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A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide for high-net-worth investors and consumers. Sign up To receive future editions delivered directly to your inbox.
Wealthy Millennials and Gen Z are redefining the world of charitable giving, seeing themselves more as activists than donors, according to a new study.
A new survey from Bank of America Private Bank shows that wealthy donors under the age of 43 are more likely to volunteer, fundraise and serve as mentors to charities, rather than just donating money. The survey of more than 1,000 respondents with more than $3 million in investable assets also found that younger philanthropists want their giving to receive more public attention than Gen Xers and baby boomers.
Shifts in how the next generation gives and the causes they support could reshape the philanthropic landscape. The next generation of donors wants to be deeply involved in solving the biggest social and environmental problems, rather than simply writing checks to causes they care about.
“They see themselves as agents of overall social change,” said Dianne Chipps Bailey, managing director of Bank of America Private Bank and national philanthropic strategy leader for Philanthropy Solutions. “I think they are in this There is a better sense of agency in the world. They do want to move capital in a more comprehensive and robust way to achieve their social impact goals.”
Both young and old multimillionaires are very philanthropic. Research shows that 91% of respondents have donated to charity in the past year. More than two-thirds of older and younger respondents said they were motivated by “making a lasting impact.”
However, their reasons for and methods of donating varied by age. Donors under the age of 43 are slightly more likely to volunteer and twice as likely to help raise charitable donations from friends or colleagues than to donate directly. They are more than four times more likely to serve as mentors than others. They are more interested in serving on nonprofit boards than in limiting their contributions to capital.
Older donors give out of a sense of responsibility. People over 44 are more than twice as likely as younger donors to donate out of “obligation.” People under 43 are more likely to cite self-education and the influence of their social circles as drivers of philanthropy.
Some differences between generations may stem from life cycles and wealth. Young wealthy people are still accumulating wealth and inheriting it, so they are more likely to invest their time and help with fundraising. Still, Bailey said the focus on peer networks and activism is likely to persist even as they grow older and wealthier.
“You can think of philanthropy as the five Ts — time, talent, treasure, testimony and relationships,” she said. “The older generation is focused on treasure (providing funds). The younger generation is leaning towards the other four.”
Young wealthy people also support different causes. They are twice as likely to support efforts related to homelessness, social justice, climate change, and the advancement of women and girls. Philanthropists over 44 are more likely to support religious organizations, arts and military charities.
“When you think about what (younger generations) have been through in recent years, 2020, and they’ve seen it all come to light, they tend to respond,” Bailey said. “And it’s ongoing. A lot of people are coming through Headlines come in to donate, but they’ve really dug in. It’s not a moment, it’s a movement.”
The generational shift in giving will have a profound impact on wealth advisors and nonprofits, advisers say. Because many younger donors inherit their wealth, they are more likely to use family-created giving vehicles. They are more than four times more likely than others to use charitable trusts, family foundations and donor-advised funds.
Bailey says the next generation wants to talk about philanthropy during initial discussions with wealth advisors — even before talking about their investment plans.
“They’re eager to learn more and learn more about philanthropy,” Bailey said. “They already have these sophisticated (donation) tools in place, so the education part is critical for both nonprofits and consultants.”
As philanthropy is increasingly dominated by wealthy donors and the next generation is expected to inherit more than $80 trillion over the next few decades, attracting young wealthy people will be critical.
“You need their perspective, and you need their money,” Bailey said.
Advisors to young wealthy people also need to praise them generously. Young donors are more than three times more likely than others to measure the success of their philanthropic efforts through public recognition, the survey shows. Nearly half said they were likely to associate their name with a charity, while more than two-thirds of older donors gave anonymously.
“Praise them, celebrate them, bring attention to them,” she said.
Just don’t call them “philanthropists.” A report from Foundation Source found that 80% of young donors want to be seen as a “giver,” while 63% also like terms like “advocate” or “changemaker.” Only 27% accept the label “philanthropist.”
