MacKenzie Scott’s Budget Limit May Seem Arbitrary, but It Serves an Important Purpose

To the Editor:

I’ve run and served on the boards of nonprofits with budgets under $1 million, so I understand the frustration expressed by Sneha Dave (“MacKenzie Scott, Stop Ignoring Small Nonprofits Like Mine,” March 20) and others. At the same time, MacKenzie Scott’s $1 million budget requirement makes sense to me.

At some point, some small and early-stage nonprofits start producing results that are better than organizations with similar programs. This attracts grant makers who want to see more people benefit from the organization’s services. While not all nonprofits want to grow or seek ways to extend reach and impact, those that are seeing success — and have the leadership capability and interest to help more people — make a strong case for additional funding.

A $1 million budget limit may appear arbitrary, but it serves two key functions. First, it’s natural for grant makers to have different priorities, just like investors in the corporate world who focus on different business stages — idea, proof of concept, going to market, or growth. We need funding at every parallel level of nonprofits. Yet is it fair to expect a donor, even one as generous as Scott, to support all stages? Grant makers should have the freedom to support organizations demonstrating success versus those yet to do so.

An artificial cutoff of $1 million also helps donors assess progress and potential. Getting to a $1 million budget requires convincing earlier-stage grant makers of the relative value of your program. Managing a budget of $1 million or more requires skills that some leaders of small organizations may not have yet.

Drawing such a line may indeed shut out some worthy organizations. If Scott repeats this competition, perhaps she could consider developing criteria that would allow organizations with budgets just under $1 million to pitch their progress and potential. But a single donor cannot be all things to all organizations. More than 6,000 organizations applied for this latest round of funding. Imagine trying to process thousands more applications from those below the threshold.

Perhaps Scott will take heed of this feedback and shift more grants to small nonprofits. Still, I see the strategic downside of trying to include every organization. And I’m delighted to see so many great organizations who have proven their value given an opportunity to extend it through Scott’s generosity.

Mickey Levitan
Adjunct Professor, Philanthropic Studies
Lilly Family School of Philanthropy