As the landscape of philanthropy undergoes significant transformation, the rising generations of wealthy individuals—namely millennials and Gen Z—are leading a paradigm shift characterized by active participation rather than passive financial contribution. A recent study by Bank of America Private Bank, targeting affluent individuals under 43, illuminates this trend, revealing that their approach to charitable endeavors is increasingly rooted in activism, volunteerism, and a desire for social change. This new wave of givers is not merely satisfied with writing checks; instead, they aim to be deeply involved in initiatives aiming to tackle pressing social and environmental challenges.
Beyond Monetary Contributions
The research highlights a compelling distinction between younger and older philanthropists in terms of their motivations and methods for giving. While a staggering 91% of all surveyed affluent individuals reported charitable contributions over the past year, younger donors were found to be more actively engaged in a variety of roles beyond fundraising. They are not only volunteering their time but are also taking on mentorship roles and actively seeking positions on nonprofit boards. This hands-on approach is a stark contrast to older beneficiaries over 44, who primarily view giving as a matter of social obligation, often focusing predominantly on financial contributions.
Dianne Chipps Bailey, a key figure in philanthropic strategy at Bank of America, asserts that younger donors possess a keen sense of agency. They strive for a comprehensive approach to philanthropy, as they recognize the multifaceted nature of social issues. This perspective allows them to engage in influenced giving—where they draw on peer networks and personal connections to enhance their impact.
The motivations informing these generational differences can be attributed, at least in part, to the distinct life stages these donors inhabit. Younger wealthy individuals are in the process of accumulating wealth and may be more inclined to invest their time and efforts alongside the funds they contribute. Consequently, the youthful approach to philanthropy encapsulates the five T’s: time, talent, treasure, testimony, and ties. This contrasts sharply with their older counterparts, who often prioritize the monetary aspect—focusing predominantly on “treasure.”
Moreover, the current socio-economic landscape has shaped the causes young donors prioritize. Areas like social justice, climate change, and homelessness have gained particular traction among younger philanthropists, fueled by recent global events that have heightened awareness and urgency regarding these issues. Wealthy individuals over 44, in contrast, show a greater inclination to support traditional pillars such as religious organizations, military charities, and the arts.
The implications of this generational shift promise to be far-reaching, particularly for wealth advisors and nonprofit organizations. As younger donors emerge as key players, they will likely utilize sophisticated giving vehicles—such as family foundations and donor-advised funds—that have either been inherited or established by their families. This trend represents a fundamental change in how charitable giving is conceptualized and executed; education on philanthropy has become essential for both advisors and nonprofits.
Bailey points out the eagerness of young wealthy individuals to incorporate philanthropy into their financial discussions right from the outset, often even before addressing investment strategies. This hunger for knowledge signifies a new landscape where education becomes a critical component in making impactful philanthropic decisions.
Another crucial factor affecting young philanthropists is the significance of recognition in evaluating their charitable impact. Unlike older generations, who often prefer to maintain anonymity in their donations, younger donors exhibit a craving for public acknowledgment of their efforts. Nearly half of the respondents under 43 are likely to associate their names with philanthropic initiatives, emphasizing the importance of visibility in their charitable endeavors. According to the study, advisors must adapt accordingly—offering praise and visibility to engage this new generation effectively.
As millennials and Gen Zers increasingly occupy the roles of wealthy donors, their active, holistic engagement with philanthropy is set to reshape the charitable landscape. Advisors and nonprofits must recognize and adapt to these shifting tides. By focusing on education, collaboration, and visibility, they can cultivate strong relationships with young philanthropists who view charitable giving as a movement toward societal change rather than a mere transaction. As we move forward, understanding these evolving dynamics will be critical in harnessing the full potential of emerging philanthropists and ensuring that their contributions lead to meaningful, lasting impact.