A new generation of donors who are coming into wealth at a young age are going to be the most significant philanthropists in history, say the authors of a new book.
Sharna Goldseker and Michael Moody admit the claim sounds a little breathless, but they offer plenty of evidence and intriguing insights to make their case in Generation Impact: How Next Gen Donors Are Revolutionizing Giving.
Chief among the authors’ findings: This next generation of wealthy millennial and Generation X philanthropists don’t want to just write checks. They want to go “all in” and have a much more deeply engaged, hands-on relationship with the causes and the nonprofits they support than previous generations of affluent philanthropists.
They also have a bigger appetite for experimenting with new giving vehicles that blur the line between nonprofit and for-profit giving (such as limited-liability companies), and they are interested in focusing their philanthropy on fewer causes or charities so they can make a bigger, concentrated impact.
“They don’t like the previous generation’s approach that one of them called ‘the peanut-butter approach,’ where you’ve got all of this money and you spread it across multiple organizations,” says Mr. Moody.
It is important for nonprofits to pay attention to these donors and how they think, say the book’s authors, because as beneficiaries of a collection of unusual economic factors happening all at once, they are giving now rather than waiting until retirement age. And they have the power to give substantially.
Growing Wealth
The concentration of significant wealth among Gen X-ers and millennials is happening at record pace, partly because of the robust wealth transfer that is now occurring and the astronomical new wealth some in this generation are creating at a much younger age than those who came before them. Those factors have created a group of affluent donors who are giving earlier in life and therefore will be giving longer than the previous generation.
Mr. Moody, a philanthropy expert at Grand Valley State University, and Ms. Goldseker, a wealthy young philanthropist herself and the managing director of a nonprofit that advises young donors, conducted 75 in-depth interviews with wealthy millennial and Generation X philanthropists; 310 other donors responded anonymously to a survey.
The findings have potentially important implications for how nonprofit leaders and fundraisers should cultivate this new generation of rich philanthropists.
The causes they are interested in backing are similar to those of previous generations, although they place added emphasis on environmental and animal-related efforts as well as civil rights and advocacy.
The bigger differences are reflected in how they prefer to interact with charities. “The ways they want to engage with organizations are going to require nonprofits to rethink how they go about major-donor engagement, and it’s not a small rethink,” says Mr. Moody. “It’s a pretty significant one.”
Ms. Goldseker and Mr. Moody found that these donors want to do things like serve on a nonprofit committee, help the charities they support develop new programs, and work with senior staff to plan strategy. One young philanthropist told Ms. Goldseker that she doesn’t want to give money for a new building; she wants to be in the new building helping the charity do its work.
The sooner nonprofits start giving this new generation those kinds of opportunities, the better, the authors say.
Charity leaders are not quite there yet, says Ms. Goldseker. She and Mr. Moody hope their book will give nonprofits a better understanding of who these donors are and how they think, so fundraisers can improve their chances for capturing their attention before it’s too late.
“The nonprofit sector is still organized to relate to older generations of donors and sometimes doesn’t appreciate the next generation is really the now generation,” says Ms. Goldseker. “If they build relationships with them now, they will have some of the most long-term, committed donors.”
Humility Problem
Ms. Goldseker has met more than a few charity leaders who don’t bother getting to know their big donors’ grown children. A shamefaced fundraiser once admitted to her that he had relied so heavily on his relationship with a rich donor who was funding about 10 percent of the group’s budget that it never occurred to him to build a relationship with the donor’s grown children. When that donor died, the charity found itself in a financially vulnerable spot.
Mr. Moody and Ms. Goldseker acknowledge that charity leaders and fundraisers are sometimes wary about cultivating the next generation of donors because of what Mr. Moody calls the “bull-in-the-china-shop” problem: young, rich donors who think they have all the answers and might be inclined to impose well-intentioned but misguided ideas to the detriment of a charity’s ability to carry out its mission.
“There can be next-generation donors who have this passion for how they want to get involved but who do so in a way that lacks humility and sensitivity,” says Mr. Moody. But there are a couple of things that give us hope that they will be able to approach this with the humility nonprofits want.”
The next-generation donors the two studied have an earnestness about them, says Mr. Moody. They’re comfortable having candid conversations with charities in ways their forebears were not. The authors found that some may come to a nonprofit they’re supporting pushing a big idea, but as their involvement increases and they see how the group works, they are willing to listen to charity leaders who are upfront about why the idea won’t work.
Ms. Goldseker says the exuberance that comes with youth might be irritating to a seen-it-all charity leader, but it’s something society needs, so nonprofits shouldn’t back away from it. Instead they should show their next-generation donors what the nonprofit has learned and how to use that insight to adjust a suggested project — or explain why it doesn’t fit the group’s mission.
What next-generation donors don’t want, says Mr. Moody, are nonprofit leaders who pretend the idea is a good one when they know it isn’t and promise to look into it. “They do want to be taken seriously, but they also appreciate candor, especially once a good relationship has been developed, so that’s part of this rethinking how nonprofits relate to these donors,” he says.
Ms. Goldseker and Mr. Moody said that in writing the book, they wanted to take a sober approach to the subject. They’re aware of the challenges of donors who have strong feelings about all of the changes they want to make, but the overarching conclusion the authors reach is positive for charities.
“We ended up being optimistic, for sure, about the possibilities of the next generation beginning to help us really move the needle on some of the big problems,” says Mr. Moody. “We think the next generation of donors is going to be of great benefit to the nonprofit sector and to the causes we all care about.”