With the new year approaching, now’s a good time to review charitable giving trends and predictions for philanthropy in 2025. According to The Growing Power of Giving: An Outlook from Foundation Source CEO Joe Mrak, 2024 has seen charitable giving continue to grow, driven by the great wealth transfer and favorable market performance. Foundation Source’s clients are reportedly on track to match or exceed giving in previous years. Opportunities abound for both financial advisors and philanthropic leaders, who play the crucial role in bridging the generational gap to strengthen family legacies and impact well into the future.
The report identifies three key areas to watch for 2025:
- The growing popularity of organized giving;
- The rising influence of the next generation; and
- The potential of advanced technologies.
Organized Philanthropy
The report found that grantmaking organizations, such as foundations and donor-advised funds, experienced the strongest growth as wealthy donors continued to invest in the future of the non-profit sector. Foundation giving is up to 19% of overall giving, crossing into the $100 billion threshold for the second consecutive year. DAFs have also gained popularity among donors, including millennials and Generation Z, as well as advisors, citing ease-of-use, tax advantages and the ability to align their investment choices with their core values and charitable interests as major perks of the giving vehicle. In general, clients are increasingly using a combination of vehicles and approaches to drive impact and meet their philanthropic goals.
The Next-Gen
As the great wealth transfer continues, high-net-worth families remain dedicated to building a legacy that spans generations, but the next generation is set to shake up philanthropy as we know it. Driven by family values and a passion for specific causes, the next generation prefers to be much more hands-on.
Foundation Source surveyed 1,000 Gen Z and millennial donors to better understand their attitudes, perceptions and preferences around charitable giving. Some key takeaways:
- Younger generations continuously underscore their desire for direct involvement in giving back. They’re focused on changing the world to a better place, starting with systemic and social change on both a local and grander scale, and they want to see evidence of progress.
- They don’t limit their charitable activities to financial contributions—they prefer to be hands-on, for example, by donating items, volunteering, helping with fundraising and sharing expertise/knowledge.
- Their financial contributions are directly correlated to their earning power and financial resources; high earners donate more.
- They prefer to be direct and informal, but they’re also interested in learning more about formal charitable vehicles, such as DAFs and family foundations and other giving approaches, such as giving circles and trust-based philanthropy.
- Their involvement in charitable causes is starting at a younger age. Millennials started at an average age of 18, while Gen Z started even younger at 14.
Future of Technology
As artificial technology creeps its way into more aspects of our lives, it’s also set to impact the philanthropic sector. Foundation Source reports that 81% of surveyed foundations use some degree of AI within their organizations. The use appears to still be on the individual level, while it’s still too early for integration on the organizational level.
Whether by helping foundations find charities faster that align with their goals and desired impact or streamlining the grant application process and back office work, experts believe AI can help reduce administrative costs by providing efficiencies throughout the granting process and free up more time that financial advisors can spend working with their clients.
