Scott's giving. The results directly contradict every fear funders express about unrestricted funding.
Impact on Mission
93% of nonprofit leaders said Scott's grant "moderately or significantly" strengthened their ability to achieve mission
90% reported strengthened financial position compared to peer nonprofits
Only 2% (11 nonprofits out of over 2,000) reported major challenges related to receipt or use of the grant
When you give organizations unrestricted money and trust them to use it well, 98% succeed. How many times do we need to learn this lesson before we believe it?
Impact on Sustainability
Organizations receiving Scott's funding have twice as many months of operating expenses in cash compared to similar nonprofits two years post-grant.
This demolishes the argument that unrestricted funding gets spent recklessly. Leaders used unrestricted funds strategically for long-term sustainability, not immediate spending sprees.
Impact on People
88% reported improved staff morale, empowerment, or creative capacity
Organizations could finally pay competitive salaries
Staff could focus on mission rather than chasing the next grant
Burnout decreased
Impact on Future Fundraising
50% said Scott's gift made fundraising easier.
Funders worry that large unrestricted gifts reduce urgency for other donors. The data shows the opposite. Scott's stamp of approval and the organizational strengthening that resulted made organizations more attractive to other funders.
What Organizations Did With the Freedom
They made the investments that restricted funding never allows:
Built reserves for sustainability
Upgraded technology infrastructure
Hired development staff to diversify funding
Invested in staff training and professional development
Paid competitive salaries to retain talent
Made long-term strategic decisions rather than chasing short-term grants
Served the populations most in need rather than cherry-picking easy wins
Everything we said we needed in the first three parts of this series? Organizations did it when they had the freedom to do so.
Why Foundation Leaders Still Don't Believe It
Yet foundation leaders still don't believe it:
Only 33% of foundation leaders believe Scott's approach is "quite" or "very effective"
60% express concerns about "funding cliffs" or "over-reliance" on large gifts
Despite overwhelming evidence that these fears are unfounded.
This disconnect reveals how deeply embedded restrictive practices are in philanthropic culture. It's not about evidence. It's about control.
Funders can see data proving unrestricted funding works, and still choose not to believe it—because believing it would require ceding power.
Beyond MacKenzie Scott: The Ford Foundation BUILD Initiative
Maybe you're thinking: "MacKenzie Scott is an outlier. She has virtually unlimited resources. That doesn't scale." Fair enough. Let's look at the Ford Foundation's BUILD (Building Institutions and Leaders) initiative.
Running from 2015 to present with over $2 billion invested, BUILD provides 5-year general operating support grants with dedicated funding for institutional strengthening to 300+ organizations globally.
Critically: 60%+ led by women, 50%+ working in the Global South, focused on social justice organizations often excluded from traditional philanthropy.
Financial Resilience Results
A 2022 developmental evaluation found:
83% of grantees were more financially resilient in 2021 than at the start of their BUILD grant
94% stated BUILD "enhanced their ability to strengthen their financial situation to some or a large extent"
It Works for Everyone
BUILD works for organizations of all sizes, structures, sectors, geographies, and contexts:
Effective for both emerging and established organizations
Successful with networks and grassroots organizations
Effective with Indigenous peoples and people of color-led institutions
The model isn't just for well-established organizations in major cities. It works for the exact organizations that traditional philanthropy most often excludes.
The Overhead Myth: What Research Really Shows
Altamimi and Liu's 2022 study in Nonprofit Management and Leadership found an inverted U-shaped relationship between overhead spending and program outcomes.
Translation: There is an optimal level of overhead spending. Too low is just as bad as too high. And that optimal level is significantly higher than the 10-15% funders typically allow.
Contrary to "lower overhead is better" conventional wisdom, increased investment in infrastructure improves outcomes—up to a point. This validates everything we've been saying: underfunding overhead actually harms nonprofits' ability to deliver on missions.
The Bottom Line: Evidence Over Fear
The evidence is overwhelming:
When funders provide unrestricted, multi-year funding with minimal reporting requirements, organizations get stronger—not weaker. 93% of MacKenzie Scott's grantees say it significantly strengthened their mission. Only 2% experienced problems.
When funders invest in infrastructure rather than starving overhead, outcomes improve. There's an optimal level of overhead investment that produces the best results—and it's significantly higher than 10-15%.
The barrier isn't knowledge. The barrier is power.
Foundation leaders can look at data showing unrestricted funding works and still believe (60% of them) that it's risky or ineffective. When all the evidence is counter to your closely-held beliefs, it's normal to retrench. We need to move beyond the fear of perceived risk.
But knowing unrestricted funding works is only the beginning. The question is: what does it look like in practice? What are the specific principles and practices that make it work?
That's what we'll explore next week.
Coming Next Week
Part 5: "The Trust-Based Philanthropy Framework" – The six practices that transform funder-grantee relationships, and why participatory grantmaking represents the ultimate shift of power back to communities.
Additional Resources
MacKenzie Scott's Unrestricted Giving
Unlocking Potential and Supporting Resilience: Evidence for Unrestricted Funding
MacKenzie Scott's gifts have transformed nonprofits, research shows