Nonprofit Windfalls: Managing Transformative Gifts

Nonprofit A has a long record of successful programs, data-driven impact and strong leadership when, seemingly out of nowhere, they receive a cash gift the size of their annual revenue. Organization B, who has a strong marketing program that has produced a large annual campaign base, receives a letter from the estate of a faithful monthly donor; however, this time, the contribution is a bequest 1,000 times larger. In the nonprofit world, these two examples of mega donations are referred to as “windfalls,” defined as an unexpected donation of a sizable and transformative amount. While it may be tempting to allocate most of the newly acquired funds to immediate needs, with the right strategic planning, windfall gifts can serve as an excellent tool to build financial sustainability for your organization.

The rise of mega donations

Mega donations have become increasingly common in the past few years. In 2010, Warren Buffet and Bill and Melinda French Gates founded the Giving Pledge, an open invitation for the world’s wealthiest individuals to commit to donating a majority of their wealth to philanthropic causes either during their lives or in their wills. As of 2024, there were almost 250 pledgers from 30 different countries around the world.¹ One notable signer, philanthropist MacKenzie Scott, has emerged as a leader in “trust-based philanthropy” in which her foundation provides grants without restrictions, enabling recipients to use the donation as they see fit. To date, the foundation has given over $19 billion to over 2,450 nonprofits.²

The MacKenzie Scott effect

To assess the impact of Scott’s gifts, The Center for Effective Philanthropy conducted a three-year study on the transformative effects experienced by recipients. According to the final report released in February 2025, almost 90% of nonprofit leader respondents indicated that the grant moderately or significantly strengthened their organization’s long-term financial sustainability. Organizations reported spending the funds across a wide variety of categories, including program expansion, staff compensation and structure, paying down debt and building an endowment. Nearly half reported that the grant was used to strengthen their reserves or to grow their investment assets. Notably, 70% of leaders said that their biggest concern, losing funders due to their improved financial health, did not manifest.³

Capital structure analysis

Programs, Operations and Finance are vital categories you may consider allocating windfall funds to strategically modify your plans. Together, they inform your organization’s capital structure, defined as the distribution, nature and magnitude of an organization’s assets, liabilities (debt) and net assets (equity).⁴ After addressing any immediate needs for the gift, the first question nonprofit leaders should ask is “how do we use these funds to set up our capital structure for long-term success?" The answer to this question will vary for each organization as there is no one-size-fits all approach. It may be helpful to use financial metrics such as program costs and actual expenses to guide your allocation decisions in a way that supports your mission and improves your overall financial health and sustainability. The table below outlines the different asset pillars that can form a healthy capital structure.

Nonprofit asset decision-making

In examining your capital structure, the primary goal is to determine where the money can best be used to scale now, soon and in the future. Do cash reserves need to be expanded? Should a portion of the money finance an expansion of staff? What percentage of the funds would best be leveraged for sustainability through investments? Determining the answers to these questions should ultimately form the right ratio of asset types to make up your capital structure.

Short-term needs

Assessing short-term needs involves examining immediate debt and taking stock of what the organization has access to today in its operating account and reserves. How much is needed in that account to fund day-to-day operational expenses such as salaries, rent and utilities? If there is a lack of liquidity, a common challenge faced by nonprofits as donations are often designated for or restricted to certain uses, it may make sense to use a portion of your windfall gift as collateral to establish a line of credit to help increase your cash flow. You may also decide to allocate a portion to marketing efforts. A well-crafted publicity campaign detailing how the windfall donation will be used can serve as a magnet for additional fundraising given that donors are more inclined to give to organizations that are financially sound. Additional questions you may want to consider are:

Are you understaffed? Are you paying your employees adequately?

• Do your programs have the necessary resources to operate effectively?
• Have you outgrown your current space? Will it accommodate expansion of staff and/or programs?

Long-term investments and endowments

While it is important to factor in short-term use cases, looking at the long term is key to building future financial sustainability. Consider where your organization could enhance financial support and stability, such as by paying off debt or adding to your investment portfolio. Creating an endowment is another option that can allow nonprofits to extend the impact of a large sum of money. There are different types of endowments with various levels of restrictions but, in most cases the principal investment is kept intact while the interest earned over time provides additional income for the organization. In addition to enhancing the overall financial health of the organization’s capital structure, an endowment can garner public support and build confidence in the nonprofit’s ability to carry out their stated mission.

Stay the course

While the influx of funds from your windfall gift may feel just as overwhelming as it does exciting, if you have a strategic plan in place, it can help provide the path forward. Use your capital structure as a starting point to reveal areas of immediate need, opportunities for growth and potential long-term investment moves. And then make sure you have the right support in place. Contact your investment advisor to discuss how the PNC Institutional Asset Management^® Nonprofit Strategy & Solution Group can help your organization address its unique investment goals.

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PNC’s Nonprofit Strategy & Solutions Group serves as a dedicated partner committed to empowering nonprofit organizations to achieve their missions. By combining national expertise with local knowledge, we provide comprehensive education and advice on governance, philanthropy and financial sustainability — going beyond asset management to deliver actionable insights that address the most pressing challenges nonprofits face. With our deep community ties, practical nonprofit leadership experience and strong local market presence, we provide meaningful solutions that optimize resources and deliver a sustainable impact.

For more information, contact the team at IAMNonprofitStrategy@pnc.com.

Sources

1. The Giving Pledge

2. Yield Giving

3. Elisha Smith Arrillaga, Ellie Buteau, Christina Im, and Seara Grundhoefer, Breaking the Mold: The Transformative Effect of MacKenzie Scott’s Big Gifts (Cambridge, MA: Center for Effective Philanthropy, 2025), https://cep.org/wp-content/uploads/2025/02/CEP_Breaking_the_Mold_FNL.pdf

4. Nonprofit Quarterly, Hidden in Plain Sight: Understanding Capital Structure