An update on how LISC is using MacKenzie Scott’s extraordinary gift to promote racial and economic equity.
In the summer of 2020, MacKenzie Scott gave a $40 million unrestricted grant to LISC, the largest donation from an individual the organization had received in its 40-year history. Today, that transformative gift is being put to work for racial justice.
Scott, whose stake in Amazon has made her one of the planet’s richest people, is beloved in the nonprofit world not so much for her extraordinary wealth as for the manner in which she’s giving it away—with unerring transparency and in pursuit of greater social and economic equity.
Scott, in fact, has insisted on ceding power and attention to the hardworking groups her gifts are meant to support. And she explains her process for choosing recipients, a team effort that looks at each group’s leadership, track record, and capacity to use the money effectively. “We do this research and deeper diligence not only to identify organizations with high potential for impact,” Scott wrote in an essay posted on Medium, “but also to pave the way for unsolicited and unexpected gifts given with full trust and no strings attached. Because our research is data-driven and rigorous, our giving process can be human and soft.”
In other words, Scott’s gifts—so far totaling a mindboggling $12 billion to over 1,200 organizations—land as a surprise infusion of entirely unrestricted funds. As those $40 million did for LISC.
“It was an enormous validation of our work to receive these rare unrestricted funds, and with that trust comes responsibility,” says LISC CEO Lisa Glover. “We’re using the donation to breach new terrain, take the very calculated risks that progress demands, and also to seed revolving funds and other projects that will pay dividends for years to come.”
LISC is channeling the money into objectives of its top-priority Project 10X, aimed at closing unacceptable racial disparities in wealth, health, and opportunity.
Some $20 million have gone to establish evergreen, revolving pools of credit enhancement that allow LISC to extend financing on favorable terms to projects that advance racial justice, but might not otherwise have access to the same flexible and low-cost credit. Credit enhancement like this improves the chances of financing being repaid and so allows for more inventive and far-reaching types of investment.
One pool is being used to support projects by developers of color, especially emerging developers with strong connections and credibility in their communities. LISC already has over $20 million in loans in the pipeline under this initiative, with Scott’s credit enhancement leveraging additional LISC capital by a factor of six.
This approach accomplishes two things: It helps to diversify the community development field at the highest level, a key objective. And it helps make possible projects like Skyline Apartments by Black-led developer Exact Capital, slated for completion next year. Situated on Atlanta’s BeltLine, a 22-mile greenway and light-rail corridor encircling the city, and with unobstructed views of the urban skyline, all the complex’s 250 apartments will be reserved for people earning no more than 60 percent of area median income. This helps ensure longtime residents—including people of color—benefit from development of Atlanta’s “emerald necklace” rather than being pushed out.
“Financing affordable housing is definitely a team effort,” observes LISC Atlanta executive director Dale Royal. “LISC is proud we were able to bring our nimble gap financing with flexible terms to support this impressive new development and a Black-led developer team.”
Housing is another key area of investment, particularly in homeownership projects developed by and serving people of color. Owning a home is the way many working families build equity that sustains a secure old age and provides a nest egg for heirs. So the gaping 30-point spread between Black and white homeownership rates both reflects and fuels racial inequality.
Here, LISC’s credit enhancement is being used mainly to fund collective housing projects—cooperatives, condos, and land-trust housing—in urban markets where owning a home is largely a pipe dream for people working in low- and middle-income jobs. For example, the fund has provided a working-capital line of credit to the National Community Reinvestment Coalition to acquire and rehab for-sale housing projects in Jacksonville (FL), Cincinnati, Philadelphia, Washington (DC), New Jersey, Chicago, Atlanta, and Detroit. So far the pipeline of loans amounts to nearly $16 million, and Scott’s credit-enhancement dollars are leveraging 5.5 times their amount in other LISC capital.
LISC is also spending some of Scott’s gift on initiatives that develop the organization’s own capacity and test new ideas. Again, because the funds are unrestricted, they allow for invention, creativity and an entrepreneurial approach to scaling concepts that might not otherwise be possible.
In this vein, LISC is upgrading its IT systems to integrate all its grant and loan activities in a single efficient platform and to allow for more rigorous assessment of social impact. The funding is also being considered for a prospective internship program to engage students from historically Black colleges and universities (HBCUs) in the work of community development, creating a bridge to employment in the field.
And recognizing that insight springs from grassroots, LISC has launched an Innovation Challenge inviting its 38 field offices to pilot new and promising strategies that push toward racial equity.
Seven pilots are now underway using Scott’s unrestricted funds. In Chicago and Washington, DC, these initiatives are creating novel investment vehicles that will give legacy residents an ownership stake in gentrifying communities. In the Twin Cities, Indianapolis, and Milwaukee, they’re finding new ways to invest in and secure physical space for entrepreneurs of color to operate their businesses. In Boston, LISC is connecting people of color to green jobs, a burgeoning sector where they’re underrepresented. And in Jacksonville, FL, LISC and its partners are studying solutions to the problem of racially biased appraisals that devalue Black-owned homes, curtailing credit opportunities and sale proceeds in line with historic redlining and other racist housing practices.
“We expect all our investments using these unrestricted funds to bear fruit well into the future,” says LISC president Denise Scott. “And beyond that, when we look at the list of organizations MacKenzie Scott is lifting up—with money, with recognition, with space to breathe and imagine—we see our friends and partners. We’re talking about large nonprofits, along with a host of smaller local organizations that we know are worth their weight in gold. It’s exciting to be a part of it. We’re going to make change together.”