10th June 2020
The new generation of philanthropists want to see quantifiable results. Being credited for their generosity will not suffice. As a result, they want to use their inherited wealth to be of service to others – to find meaning, forge their own path and indeed be a valued component in the giving process.
Millennials and Generation Z will not wait until later in life to give like their predecessors but are donating earlier; they want to make a difference now and care N about enacting change and being part of the process itself.
British millennials will expect to inherit £400 billion in the coming decades (Mutual Insurer Royal London) and this means charitable organisations and private client advisors will need to redefine the way in which they engage the new generation. Charities are going to have to be more transparent and open to donors being much more involved. This is also true for private client advisors to whom the next generation will turn for information and guidance. According to the Institute for Preparing Heirs, more than 90% of heirs will change advisers promptly after inheriting. It will be more important than ever to bring up ‘philanthropy’ (or the values that drive them) with wealth inheritors.
Let us look at how the changing needs of this new generation are going to shape the future of philanthropy and how Prism can support them.
Younger Generations Are More Generous
Younger generations, such as Gen Z and millennials, are giving the most to charity, especially in the UK. According to a survey by the Blackbaud Institute for Philanthropic Impact, younger generations are giving £2.7 billion this year, making up 30% of the total amount donated countrywide.
These numbers have a lot to do with how many Gen Zers and Millennials make up the population, but they do not show any sign of slowing down with 40% of them saying they plan to increase their donations in the next year.
A New Kind of Engagement for Next Generation Giving
For leaders of charitable organisations to successfully attract younger donors they will need to find new ways to do so. Previously used fundraising methods might not apply and so next generation giving means having to reassess what a charity is offering.
Gen Z and Millennials want to be much more closely involved with the organisation they are donating to and don’t want their donation to be a drop in the ocean. They want to have a hands-on impact on the real problems they are trying to change; forming part of the solution and ensuring their money is being used in the most efficient way possible.
The best way to do this is through transparency and encouraging an open and honest conversation giving donors insight into how funds are utilised and other ways they can be involved. Time is also an asset for them and one they are keen to give to a cause they have identified.
The Future of Giving
It is important to note future giving is likely to favour smaller organisations, including those involved in tackling human rights and climate change issues. To keep the attention of the next generation, digital channels and technology will need to be embraced by charities. According to the Blackbaud Institute for Philanthropic Impact survey, 68% of younger donors engage with causes and charities through their mobile devices.
The next generation of donors want to be actively involved, and the best way to achieve this is to engage in conversation with them, allow them to be a part of the decision-making process.
Private client advisors will also need to be more open and active in their relationships with next generation wealth inheritors. A greater emphasis has been placed on ESG investment screening and impact investing and advisors will need to be an educated resource for their younger clients and be able to sign post them to experts who can help.
How Can Prism Help?
Prism the Gift Fund acknowledges the importance of engaging the next generation with philanthropy and their own giving journey. There is often not a space on the Board of a Family Foundation for the next generation. Prism provides a service for second, third and fourth generations to engage in philanthropy and the family’s legacy. We do this by creating a ‘giving circle’ consisting of family members operating an ‘Own Name Foundation’, which are ring-fenced accounts, Donor Advised Funds, running under the auspices of Prism. The Next Generation philanthropists decide on where and how to give and Prism provides efficient and personal administrative support overseeing the compliance and governance on gifts made.
As part of Prism’s mission to increase the flow of funds into the sector, Prism provide a suite of services to families and their successors in need of quasi board support and financial grant administration services. Prism’s mission is to increase the flow of funds into the charitable sector by creating efficiencies. We are experts in administering the giving of High Net Worth Individuals, groups of donors and established foundations.
We understand next generation giving and want to find ways for younger donors to establish their place in the charity sector.