NEW YORK (AP) 鈥� MacKenzie Scott, one of the world’s wealthiest women and most influential philanthropists, is now known for her 鈥渘o strings attached鈥� surprise grantmaking. But, as a Princeton University sophomore, she learned what it was like to be on the receiving end of generosity.
Facing the prospect of dropping out if she couldn’t come up with $1,000, Scott was crying when her roommate, Jeannie Tarkenton, found her and got her dad to loan Scott the money.
鈥淚 would have given MacKenzie my left kidney,鈥� Tarkenton told the Associated Press recently. 鈥淟ike, that鈥檚 just what you do for friends.鈥�
Today, is around $34 billion, according to Forbes. that Tarkenton’s act is among the many personal kindnesses she has considered as she has donated more than $19 billion of the wealth she amassed mostly through Amazon shares as part of her 2019 divorce from company founder Jeff Bezos. And when Tarkenton started Funding U, a lending company that offers last-gap, merit-based loans to low-income students without co-signers, Scott said she jumped at the chance to help.
A quarter century passed between the end of their sophomore year and Funding U’s creation, a period when Tarkenton realized just how many more students were being pushed into her former roommate’s position by the rising cost of college. That Scott took an interest in her old friend’s mission to help economically disadvantaged students finance school is unsurprising. Her 鈥� which she rarely discusses or discloses outside of essays and a database on her website, Yield Giving 鈥� , and economic security.
But the revelation of Scott’s Funding U support offers a new glimpse into her investments. Scott that she would invest in 鈥渕ission-aligned ventures鈥� led by 鈥渦ndercapitalized groups鈥� that focus on 鈥渇or-profit solutions鈥� to the challenges that her philanthropy seeks to address. However, this is among the few confirmed publicly.
鈥淪he鈥檚 looking for innovative ways to create opportunity for those that don鈥檛 have it,” said Marybeth Gasman, who runs Rutgers鈥� Center for Minority Serving Institutions and follows Scott鈥檚 donations. “I have to say, as somebody who went to school on a Pell Grant and who came from an extremely low-income family, that鈥檚 really meaningful.鈥�
Amplifying impact
Scott, in many ways, resembled the exact students that Funding U seeks to serve. Tarkenton recalled the undergraduate Scott as a 鈥渉ardworking student with very good grades鈥� who was 鈥渉ighly focused” and had already been accepted into a competitive program.
Her lending company plugs those sorts of details 鈥� student transcripts and internship experiences, for example鈥� into an algorithm that determines the likelihood applicants will complete college, get a job and make enough money to pay back the loan.
Tarkenton suggested that this formula is fairer 鈥� and more predictive 鈥� than existing criteria that determine loan eligibility based on the credit histories of students or their co-signers.
Scott provides most of the 鈥渏unior debt鈥� they use to reduce the risk for larger investments from banks such as Goldman Sachs, according to Tarkenton. She is among a handful of philanthropists who provide 30 cents for every dollar that Funding U loans. These funders lend at concessionary rates, meaning they make less money back than the market suggests they should and wait a longer period of time to recoup the money.
Funding U gets the other 70% from banks, who support them to comply with federal laws aimed at preventing anti-poor discrimination by requiring banks to make loans that benefit their communities.
鈥淚 wanted to combine capital from people who were participating in this because they cared about the underlying person,鈥� Tarkenton said, 鈥渁nd also, knowing that scale of philanthropy wasn鈥檛 quite big enough, bring to the table some sort of market solution alongside that capital.鈥�
A philanthropic endeavor?
Tarkenton is clear: the endeavor isn’t philanthropic. Funding U is a company, after all, and Scott will eventually get her money back 鈥� just as she repaid Tarkenton’s informal loan all those years ago at Princeton.
But the approach represents a model that Scott’s former roommate thinks more philanthropists should embrace. Tarkenton said there’s more space for the likes of Scott to 鈥渂ring a spirit of investment鈥� that serves a 鈥済reater good鈥� but isn’t purely charitable.
鈥淚 think philanthropists can get a little messier and do more with their money,” Tarkenton said. 鈥淚鈥檓 all about pushing philanthropists in a very aligned way.鈥�
It’s why she started Funding U. Working at an Atlanta-based adult literacy nonprofit, Tarkenton said she noticed persistent disparities in degree completion rates based on socioeconomic status. She found the problem too big for philanthropy to solve. But the need was too small for most market players to care about addressing, she said.
Scott described the Funding U loans as 鈥済enerosity- and gratitude-powered鈥� in an Oct. 15 essay about the ripple effects of kindness.
Panorama founder Gabrielle Fitzgerald, whose social impact nonprofit tracks Scott’s giving, said the investment is 鈥渧ery consistent with her approach to ensuring students have access to higher education.” She said many funders see impact investing as a critical part of their giving portfolios.
鈥淚t shows that she鈥檚 using all the tools at her disposal to pursue her goals,” Fitzgerald said.
And the full circle impact of Tarkenton’s college-era loan?
鈥淚t鈥檚 a really lovely story in a time when we鈥檙e not seeing a lot of kindness and generosity,” Fitzgerald added. “And just a reminder that helping your fellow humans is both a good thing to do at the time and something that could have a massive impact down the road.鈥�
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