Mackenzie Scott is now worth $34 billion, and she once needed her college roommate’s help to get a $1,000 loan: ‘That’s exactly what you do for friends’

Facing the prospect of dropping out if she couldn’t get $1,000, Scott was crying when her roommate, Jenny Tarkenton, found her and asked her father to lend Scott the money.

“I was going to give Mackenzie my left kidney,” Tarkenton told the Associated Press recently. “Like, that’s what you do for friends.”

today, Scott’s net worth About $34 billion, according to Forbes. Scott wrote in October: Tarkenton’s act is among many personal acts of kindness she has taken into account as she has donated more than $19 billion in wealth she has amassed mostly through… Amazon shares as part of her 2019 divorce from company founder Jeff Bezos. When Tarkenton started Funding U, a lending company that provides merit-based loans to low-income students without co-signers, Scott said she jumped at the opportunity to help.

A quarter century passed between the end of their sophomore year and the creation of Funding U, a period during which Tarkenton realized how many other students were being pushed into her former roommate’s position due to the high cost of college. Scott’s interest in her longtime friend’s mission to help economically disadvantaged students finance their studies is not surprising. Ha Unusual gifts — which she rarely discusses or discloses outside of articles and a database on her website, Yield Giving — Tend to focus on equality issues, Higher education and economic security.

But the revelation of Scott’s Funding U backing offers a new glimpse into its investments. Scott Written last year It will invest in “mission-aligned ventures” led by “low-capitalization groups” that focus on “profitable solutions” to the challenges its philanthropy seeks to address. However, this is among the few cases that have been publicly confirmed.

“She looks for innovative ways to create opportunities for those who don’t have those opportunities,” said Marybeth Gasman, who directs Rutgers’ Center for Minority-Serving Institutions and tracks Scott’s donations. “I have to say, as someone who went to school on a Pell Grant and came from a very low-income family, this is really meaningful.”

Amplify the effect

In many ways, Scott was similar to the students Funding U seeks to serve. Tarkenton remembers college student Scott as “a hard-working student who got very good grades” and was “highly focused” and had already been accepted into a competitive program.

Its lending company feeds this kind of detail — student records and internship experiences, for example — into an algorithm that determines applicants’ likelihood of completing college, getting a job, and earning enough money to repay the loan.

Tarkenton suggested that this formula is fairer — and more predictive — than current standards that determine loan eligibility based on the credit history of students or co-signers.

Scott provides most of the “junior debt” they use to de-risk larger investments from banks like Goldman Sachs, according to Tarkenton. She is among a handful of philanthropists who offer 30 cents for every dollar loaned by Funding U. These funders lend at concessional rates, meaning they make less money than the market suggests, and they wait a longer period of time to get the money back.

Funding U gets the other 70% from banks, which it supports to comply with federal laws aimed at preventing discrimination against the poor by requiring banks to make loans that benefit their communities.

“I wanted to raise capital from people who were involved in this because they cared about the core person,” Tarkenton said, “and also, knowing that the scale of philanthropy wasn’t large enough, I brought to the table some kind of market solution along with that capital.”

Charitable endeavor?

Tarkenton is clear: the endeavor is not charitable. Funding U is a business, after all, and Scott will eventually get her money back — just as she paid off Tarkenton’s informal loan all those years ago at Princeton.

But the approach represents a model Scott’s former roommate believes more philanthropists should embrace. Tarkenton said there was more room for the likes of Scott to “bring an investment spirit” that serves the “public good” but is not purely philanthropic.

“I think philanthropists can get more anarchic and do more with their money,” Tarkenton said. “I’m all about paying good people in a very consistent way.”

That’s why she started Funding U. Tarkenton, who works at an Atlanta-based adult literacy nonprofit, said she’s noticed persistent disparities in degree completion rates based on socioeconomic status. I found the problem to be too big for philanthropy to solve. But she said the need was too small for most players in the market to be interested in addressing it.

Scott described Funding U loans as “deriving their power from generosity and gratitude” in an October 15 article about the ripple effects of kindness.

Panorama founder Gabrielle Fitzgerald, whose social impact nonprofit is affiliated with Scott Giving, said the investment is “very consistent with its approach to ensuring students have access to a higher education.” Many funders consider impact investing an important part of their giving portfolios, she said.

“It shows that she is using all the tools at her disposal to achieve her goals,” Fitzgerald said.

And what is the full impact of the Tarkenton loan on the college era?

“It’s a really beautiful story in a time when we don’t see a lot of kindness and generosity,” Fitzgerald added. “And just a reminder that helping your fellow human beings is a good thing to do at the time and something that can have a tremendous impact down the road.”

___

Associated Press coverage of philanthropy and nonprofits receives support through an AP collaboration with The Conversation US, with funding from the Lilly Endowment Inc. The AP is solely responsible for this content.