Forbes: What It Means to Be A Philanthropist
April 1, 2013
By Sharna Goldseker & Michael Moody
$100 million to Newark schools. $200 million to a family foundation. Massive recent donations by young entrepreneurs, such as those by Mark Zuckerberg and Sergey Brin, are just the well-publicized tip of a much larger iceberg of major philanthropic giving by rising next gen donors.
Entrepreneurs like Brin and Zuckerberg will be joined by Gen Xers and Millennials starting to inherit $40 trillion, much of which will be designated for charitable giving.
These “next gen” major donors have the potential to be the most significant philanthropists in history. Yet we know very little about them.
In a recent report co-published by our organizations, Next Gen Donors: Respecting Legacy, Revolutionizing Philanthropy, we aimed to provide some insight into this relatively unknown group of donors based on a first-of-its-kind national survey and in-depth interviews. It captures the philanthropic vision of next gen major donors in their own voices.
Who are these rising generations, holding the future of philanthropy in their hands? We discovered many serious, responsible Gen X and Y family members working hard to educate and prepare themselves to steward philanthropic resources.
Make no mistake, though; these donors want to be more than stewards. They are also determined to innovate so philanthropy makes a bigger difference. They want to change how philanthropy operates, to rethink what being a “major donor” signifies.
For many, that means integrating social responsibility into every aspect of their lives. From investing to parenting to making consumer choices, they want their assets to reflect their values.
Mary Galeti, a young philanthropist now serving as vice-chair of the Tecovas Foundation, her family’s foundation based in Cleveland and Amarillo, explained that for her generation this integration “feels more important than maybe it did for previous generations who saw social life as very social, professional life as professional, and then family life as family. We, I think see those way more integrated into the self.”
One way this plays out, Galeti explains, is in the search for ways to combine social and financial value. “[My family’s foundation is moving] into the mission related investing and impact investing space. I think my generation doesn’t think you need to sacrifice positive social impact for earning return on investment. Those two things don’t just coexist together but are actually inherently aligned, and that is ideally way the world should work, that I should be adding both social value and financial value to me and everyone else.”
Other next gen donors agree with this philosophy, recently coined “impact investing.” As next generation major donors begin to control substantial financial resources – family, personal, and both – impact investing will likely increase.
Zac Russell, a next gen trustee of the Russell Family Foundation whose grandfather founded the Frank Russell Company, which sold to Northwestern Mutual Life and is best known for the Russell Index, notes, “I think that implementation of impact investing is not a matter of if, but when. On the issues we care about, we want to use our full ability to leverage the change we want to see and, in a lot of ways, expect.”
Katherine Lorenz, a next gen donor who is President of the Cynthia and George Mitchell Foundation, a philanthropy started by her grandfather who pioneered natural shale gas drilling, explains why impact investing makes sense, “I first think about the impact I want to have, then I look at all the resources I have at my disposal. Grants, investments, networks, time, and passion are all tools I can use to make a difference, and I try to put all of them to work to create change.”
Financial advisors have certainly noticed this generational shift. Jared Dubey, Advisor at UBS, echoes the research in describing his experience working with next generation clients around the globe. “In my experience, younger investors often want the best of both worlds; social and financial return on investment. They want to align profit with progress through innovative, values-based investing.”
Next gen major donors also want to break the traditional mold – a mold set by their parents and grandparents – of waiting until the sunset of their lives to devote themselves to charity. They see philanthropy as integral to who they are, not just something they do – and certainly not something they do only when they retire.
The philanthropy world won’t have to wait 40 years for the impact of the wealth transfer. Next generation major donors already serve on their family’s foundation boards and have set up their own philanthropic vehicles. Yet this also means that they are reshaping philanthropy with their new ideas, even changing what it means to be a philanthropist. They may respect philanthropy’s past, but they are also eager to change philanthropy’s future.