Giving: The Next Generation
Capturing the attention of the next gen donor has been the holy grail for those trying to catalyse investment into social good, and for good reason: estimates show that in the US alone, $30 trillion will be passed to millennials, born between 1980 and 2000, from their high net worth parents and grandparents.[1] Globally, this amount will be even higher, and as global wealth has increased, so has the opportunity to help this socially conscious generation create greater social change.[2]
For years, most research on next gen donors was produced by people who were decidedly not next gen. Recently, the emergence of next gen networks like 2164 and Nexus — led by young people themselves — have provided new insight, but it’s fair to say the next gen donor remains elusive to many. The fact that this group is far from monolithic adds to the challenge of understanding who they are, what they want and crucially, what they need to unlock their full potential as philanthropists, impact investors, and agents of change.
Philanthropy itself is facing fundamental questions about its purpose and the impact it’s truly able to have, and for years we at I.G. Advisors have worked closely with individuals at different stages of their giving journey to help them navigate these challenges. We also have spent the last two years working with the Bill and Melinda Gates Foundation to research how next gens want to use technology in their giving. There is a lot we do know about this generation taking the reins of philanthropy, and while each next gen is as different any other group of individuals, there are a few things they share:
1) Next gens are throwing the rule book out the window (and this is a good thing).
“Building collective action is important — where can our small contribution create more change, how can we make this money matter more than it deserves to, by adding our intellectual capital?” — Next-gen donor, North America
Much has been made of the uniqueness of the millennial experience — being born into life at the cusp of the technological revolution, embarking on adulthood in the midst of complex social, economic and environmental questions, and being at the centre of discussions about how future-fit the fundamental institutions in our lives truly are; so it’s no surprise that this generation of givers do things differently than their predecessors.
Legacy matters to this group but it’s not everything — for many next gen individuals we have worked with, the desire to strike out on their own has been central to their philanthropy. In practice, this desire for change, and focus on impact over passion has led to some key trends.
This group is looking beyond just money when they think about the assets they have to offer; a broader perspective that includes their skills, their networks, the influence of their voice and opinion over decisionmakers, as well as their funds to back it up. This has made for engaged donors who can support causes in ways that aren’t always easily quantifiable, but have a huge potential to create change.
This has also led to a more holistic approach to understanding not just how their assets can create a positive impact, but how the rest of their life — including how their money is made and invested — can either accelerate or hamper their efforts toward impact. We see an increasing number of next gens understanding, for example, how their tax footprint can contribute to helping, or hindering social progress. We have also supported young donors to assess how their family business and investment portfolios may or may not have an impact on their cause of choice. For example, if a family foundation is funding efforts to mitigate the effects of climate change, while investing its endowment in oil companies, there is a clear mismatch of objectives. Sometimes these challenges are more nuanced, but next gens appear to be more open to casting a critical eye to how their overall impact and philanthropic impact are linked: the desire to be part of the solution and not the problem is a core feature in their growing social sector engagement.
2) The technology of giving needs to catch up to this digital first generation.
“If technology can enable a more efficient way of doing things, then there’s an incentive to use it; [the question is] how does it lead to a more constructive use of limited time to engage in good philanthropy?”. — Advisor to next gen philanthropists
Technology is a defining feature of millennial life; the next gens we have worked with and interviewed straddle the line between “digital natives” (who have never known life without the internet), and “digital immigrants” (who adopted technology at a young age). We have found this generation often define themselves not just as “digital first” but “mobile first,” and use app and web-based technologies in almost every aspect of their lives — except philanthropy.
Next gens are keen for a technological solution to alleviate some of the pain points of giving — things like identifying credible partners, learning from fellow donors, and finding co-investors — and to accelerate the time it takes for these things to happen in an analogue way. However, they are cautious about putting all of their giving online. The human connection element, with their partners and other donors, is critical. They are seeking solutions that can bring the new innovations tech has to offer, alongside a very old school preference for forging offline connections and relationships.
3) Psychology matters — more than you think.
You want to feel that you are not a lone fish in the sea; you want to find someone with the same mindset as you who you can approach. — UK-based next gen philanthropist
The more next gen donors have become involved with disseminating insights about themselves and their peers to the wider world, the more one key theme has emerged: the “affluenza problem: the psychological pitfalls of excessive wealth ownership.”[3]
It can be taboo to pay heed to the challenges of the wealthy, when so much of the fundamental work of changemaking involves individuals with far greater socioeconomic challenges; but until the sector starts to understand and accept the unique journey and experience that comes with inherited wealth, the world of advisors, fundraisers, and collaborators in giving will not be able to meet next gen donors where they are.
Our research has found that many next gens engaged in philanthropy often feel lonely and isolated from others in the space. If their friends and peers are not engaged in giving, they may not know where to turn for advice, guidance or to pose questions about sensitive topics, like managing family relationships. If their peers are engaged in giving, competition, taboos and cultural norms around money can keep them from meaningfully connecting about their giving intentions. New networks have cropped up to meet this issue, but much more high-quality convening could happen. The increase in pooled funds and collective giving options is also a positive trend that can help more next gens find each other and greater impact together.
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The next few decades have been hailed by some as “the new Golden Age of Giving.”[4] With the right guidance, opportunities to connect, and openness of thought and ideas, this group has the potential to emerge as not only the generation with the greatest inherited wealth, but the one that helped philanthropy as a whole achieve its true purpose and potential.
[1] Accenture, “The ‘Greater’ Wealth Transfer”, 2015, https://www.accenture.com/us-en/~/media/accenture/conversion-assets/dotcom/documents/global/pdf/industries_5/accenture-cm-awams-wealth-transfer-final-june2012-web-version.pdf
[2] UBS/PwC Billionaires Report, 2016, https://uhnw-greatwealth.ubs.com/media/8616/billionaires-report-2016.pdf
[3] Nexus, “Born to Give: A Human Approach to Catalyzing Philanthropy”, 2015
[4] Sharna Goldseker and Michael Moody, Generation Impact: How Next Gen Donors are Revolutionizing Giving, 2017.
