In the ever-evolving landscape of charitable giving, a new generation of affluent individuals is emerging with a profound desire to enact change, going beyond traditional methods of donation. Recent survey findings from Bank of America Private Bank reveal that wealthy millennials and Generation Z individuals—those under 43—view their charitable actions through an activist lens. This shift signals a departure from simply writing checks; these young philanthropists aspire to engage holistically in social issues, assuming roles as advocates, mentors, and community leaders.
They are seen as change agents who wish to interact deeply with the causes they support rather than remaining detached financial benefactors. As articulated by Dianne Chipps Bailey of Bank of America, this new wave of philanthropists possesses a heightened sense of agency and a more comprehensive approach to achieving their social impact goals. This commitment to activism is transforming the philanthropic sector, making it essential for organizations and wealth advisors to realign their strategies to meet the evolving expectations of these emerging givers.
The generosity of affluent individuals spans across generations; however, motivations and methods of giving reveal stark contrasts. A remarkable 91% of individuals surveyed had contributed to charitable causes in the past year, and both younger and older high-net-worth individuals share the common goal of effecting meaningful change. Yet, the younger demographic is notably more inclined to engage in hands-on activities—volunteering their time, raising funds among peers, and mentoring others—instead of solely giving monetary support.
Older affluent donors, particularly those aged over 44, often feel a sense of obligation when donating. In contrast, younger donors are influenced more significantly by their social circles and pursuits of self-education, steering their giving towards causes that resonate with their life experiences and values. This distinct shift in priorities reveals a crucial point: younger generations are actively redefining what it means to give, not just adhering to the socially acceptable norms established by their predecessors.
The New Causes of Concern
The causes favored by younger philanthropists diverge significantly from those supported by older generations. Young givers show a marked propensity to champion issues such as homelessness, social justice, and climate change, situating their efforts within the framework of contemporary societal challenges. In stark contrast, older donors are more likely to direct their generosity toward traditional causes like religious institutions, the arts, and military charities.
The contrasts in focus reflect not only the different experiences each group has encountered but also a proactive stance in addressing immediate societal needs. The upheavals of 2020 seem to have instigated a deeper sense of purpose among young philanthropists, who recognize their unique position to effect meaningful change. As Bailey notes, this perspective indicates a movement rather than a fleeting trend—a sustained commitment to tackling societal problems head-on.
The generational transition in philanthropy carries significant implications for wealth advisors and nonprofits navigating this landscape. As younger donors often inherit their wealth and skillfully utilize established philanthropic vehicles such as charitable trusts and donor-advised funds, they seek to incorporate conversations about their philanthropic aspirations as integral parts of their financial planning. This inclination underscores a notable departure from traditional norms, where conversations typically centered around investment strategies alone.
It becomes essential for advisors to embrace this new paradigm—one grounded in a thirst for knowledge about impactful giving strategies. Notably, young donors are not only eager to contribute financially but also express an interest in the mechanics of philanthropy itself. Advisors and nonprofits must enhance their educational outreach, providing valuable insights and support to these emerging philanthropists who are poised to reshape the future of charitable endeavors.
The influential role that wealthy millennials and Gen Z will play in the charitable sector cannot be overstated, particularly considering their expected inheritance of over $80 trillion in the coming decades. As they take an active role in philanthropy, courting their interest and engagement will be critical for nonprofits and wealth advisors alike. Recognition and visibility are increasingly pivotal—nearly half of younger donors express a desire to publicly associate their names with philanthropic efforts, in stark contrast to the anonymity preferred by older benefactors.
This shift towards visibility emphasizes the need for nonprofits to celebrate the contributions of young donors, acknowledging their efforts publicly to foster a culture of recognition and appreciation. As the sector evolves, so too must the approaches organizations take to connect with this spirited cohort, blending philanthropy with activism and creating avenues for meaningful collaboration. Ultimately, the future of philanthropy hinges on the unique perspectives of younger givers who are committed not only to financial support but to transformative social change.