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February 15, 2013

NonProfit Times: #NGD Respect Legacies

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The NonProfitTimes

‘NextGen’ Donors Respect Legacies

February 11, 2013

The next generation of major donors, those Gen Xers and Millennials born between 1964 and 1999, are poised to inherit about $40 trillion in their lifetimes. Starting from the premise that not enough is known about these major donors of the near future, the Johnson Center for Philanthropy at Grand Valley State University in Grand Rapids, Mich., in partnership with 21/64 in New York City, studied these donors and found they are more hands-on than previous generations and more driven by engagement and personal values.

The resulting report, “Next Gen Donors: Respecting Legacy, Revolutionizing Philanthropy,” was released in January. “This generation has the potential to be the most philanthropic in history, and we don’t know much about them,” said Michael Moody, Ph.D., Frey Chair for Family Foundations in Philanthropy at the Johnson Center. “Simply knowing more about this incredibly important group of people is really important for the field.”

The study details survey answers from 310 respondents, and researchers had in-depth interviews with 30 subjects. Respondents had to meet at least one of the following criteria: personal net worth of at least $500,000; personal income of $100,000 or more; endowed family philanthropic assets of $500,000 or more; annual personal giving of at least $5,000; or annual family giving of at least $10,000.

Respondents spanned two generations; those born between 1964 and 1980 are Generation X, and those born between 1981 and 1999 are Generation Y or Millennials. These next generation donors have learned about philanthropy very early. Some 95 percent of survey respondents began volunteering before the age of 20, with 35.5 percent saying they started younger than age 10. About half began using their own money for charity before they turned 21, and nearly all started before age 30.

It is these early experiences that shape their thoughts about philanthropy, said Moody. These donors want to get in the trenches and want to be seen as more than just a checkbook. They want to know the organizations they’re supporting, the staff, board and constituents. “We cannot underestimate the importance of hands on nature of these generations for who they are as philanthropists and the kind of philanthropy they want to do,” said Moody. “They want to get their hands dirty, solve problems, work with the people they fund and not just give money and be passive.”

Moody said the report challenged some misconceptions about these generations, namely that they want to radically change the philanthropic landscape without a care for the past. “What surprised me was they were very respectful of tradition,” said Moody. “What they get from tradition and their parents is the belief and value that philanthropy is an essential activity and something everybody should be engaged in. It doesn’t mean they’re not ready to make changes, but they’re trying to find a balance between respecting that legacy and doing new things they think will have more impact.”

Some 37.2 percent of respondents said they support similar causes in similar ways as their families. Nearly 30 percent said they support similar causes in different ways, with 19 percent saying they support different causes in similar ways and 13.9 percent supporting different causes in different ways.

The vehicles this generation uses for giving are dissimilar from their family’s, but not overly so. More members of these generations utilize check (84.8 percent versus 59.4 percent), cash (57.7 percent versus 32.6 percent) and workplace giving (17.1 percent compared to 9.7 percent) than their families, but far less of private foundations (6.1 percent as opposed to 75.8 percent).

It is in the motivations for and attitudes towards philanthropy that these generations diverge from earlier generations. These donors want to see the impact their donations are making, and want to give their time and talent in addition to funds. When asked why they’re involved in philanthropy, their top choice was supporting a cause that fits with their personal values (average score on a scale of 1 to 4, least important to most important, was 3.8).

These donors are also strategic in their giving; they do not engage in what Moody called “spray and pray” philanthropy, spreading money around to many organizations in the hopes that some of it, somewhere, will do some good. Their strategy starts with research, and they’re looking for organizations that attack root problems, not just symptoms. These generations utilize their on- and offline peer networks. If they believe in an organization, they won’t hesitate to recommend it to their peers, and they readily take recommendations and share information with their fellow next gen donors.

“What these people want is to be taken seriously and to be given opportunities for hands-on engagement,” said Moody. “They don’t want to just plan a party or sit on a board, they want to serve. Structuring opportunities for them to be thought partners, problem solvers and to work alongside you, that’s going to engage them.”

 

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