If there’s one hallmark of MacKenzie Scott’s giving, it’s the idea of trust. Her support is typically made with no strings attached, and empowers organizations on the receiving end to use their best judgment on how and when the funds are used.
So it was no surprise when the new Yield Giving database revealed that GiveDirectly, which makes unconditional cash transfers to some of the world’s poorest people, received Scott’s second-largest reported gift to a single organization — a $60 million bet on a project putting cash in the hands of Americans reeling from the impacts of COVID in 2020.
After three other donations, her total support for the organization now stands at $125 million. That’s a significant boost for an organization that has grown rapidly since 2020 as a result of the pandemic, and with it, greater acceptance of the power of direct cash giving. Here’s a look at how GiveDirectly operates and the specifics of Scott’s support.
Unconditional support
When GiveDirectly was founded back in 2011, handing out no-strings cash to those in need was a relatively uncommon practice. The group’s mission was a daring swing at the politically charged view that low-income people can’t be trusted to make their own financial decisions and were likely to blow funds on nonessentials.
Government cash programs for social programming were mostly seen in the conditional cash transfers employed in Latin American countries, which are typically tied to meeting specific criteria like attending school or complying with health mandates.
But GiveDirectly’s own rigorous, randomized controlled trials showed that such concerns were unfounded, and even small amounts delivered big returns in the form of earnings and assets. As it turned out, recipients used the cash for things like medicine, growing their businesses, and sending their children to school. Another 300 studies have since borne that out.
At the same time, person-to-person support through platforms like GoFundMe, which was founded in 2010, about the same time as GiveDirectly, were gaining traction.
Then a pandemic came along.
In COVID, a game-changer
COVID helped change the mindset on cold, hard cash, as even wealthy nations like the U.S. scrambled to speed support to large swathes of low-income citizens with a minimum of red tape.
Funders like Schusterman Family Philanthropies, Google.org and the Schultz Family Foundation quickly employed the tactic to combat the disease and its repercussions, as did nonprofits racing to get help to hard-to-reach groups like restaurant workers. Public policy soon followed. Today, GiveDirectly partners with governments on delivering support, and has built relationships with key development agencies like USAID.
Since 2009, GiveDirectly has delivered more than $580 million to more than 1.37 million people living in poverty around the globe. Program operations currently span the Democratic Republic of Congo, Kenya, Liberia, Malawi, Morocco, Mozambique, Nigeria, Rwanda, Uganda, Yemen — and the United States.
Tyler Hall, GiveDirectly’s communications director, said that the organization had been growing at a good pace since its founding, but jumped six-fold between 2019 and 2020, from $33 million to $211 million. Last year’s total, $168 million, is still almost five times pre-COVID levels.
Besides its work via governments and cash transfer programs, Hall said GiveDirectly focuses on sharing findings from research and the impacts of its own giving, as well as helping with program design, in order to influence others in the sector.
It also takes pains to avoid the situational pitfalls of direct giving, where donors sometimes expect 100% of their support to reach recipients. Since its inception, GiveDirectly has directed nearly 90 cents on the dollar to cash transfers and delivery costs, and maintained a level of transparency that earned it a four-star rating from Charity Navigator.
Scott’s four moves
MacKenzie Scott first invested in GiveDirectly right out of the gate, as part of her initial “384 Ways to Help” in June of 2020. Responding to COVID, Scott contributed $10 million to its U.S. program, Project 100+, which was delivering $1,000 payments to low-income households based on need rather than geography, as mapped through government data.
That July, GiveDirectly was among Scott’s second tranche of 116 Organizations Driving Change, for its work in both the U.S. and Africa.
In the U.S, an additional commitment of $60 million to Project 100+ brought the total program support to $70 million. Before drawing to a close in October of 2021, nearly 200,000 households across 49 states received support totaling $200 million, nearly a third of which came from Scott. Funds were distributed through Propel, a free app that more than 2 million Americans were already using to access SNAP, or food stamp, benefits.
Scott also contributed $5 million to GiveDirectly’s Africa Response, which at the time centered upon Kenya and Togo. In May of 2021, Scott upped her support in Africa by $50 million, funding direct cash transfers to people in poverty across seven African countries and Yemen. Still active, the project identifies census areas below the poverty line, then enrolls entire villages for support. Tyler Hall said that more than 1.3 million Africans have already received funds, again delivered through mobile technology.
Unlike in the U.S., Hall said that most of the Africa funding goes to a large-transfer program that gives households a one-time boost of $1,000 — a de facto form of basic income that typically exceeds household consumption for a year.
Shining a light
An upside of Scott broadly sharing the details of her work is the light it shines on growing organizations like GiveDirectly. Not all growing organizations are comfortable with such added attention to their finances, but a recent report from the Center for Effective Philanthropy found that for many recipients, the high-profile boost from Scott made fundraising easier by adding legitimacy.
Indeed, Hall said the organization is excited by receiving coverage in the company of well-known “old guard” organizations, which helps open doors and elevates the idea of direct cash. But the biggest plus, he said, is added effectiveness. Scott’s investments have allowed GiveDirectly to move millions out the door almost immediately — a great success story that it weighs against the enormous need it still sees on the ground, particularly in Africa.
“It’s great that we are growing so quickly,” said Hall, but “much more needs to be done… We have only reached a million of the 470 million living in extreme poverty; that is less than $2.15 per person, per day.”
MacKenzie Scott trusts that the solutions to building better lives lie with the people who are closest to the problems, within their own households, cash in hand.