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
I’m a little late getting the June 10 Great Reads list out this month because I was on vacation. But June didn’t disappoint, with some great articles that make us think about things in new ways, from how philanthropists fund, to how “nonprofit” is defined, to how homelessness and food insecurity can be solved, to how Millennials give and much more.
Below are my ten picks of the best reads in social innovation in June, but please add what I missed in the comments. If you want to see more than just this list of 10, follow me on Twitter, Facebook, LinkedIn or Pinterest. And if you want to read 10 Great Reads lists from past months, go here.
- A new debate raged on the “old” topic of defining the nonprofit sector. Phil Buchanan at the Center for Effective Philanthropy started it off with this 6-part series on articulating the value of the nonprofit sector. And along the same lines, Mark Hecker at the UnSectored blog wrote this really thought-provoking piece about the language of social good.
- From The Atlantic comes a great article about the enormous opportunity of impact investment, “How Financial Innovation Can Save the World.”
- The on-going drumbeat to get nonprofits to advocate for their own sector in Congress gets louder with “Nonprofits Missing From Big Battles (in Congress)” and a united movement among San Francisco nonprofits to push for more city funding.
- David Henderson is easily one of the greatest thinkers in the social sector space and he takes issue with a new app designed to “solve” homelessness. His post really begs the question, “To What End?”
- Always at the ready with fantastic financial tools for the nonprofit sector, the Nonprofit Finance Fund releases a list of Top 10 Finance Essentials for nonprofits and, not to forget that the philanthropy that funds nonprofits also needs to change, they also have a list for nonprofit funders.
- In The Washington Post, Sarah Kliff explores new experiments and studies about how to solve urban food deserts.
- As a mother of two young boys I agree there is definitely something to emulating how kids play, as Philip Auerswald argues at the Harvard Business Review blog: To Innovate, Play with Pieces Off the Game Board
- The third annual Millennial Impact Report, about how the millennial generation connects with nonprofits, was released and lots of people had things to say about the data, including 3 New Truths About Millennials and How Millennials Connect, Involve and Give.
- At the Center for High Impact Philanthropy blog Jen Landres describes how philanthropists can have much greater impact by being “unsexy” in their giving.
- Decrying the over-emphasis on capital campaigns in the arts world, Rebecca Thomas and Rodney Christopher argue that “scores of organizations jeopardize the long-term vibrancy of their programs because they focus on getting the building built rather than having a healthy organization inside it.” Amen to that!
Photo Credit: Frank Starmer