Posted on August 15, 2017
At The Community Foundation for Ireland, we are increasingly seeing the growing influence of a younger generation in the area of philanthropy. This growing influence is being demonstrated in two key ways:
Firstly, younger people who do well in their business lives are engaging in philanthropy at an earlier stage and in very different ways than their parents and grandparents.
Secondly, families with wealth are increasingly seeing philanthropy as an important way to engage the younger generation and to instil family values and to give back to society.
The importance of next generation philanthropists
This next generation of philanthropists falls under two categories, Gen Y or millennials (born 1988 to 1995) and Centennials or Gen Z (born 1996 onwards). These groups are not only important in terms of the amount of wealth they are set to inherit but also how they will engage in philanthropy.
Research shows that the next generation of philanthropists are developing a different style of giving than older generations. There is a growing interest in new social investment models, taking an active engagement and measuring impact and return on investment.
Major trends for this next generation of philanthropists include:
- Tackling big issues, long gone are the days where donors will predominantly give to a religious institution or one organisation throughout their lives. Tomorrow’s philanthropists want to tackle big themes and will engage a number of organisations on the way.
- Getting more involved in their giving, this is achieved in a number of ways; volunteering, sitting on boards or committees and/or providing their professional services. Tomorrow’s philanthropists want to ensure the success of their investment.
- Leveraging their networks, Gen Y’ers and to a greater extent Gen Z’ers have larger social networks than any past generation. Tomorrow’s philanthropists want to engage their friends, family and organisations they work with or for in their charitable giving and leverage their support.
- Collaboration, while some of today’s Irish donors are still hesitant to publicly share their charitable giving we can already see a trend of younger philanthropists sharing their giving stories. With the lessening need for anonymity more young donors are collaborating on projects to create larger social impact through their combined giving. Tomorrow’s donors will no longer work in private silos but want to collaborate with philanthropists who share their values.
Notions of ‘armchair philanthropists’ – engaging in philanthropy in later stages of life and in a somewhat detached manner have increasingly been replaced by the ‘philanthropreneurs’. Having achieved business and financial success relatively early in their lives, such entrepreneurial philanthropists begin to pursue philanthropic and social entrepreneurship interests at a relatively young age, often demonstrating the passion and energy which drove their original business success.
Involving the next generation in family giving
“People should leave their children enough money so that they would feel that they could do anything but not so much that they could do nothing”
Over the next few decades, we will witness the largest intergenerational transfer of wealth ever recorded. We will also witness a major rise in strategic giving in both Ireland and around the world as the new generation of philanthropists will have a greater potential for social good. In the United States alone, Boston College have predicted an estimated €41 trillion in intergenerational wealth transfers by 2052 with €6.3 trillion in charitable requests.
Within The Community Foundation for Ireland, we are witnessing a growing interest in the concept of approaching charitable giving in a more strategic and impactful way. Individuals and families are concerned to know if their charitable donations are making a difference; they are interested in getting advice as to how to best invest the money they have available; they want to be facilitated to give effectively, with a minimum of bureaucracy but to the highest standards of governance. They are also thinking about how they can engage the next generation in their current giving and how the incoming trend of large intergenerational wealth transfers will affect the next generation and their own legacy.
We already working with a growing number of families where the younger generation is involved as many of our donors are worried about the negative impacts on their children of inheriting vast wealth and they want to use philanthropy as a way to instil values and realise the importance of giving back. This can be achieved through different and personalised giving methods. For example, one family divides their charitable fund into six even portions each year, allowing the five family members to follow their own charitable interests and invest their own portion how they choose, leaving the sixth portion for them to invest as a family in a cause that is close to all their hearts.
The Community Foundation for Ireland supports the family’s strategic giving through assisting in identifying, managing and administering the projects they would like to support, often on a multi annual basis.
“So how did we guide our children into philanthropy? Actually, it is very easy because young people are naturally inclined to be kind, non-judgmental and generous. When they become adults, to keep the momentum going, we decided that we would like them to manage their own giving fund. Here was their chance to have an impact on the issues that were pulling at their heartstrings.
Practically though, it was not as easy as we thought it would be. We wanted them to manage their fund yet we felt that they needed support and we did not want to influence them nor did we feel that we had the expertise to guide them properly. This is the reason why we asked The Community Foundation for Ireland to step in.”
Anonymous Family Fund at The Community Foundation for Ireland
The generation of donors, who fit into the millennial category (born 1981-1999) whether they be self-made or from a family of philanthropists are set to make some of the biggest donations seen to date in a more strategic and impactful way than ever before. Next generation philanthropists are differing in their philanthropic giving and have different influencers than what we have seen before. Similarly, with what is predicted to be the largest intergenerational transfer of wealth ever recorded over the next few decades, these donors hold the future of philanthropy in their hands and have the power to address a number of social issues in a meaningful way.
Head of Fund Development