A new study from the Source Foundation, Shaping Tomorrow: How Gen Z and Millennials View Charitable Givingfound 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 engaged in charitable activities and starting young (millennials at age 18 and Gen Z at age 14), the methods of younger generations often differ from traditional philanthropy. Their giving is not limited to financial contributions, but includes other activities such as donating items, volunteering and helping with fundraising. In general, their giving tends to be informal and direct, reflecting a desire to make an immediate impact. Importantly, NextGen is moving away from being described as “philanthropists” and “altruists” and instead wants to be described as “givers,” “volunteers,” “advocates,” and “humanitarians.”
Opportunity to Educate
While NextGen's lack of awareness of giving through tax-efficient vehicles presents several 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 (more than a third are unfamiliar with impact investing, faith-based philanthropy or giving circles), the good news is that they show interest in learning more about the range of giving tools.
According to Gillian Howell, head of client advisory solutions at The Source Foundation, “(NextGen is) still in the early stages of their philanthropic journeys and open to learning about different methods that can help maximize their impact. This is a prime opportunity for advisors and nonprofits to educate the next generation about how different approaches can help them do more with their charitable dollars and shape their giving for years to come.”
Stakeholder Engagement Strategies
The study summarizes several engagement strategies for PFs, financial advisors and nonprofits.
PFs can:
- Create roles that tap into the talents and passions of NextGen givers;
- Creating diversity and inclusion initiatives within grantmaking processes to support a broader range of causes and communities;
- Look for opportunities to involve the rising generations in planning, governance and decision-making processes to help them better understand how the foundation itself and the tools and approaches it can use can contribute to the desired results;
- Offer personalized site visits or virtual tours to connect donors with the projects they're supporting.
Counselors can:
- Facilitating 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 non-financial contributions and how these can be a component of an overall giving strategy;
- Proactively introduce new clients to various donation 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.
Non-profit organizations can:
- Develop family-oriented volunteer programs and events that encourage multi-generational participation;
- Implementing targeted outreach programs to engage underrepresented groups, particularly men and individuals of diverse racial and ethnic backgrounds;
- Create a variety of engagement opportunities that enable young people to contribute their time, skills and networks. These programs help build relationships that can become financial contributions in the future;
- Partner with schools, community centers and other organizations to provide educational seminars on various donation vehicles and their benefits; AND
- Create experiences that allow donors to see the direct impact of their contributions on local communities and causes.
Get the main
Younger generations are poised to reshape the philanthropy sector, focusing on direct impact. With the right outreach and engagement strategies, PFs, financial advisors and nonprofits can help educate NextGen on available charitable giving tools and build relationships that can turn into financial contributions later. Meeting NextGen where they are is essential.