As the new year approaches, now is a good time to review charitable giving trends and predictions for philanthropy in 2025. According to The Growing Power of Giving: A View from Foundation CEO Joe Mrak2024 has seen charitable giving continue to grow, driven by large wealth transfers and favorable market performance. Source Foundation clients are said to be on track to match or exceed giving in previous years. Opportunities abound for both financial advisors and philanthropic leaders, who play a crucial role in bridging the generation gap to strengthen family legacies and impact the future for good.
The report identifies three key areas to watch for 2025:
- The growing popularity of organized giving;
- The growing influence of the next generation; AND
- The potential of advanced technologies.
Organized philanthropy
The report found that grant-making organizations, such as foundations and donor-advised funds, experienced the strongest growth as wealthy donors continued to invest in the future of the nonprofit sector. Foundation giving is up to 19% of overall giving, crossing the $100 billion mark for the second year in a row. DAFs have also gained popularity among donors, including millennials and Gen Z and advisors, citing ease of use, tax advantages and the ability to match their investment choices with their core values and charitable interests as benefits. principal of the donor vehicle. In general, clients are increasingly using a combination of vehicles and approaches to drive impact and meet their philanthropic goals.
The future general
As the great transfer of wealth continues, high net worth families remain committed to building a legacy that spans generations, but the next generation will shake up philanthropy as we know it. Driven by family values and passion for specific causes, the next generation prefers to be much more hands-on.
The Source Foundation surveyed 1,000 Gen Z and millennial donors to better understand their attitudes, perceptions and preferences about charitable giving. Some staple foods:
- Younger generations consistently emphasize their desire for direct involvement in giving back. They are focused on changing the world for the better, starting with systemic and social change on a local and larger scale, and want to see evidence of progress.
- They do not limit their charitable activities to financial contributions – they prefer to be hands-on, for example by donating items, volunteering, helping with fundraising and sharing expertise/knowledge.
- Their financial contributions are directly related to their earning power and financial resources; people with higher incomes donate more.
- They prefer to be direct and informal, but are also interested in learning more about formal charitable vehicles, such as DAFs and family foundations, and other giving approaches, such as circle giving and community-based philanthropy. trust.
- Their involvement in charitable causes starts at a young age. Millennials started at an average age of 18, while Gen Z started even younger at 14.
The Future of Technology
As artificial technology creeps into more aspects of our lives, it is also set to impact the philanthropic sector. Foundation Source reports that 81% of foundations surveyed use some degree of AI within their organizations. Usage appears to be still at the individual level, while it is still early days for integration at the organizational level.
Whether it's helping foundations more quickly find charities that match their goals and desired impact or streamlining the grant application process and back-office work, experts believe AI can help reduce administrative costs by providing efficiency throughout the grant process and freeing up more time for financial advisors. spend working with their clients.