In recent years, the world of philanthropy has experienced a significant transformation, especially among younger generations such as millennials and Gen Z. According to an insightful study conducted by Bank of America Private Bank, affluent individuals under the age of 43 are not just redefining charitable giving; they are actively reimagining what it means to contribute to society. This progressive mindset shifts the focus from traditional monetary donations to a more hands-on and engaged approach aimed at tackling pressing social and environmental challenges.
The younger wealthy demographic is increasingly viewing themselves as agents of change, prioritizing activism over simply writing checks. Their commitment to social change is far-reaching, marking a departure from the practices of previous generations. While older donors often perceive giving as a moral obligation, millennials and Gen Z are motivated by a sense of agency and purpose, seeking deeper involvement in the causes they support.
The survey revealed that the younger generation is more likely to volunteer, fundraise, and act as mentors for their causes, rather than merely offering financial support. With 91% of all respondents indicating they gave to charity in the past year, the distinction in giving methods between age groups becomes apparent. Young philanthropists are twice as likely to engage their peers in fundraising activities and are significantly more inclined to hold mentorship roles compared to older donors, who tend to focus solely on financial contributions.
This contrasts sharply with the motivations behind giving. Donors over 44 years old often cite a sense of obligation as their primary driver, whereas the younger affluent demographic is more influenced by self-education and the dynamics of their social networks. This marks a notable evolution in how philanthropy is viewed—with younger givers prioritizing a holistic, community-driven approach that encompasses not just the giving of money but also time, talent, and personal connections.
Another significant facet noted by the study is the differing causes that resonate with younger philanthropists compared to their older counterparts. Young givers are notably more inclined to support issues such as homelessness, social justice, climate action, and initiatives focused on empowering women and girls. In contrast, older generations tend to favor contributions to religious organizations, the arts, and military-related charities.
Dianne Chipps Bailey, managing director of philanthropic solutions at Bank of America Private Bank, emphasized that the events of recent years—including the global pandemic and social justice movements—have sparked a deeper commitment among younger donors. They are not merely responding to headlines but are seeking sustainable solutions to the systemic issues they witness, thus indicating that their philanthropy is not just a short-lived trend but a long-term movement.
The generational shift in charitable giving carries significant implications for both wealth advisors and nonprofit organizations. Many millennials and Gen Zers, having inherited their wealth, exhibit a preference for philanthropic vehicles established by their families, such as charitable trusts and donor-advised funds. There is a palpable hunger for knowledge regarding philanthropy, with many younger donors eager to incorporate discussions about giving into their initial conversations with wealth advisors.
This presents a unique opportunity for wealth advisors to cultivate relationships by prioritizing themes of philanthropy in their discussions. They must understand that younger donors see philanthropy as an integral part of their financial planning process, not an afterthought.
Moreover, as younger generations are expected to inherit vast sums—estimated at over $80 trillion in the coming decades—it becomes crucial for nonprofits to engage with this demographic meaningfully. Understanding the motivations behind their giving and recognizing the importance of public acknowledgment and visibility will be key in establishing lasting connections.
The Importance of Recognition
The study highlights a crucial aspect of younger philanthropic behavior; they are more likely to seek public recognition for their efforts compared to older donors, nearly half of whom prefer anonymity. This growing desire for visibility suggests that they equate the success of their philanthropic initiatives with public acknowledgment. To attract and retain these generous younger givers, nonprofits and wealth advisors must amplify their contributions, celebrate their efforts, and provide them with the recognition they crave.
Millennials and Gen Z represent a radical departure from previous generations in their approach to philanthropy. An ethos of active participation, a focus on social issues, and a desire for recognition distinctly define their contributions. For organizations and advisors who wish to thrive in this new philanthropic landscape, adaptation to this evolving dynamic will be essential. Engaging these younger generations effectively can lead to innovative solutions and a more significant impact on society at large.