A new study by Foundation Source, Shaping Tomorrow: How Gen Z and Millennials View Charitable Giving, found that Gen Z and millennials need more education on charitable giving tools and how they can optimize impact with tax-efficient giving vehicles.
While actively engaging in charitable activities and starting young (millennials at age 18 and Gen Z at age 14), the younger generations’ methods often diverge from traditional philanthropy. Their giving isn’t limited to financial contributions but includes other activities such as donating items, volunteering and helping with fundraising. Generally, their giving tends to be informal and direct, reflecting a desire to make an immediate impact. Importantly, NextGen is steering away from being described as “philanthropists” and “altruists” but rather desires to be described as “givers,” “volunteers,” “advocates” and “humanitarians.”
Opportunity to Educate
While NextGen’s lack of awareness of giving through tax-efficient vehicles poses some challenges for stakeholders such as private foundations, financial advisors and nonprofits (the study found that three in 10 have never heard of donor-advised funds, and more than one-third are not familiar with impact investing, trust-based philanthropy or giving circles), the good news is they show interest in learning more about the range of giving tools.
According to Gillian Howell, head of client advisory solutions at Foundation Source, “[the NextGen is] still in the early stages of their philanthropic journeys and open to learning about different methods that could help maximize their impact. This is a key opportunity for advisors and nonprofits to educate the next generation on how different approaches can help them do more with their charitable dollars and shape their giving for years to come."
Engagement Strategies for Stakeholders
The study rounds up some engagement strategies for PFs, financial advisors and nonprofits.
PFs can:
- Create roles that tap into the talents and passions of NextGen givers;
- Establish diversity and inclusion initiatives within grantmaking processes to support a wider range of causes and communities;
- Look for opportunities to involve rising generations in the planning, governance and decision-making processes to help them better understand how the foundation itself and the vehicles and approaches that it may use can contribute to the desired outcomes;
- Offer personalized site visits or virtual tours to connect donors with the projects they’re supporting.
Advisors can:
- Facilitate family philanthropy discussions to help clients involve younger generations in charitable decision-making;
- Help clients research and explore charitable causes that resonate with them;
- Educate clients on the value of nonfinancial contributions and how these can be a component of an overall giving strategy;
- Proactively introduce younger clients to different giving vehicles, explaining their long-term benefits and tax implications;
- Help clients identify causes that align with their personal values and experiences, creating a more meaningful giving strategy.
Nonprofits can:
- Develop family-oriented volunteer programs and events that encourage multi-generational participation;
- Implement targeted outreach programs to engage underrepresented groups, particularly men and individuals from diverse racial and ethnic backgrounds;
- Create a variety of engagement opportunities that allow young people to contribute their time, skills and networks. These programs help to build relationships that may become financial contributions in the future;
- Partner with schools, community centers and other organizations to offer educational workshops on various giving vehicles and their benefits; and
- Create experiences that allow donors to see the direct impact of their contributions on local communities and causes.
Key Takeaways
The younger generations are poised to reshape the philanthropy sector, focusing on making a direct impact. With proper outreach and engagement strategies, PFs, financial advisors and nonprofits can help educate NextGen on the available charitable giving tools and build relationships that can turn into financial contributions later down the line. Meeting NextGen where they are is key.
