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May 19, 2013

Young Wealthy Donors Bring Taste for Hands-on Philanthropy

Author:

The Chronicle of Philanthropy

Young Wealthy Donors Bring Taste for Risk, Hands-On Involvement to Philanthropy

 

May 19, 2013

By Sharna Goldseker and Michael Moody

The signs that the world of philanthropy were changing became clear when The Chronicle announced this winter that three couples under 40 were among the most generous donors in America: Mark Zuckerberg and Priscilla Chan (No. 2), John and Laura Arnold (No. 3), and Sergey Brin and Anne Wojcicki (No. 5).

We were impressed not only with how much these young donors gave but also how they gave and to what.

The Laura and John Arnold Foundation, for instance, gives to multiples causes, but all its donations seek transformational change by getting to the root of what causes tough problems and measuring whether grants are making a difference.

It is an entrepreneurial fund that takes risks by supporting innovative projects, collaborating with other philanthropists, and sharing what its learns with other donors.

Sergey Brin, the co-founder of Google, and Anne Wojcicki, a biotech and genetics entrepreneur, support traditional causes such as medical research.

But they also support human-rights advocacy and Ashoka, which gives crucial support to creative social entrepreneurs and innovators. And they help underwrite the Tipping Point Community, founded by a member of Generation Y who believed that giving money wasn’t enough. Along with grant dollars, Tipping Point supporters offer their skills and expert knowledge to grantees. This helps the organizations and ensures donors a greater return on their investment.

These philanthropic strategies and priorities closely mirror those preferred by young major donors across the country, as we convey in a report we issued in January, “Next Gen Donors: Respecting Legacy, Revolutionizing Philanthropy.”

We conducted this study because so little is known about this group of people who will make decisions about unprecedented amounts of charitable resources—let alone those from the group who already are giving large amounts, like Mark Zuckerberg and Sergey Brin.

The 21- to 40-year-old wealthy donors we studied also want to do their research, to create results that can be measured, to take risks on new approaches to persistent problems, and to give more than just money.

They want to support traditional issues vexing society, like education and poverty, but they also are increasing their support for causes such as the environment and civil rights. In their interconnected world, they want to work with their peers to
increase their collective philanthropic impact.

Large-scale donors who are members of Generation X (born in 1964 to 1980) or of the millennial generation, also known as Generation Y (born in 1981 to 2000), will have a huge influence on the direction and support of efforts to improve local communities and solve global problems over the next several decades.

So we asked young donors—both in a poll and through in-depth interviews—about what kind of philanthropists they are now and plan to be as they grow into that role.

What they told us suggests that they are not planning to revolutionize philanthropy, writing manifestos in a side room somewhere. But it might just happen anyway as they take the reins.

The donors in our study were more focused on making a difference in fighting a particular problem than on supporting a particular organization. And they identified this focus on issues over institutions as a key generational difference—something they intend to change about major giving.

One donor told us that his father “has a list of a dozen nonprofits that are wellmeaning and do great things, but I might come at a problem differently. I may have a list of problems I’m interested in and then try to research what is the best way to attack that problem.”

Another said that if she were fully in charge of the family’s giving, she “would be very strategic about what I was interested in and narrow it down, educate myself in that area, and make some plan that I felt was going to accomplish some sort of result.”

And yet another agreed, saying that if he were in charge, he would “get away from that kind of traditional, big institutions, big universities” strategy taken by his family and move “toward a portfolio of grants that really move the dial on an issue.”

Other young donors echoed this new strategy of focusing on problems as a way to accomplish more. One donor tried to explain this fundamental generational shift in a couple ways:

“I see the older generations as institution-building. They support institutions that either they see as very important [or that] changed their lives and so have the potential to change [other] lives. I think that the next generation is a bit more hands-on. I want to know what is going on the ground. I think everyone has this feeling, for the most part; they want to see where their money is going.

“And so for my grandfather, that is seeing the bricks and mortar on the building with his name on it, because that is tangible and he knows it happened. I think the younger generation’s ‘seeing’ is being on the board or being involved or seeing the person that I helped.”

Whatever the reasons for the shift, it is clear that young donors want to change how giving is done in their families. One millennial donor who sits on her family foundation’s board was blunt about making big changes: “I wish they would just knock down all the walls at the foundation and put drafting tables in the middle of the space and everyone could just work together.”

All this talk of change might be hard for many people who have been in philanthropy for a long time.

But families looking at succession and nonprofits looking for future donors should also recognize that we are at a crucial moment in philanthropic history.

It is imperative for us to engage the next generation. These donors who might end up giving more than any other generation in history are coming into powerful roles in philanthropy right now—whether we are ready or not.

Sharna Goldseker is managing director of 21/64, a nonprofit that seeks to help young donors get involved in their family’s philanthropy and other causes. Michael Moody is the Frey Foundation Chair for Family Philanthropy at the Dorothy A. Johnson
Center for Philanthropy at Grand Valley State University.

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