NextGen Donors and the New Golden Age of Philanthropy

A new report from the Dorothy A. Johnson Center for Philanthropy and 21/64 gives us the first real glimpse into the minds of the next generation of philanthropists, and it’s fascinating. These are not your father’s philanthropists. Millennial and GenX donors (wealthy individuals, or individuals who will inherit wealth, born between 1964-2000) will control more philanthropic dollars than any previous generation. And more importantly, they think about giving in very different ways than their parents or grandparents did. Which means nonprofits need to pay attention.

This next generation of philanthropists is so critical because it’s estimated that $41 trillion will transfer from the Baby Boom to these next generations in the next 40 years. And since much of this wealth could become philanthropic, some have predicted “a new golden age of philanthropy.”

But it’s not just the unprecedented wealth that makes this new generation of philanthropists so important, it’s the fact that they want to fundamentally change philanthropy. According to the report: “They want to make philanthropy more impactful, more hands on, more networked.”

The key findings from the report are that these NextGen donors are:

• Focused on Impact. “They see previous generations as more motivated by a desire for recognition or social requirements, while they see themselves as focused on impact, first and foremost.”




• Giving Based on Values. “They fund many of the same causes that their families support and even give locally, so long as that philanthropy fits with their personal values.”




• Looking to Be Engaged. “Giving without significant, hands-on engagement feels to them like a hollow investment with little assurance of impact.”




• Paving Their Own Way. “While they respect their families’ legacies and continue to give to similar causes and in similar ways as their families, they are also eager to revolutionize philanthropy.”

This report is further proof of the major trends changing the nonprofit and philanthropic sectors. Given where the sector is heading, there are three things nonprofit leaders should understand and embrace:

• Outcomes are here to stay. In order to compete for funding you must be able to prove the results of what you are doing, what change you are creating. NextGen donors are doing their homework and want to understand what impact their dollars will have. To stay relevant, you need to start by creating a theory of change and then figure out how you can being managing to outcomes.




• Giving has gone social. NextGen donors rely heavily on their social networks to make decisions, including their giving. And they offer their knowledge of worthy causes to their friends as well. So if you aren’t part of the social network you will be left behind. Start to open your organization to become a networked nonprofit and watch your support and influence grow.




• Donors are more than a checkbook. This next generation of donors doesn’t want to just write a check, have their name on a wall and be done with it. They want to really get to know the causes in which they invest. And the word “invest” is an apt one. These donors want to give money, time, mind-share, networks to things they believe in. And if you can employ that passion and investment effectively you will get so much more than just dollars. So figure out how to engage donors in much deeper, more meaningful ways.

This is a really exciting time for philanthropy and ultimately for the nonprofit sector it funds. But it’s up to nonprofit leaders to understand these fundamental shifts and adapt accordingly.

Photo Credit: www.nextgendonors.org

Tags: 21/64, Dorothy A. Johnson Center for Philanthropy, individual donors, major donors, Millennial donors, Millennial giving, networked nonprofit, NextGen donors, nonprofit fundraising, nonprofit outcomes, nonprofit strategy, Philanthropy, theory of change

10 Great Social Innovation Reads: April

In our ongoing blog series, 10 Great Social Innovation Reads, below are my top 10 picks (ok, if you really count it’s 11, but consider it added value) for what really stood out in the world of social innovation in April. But I’d love to hear what you think the best reads last month were. Please add your favorites from the past month in the comments.

1. Are Better Days Ahead for Fundraising? It could be, according to a new fundraising survey and this infographic.
2. But maybe not, since according to new IRS data (that disputes the annual GivingUSA survey) Americans gave about 20% less during the recession than before it.
3. What Can Junk Food Teach Philanthropy?: Sean Stannard-Stockton from Tactical Philanthropy takes a look at how junk food is marketed and wonders if we could apply the same principles to get more people to become philanthropists.
4. An interesting controversy has been brewing around the social enterprise darling, TOMS Shoes, which gives a pair of shoes away for every pair purchased. But some have begun to argue that this type of cause-related marketing is actually quite harmful. The Triple Pundit blog summarizes the debate: B1G1 Virus and the Cause Marketing Paradox.
5. There are two new generations of donors on the horizon, Millennials and Generation Z. Do you know what you need to about Millennials?: What do – and don’t – we know about Millennial donors?
6. And Is Your Nonprofit Connecting with Generation Z?
7. The Nonprofit Finance Fund has been building a treasure trove of information, discussion, tools etc on social impact bonds, a revolutionary way to fund nonprofit impact through government, all in an effort to make them a reality in America.
8. The Path to Sustainability: Bob Ottenhoff from GuideStar gives a great argument about the lifecycles of nonprofits and how revenue must move from foundation support to some sort of market support over time.
9. From the Philanthropy411 blog comes a great list of resources for nonprofits entering, or looking to enhance their presence in, the world of social media: 20 Social Media Resources for Nonprofits
10. Impact Market Failure: Kevin Starr from the Mulago Foundation challenges funders to start funding organizations that can achieve impact and address the failure of the impact funding market.

Photo Credit: susivinh

Tags: Bob Ottenhoff, cause marketing, Fundraising, Generation Z, GivingUSA, GuideStar, Kevin Starr, Millennial donors, Millennials, nonprofit earned income, nonprofit sustainability, Philanthropy, Sean Stannard-Stockton, social impact bonds, social impact finance, TOMS Shoes