Is It Possible to Get Too Much Money?

In recent news, MacKenzie Scott donated billions of dollars to about 400 nonprofit groups. I worry about those nonprofits.

According to the news, the nonprofits did not ask for the funding, but were selected by a team working for Scott. When I worked for the U.S. Defense Department, for political reasons Congress would give small organizations a large funding increase they did not ask for. The organizations had no infrastructure to spend the excess funding before it expired. It was always a disaster.

The same happens to nonprofits who suddenly receive funding several times their annual budget. Years ago I saw a nonprofit receive a one time, large federal grant. They were not prepared for so much funding and they eventually ceased operations after infighting.

Some organizations who receive Scott’s money, like universities, can manage the funding. However, few small nonprofits have the resources readily available to manage an excessive amount of funding given to them. Nonprofits usually have a small staff and limited outreach. Ms. Scott may believe she is helping the organizations, yet she may be doing them harm.

When I have a large grant approved for a small nonprofit, I have the nonprofit hold off the partying and develop a plan for spending the money. I didn’t have to do that for one large grant I wrote that was approved. Before receipt of the funding, the nonprofit and foundation agreed to a spending plan over a designated span of time.

The nonprofits receiving Scott’s wealth have a one-time large infusion of cash, a stream of publicity, and stress to spend the money efficiently without harming their reputation and losing future donations and grants. I only hope that Scott’s team helps the nonprofits manage so much money at one time.

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