Wealthy millennials and Gen Z are redefining philanthropy

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Wealthy millennials and Gen Z are redefining the world of charitable giving, seeing themselves more as activists than donors, according to a new study.

Wealthy donors under 43 are more likely to volunteer, fundraise and act as mentors for charitable causes rather than simply giving money, according to a new survey from Bank of America Private Bank . The survey of more than 1,000 people with more than $3 million in investable assets also found that younger philanthropists want their giving to be noticed by the public more than Gen X and baby boomers .

The shift in how the next generations give, as well as the causes they support, is likely to reshape the charitable landscape. Rather than simply sending checks to causes they care about, the next generation of donors wants to get deeply involved in solving the biggest social and environmental problems.

“They see themselves as holistic agents of social change,” said Dianne Chipps Bailey, managing director and head of national philanthropic strategy for philanthropic solutions at Bank of America Private Bank. “I think they have a better sense of agency in this world. They’re really looking to move their capital in a much more holistic and robust way to achieve their social impact goals.”

Multimillionaires, young and old, are very charitable. According to the study, 91% of respondents had donated to charity in the past year. More than two-thirds of respondents, both older and younger, said they were motivated by the idea of ​​“making a lasting impact.”

Yet their reasons for giving and their methods vary greatly by age. Donors under 43 are slightly more likely to volunteer and are twice as likely to help raise charitable donations from friends or peers rather than just giving directly. They are four times more likely to act as mentors. And they are more interested in serving on nonprofit boards rather than limiting their capital contributions.

Older donors give out of a sense of responsibility. People over 44 were twice as likely to give out of obligation as younger donors. People under 43 were more likely to cite self-education and the influence of their social circle as drivers of their philanthropy.

Some of the differences between generations may be rooted in life cycles and wealth. Young rich people continue to build their fortunes and inherit their wealth. They are therefore more likely to volunteer their time and participate in fundraising. Still, Bailey said the emphasis on peer networks and activism will likely endure even as they get older and wealthier.

“You can think of philanthropy as the five Ts: time, talent, treasure, testimony and connections,” she said. “The older generation focuses on the treasury (donating funds). The younger generations look to the other four.”

Young rich people also support different causes. They are twice as likely to support efforts related to homelessness, social justice, climate change, and the advancement of women and girls. Philanthropists over the age of 44 were much more likely to support religious, arts and military organizations.

“When you think about what [the younger generation] “What we’ve been through over the last few years, in 2020, where they’ve seen all of this exposed, they’re looking at the answer,” Bailey said. “And it has continued. A lot of people make headlines by donating, but they really dug deep. It’s not a moment but a movement.”

The implications of the generational shift in giving will be profound for wealth advisors and nonprofits, advisors say. Since many younger donors have inherited wealth, they are much more likely to use giving vehicles created by their family. They were more than four times more likely to use charitable trusts, family foundations and donor-advised funds.

Bailey said the next generation wants to talk about philanthropy as part of an initial discussion with a wealth advisor – before they even talk about their investment plan.

“They’re hungry to know more, to learn more about philanthropy,” Bailey said. “They already have these complexes [giving] vehicles at your fingertips, so the educational aspect is essential for both nonprofits and advisors.

As charities become increasingly dominated by wealthy donors and the next generations are expected to inherit more than $80 trillion over the coming decades, courting the younger rich will be critical.

“You need their perspective and you’ll need their money,” Bailey said.

Advisors to the young rich should also be generous in their praise. According to the survey, young donors are three times more likely to evaluate the success of their philanthropic efforts by public recognition. Nearly half say they are likely to associate their name with their philanthropic efforts, while more than two-thirds of older donors give anonymously.

“Congratulate them, celebrate them, give them visibility,” she said.

Don’t call them “philanthropists.” A report from Foundation Source reveals that 80% of young donors want to be considered a “donor,” while 63% also like the terms “advocate” or “changemaker.” Only 27% accept the label “philanthropist”.