Generational change in giving and philanthropy
In the coming years, trillions of dollars in wealth held by the Baby Boomer generation (born from 1955– 1964) are poised to transfer to their children and grandchildren, millennials (1981 – 1996) and Generation Z (1997 –2012). Today’s younger generations show signs of a radically different approach to giving than that of older philanthropists.
The big question is: How will generational shifts and donors’ evolving values and social interests shape the face of future philanthropy and perceptions of giving?
A historic transfer of wealth on the horizon
By some estimates, the greatest generational wealth transfer in the history of the world is already underway. Through 2045, some $84 trillion dollars will pass mostly from baby boomers to Gen X (born 1965-1980) and millennials. What’s more, an estimated $12 trillion of that will find its way into philanthropy, either through foundations, donor-advised funds, impact investing, or personal direct action.
To understand the scale of this change, consider that in 2020 all U.S. foundations together distributed about $472 billion in grants. Adjust for these figures for inflation, and you are still looking at enough fuel to drive philanthropy for more than a century.
A new wave of generational approaches to philanthropy
A study by Bank of America in 2022 found that people in their forties and older have different views on investment risk and financial preparedness than younger people, impacting their approaches to philanthropy. For example, older individuals are more likely to use donor-advised funds, charitable trusts, and family foundations, whereas younger people are less likely to support charities through these traditional contribution avenues.
But the generational differences don’t end there. Younger generations’ philanthropic engagement extends beyond direct giving to include direct involvement and participation in the work being done. While not a new dynamic, younger generations are explicitly and holistically leveraging their wealth as an expression of their philanthropic values. This offers a glimpse into the significant role their charitable priorities will play in the future of philanthropy.
For example, over 90% of millennials and Gen Z not only expect businesses to address societal and environmental causes. They also will pay a premium for products that reflect their philanthropic priorities. This explains why younger people are increasingly investing in industries and businesses that produce public goods and prioritize corporate social responsibility—whether by supporting environmental causes like clean energy or investing in underserved communities.
Moving Money and Shifting Power for Social Justice: Voices of Wealthy Next-Gen Donors, is a recently published study of wealthy, predominantly female donors, many who identify as queer or part of the LGBTQ+ community supporting social justice causes. The report found that their philanthropy was an attempt to “reconcile the gap between the world in which wealthy donors operate today and the values they hold for a more equitable future.”
Drivers of this change
Today’s digitally native generations also have myriad new ways to engage philanthropically, from personal fundraising over social media, using crowdsourcing platforms, and amplifying both messaging and fundraising for a broad array of causes they care about.
Raised on the web, Gen Z and millennials share a comfort level with crowdfunding platforms, such as GoFundMe, Classy, PayPal Giving, Venmo, and Give Directly. They regularly contribute publicly, in near real time, to a collective effort, replacing the staid habits of privately writing end-of-year checks at the kitchen table. Moreover, they are leveraging their social networks to advocate and multiply the impact of their small donations across the social media landscape.
A recent report found that Gen Z and millennial donors are three times as likely to advocate on an organization’s behalf compared to their parents and grandparents. For the next generation of philanthropists, the act of giving is only one facet of their engagement in causes.
The democratizing effects of an online world allow new philanthropists (regardless of their net worth) to engage meaningfully in supporting causes with their voices, their bodies, and their money. The development of quick moving communities online is helping to create new cultural norms across society that are intersectional, connecting cause-related advocacy, long-term investing, and philanthropy as a broad expression of personal values.
Looking towards the future of philanthropy
Older generations will continue to have an outsized influence on philanthropy and the social sector for quite some time. After all, a 65-year-old billionaire is likely to be leveraging their dollars in 2050. But more established donors are operating in a world that is increasingly dominated by the voices of younger generations. These digital natives possess fluency in and access to a technologically interconnected world—and will soon be in control of trillions of dollars in family wealth. Today, younger donors (large and small) seem primed to push past preconceived expectations of what philanthropy looks like and how the work of the social sector is funded.
Any fundraiser looking to the future should be thinking about how younger people communicate, what motivates them, and what prompts them to give.