Portraits of philanthropy
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Meet the next generation of philanthropists revolutionizing the world of charitable giving. In a new series of articles from The EIU, sponsored by Fidelity Charitable, we introduce the entrepreneurs, financiers, and heirs donating their money, time and talent to charitable causes. As we prepare for the largest transfer of intergenerational wealth in history, find out more about how these fresh faces will shape the future of philanthropy.
Transcript of Portraits of philanthropy
- 1. September 2014 Portraits of young philanthropists: How Generation X and Generation Y are transforming charitable giving Sponsored by
- 2. September 2014 Portraits of young philanthropists: The next generation of philanthropists Informed, committed, innovative and engaged, Generation X and Generation Y philanthropists are quickly changing the world of charitable giving. And, by some measures, these groups of individuals, born after 1965 (Gen X from 1966 to 1976 and Gen Y from 1977 to 1994), may be the most powerful generations the philanthropic world has ever seen. According to John Havens and Paul Schervish from the Center on Wealth and Philanthropy at Boston College, roughly $41trn will be transferred to these generations via the previous ones by 2052, the largest transfer of wealth in the history of the US. As wealth becomes more concentrated, next-gen individuals will potentially be our biggest philanthropists ever, says Dr Michael Moody, Frey Foundation chair at the Johnson Center for Philanthropy in Grand Rapids, Michigan. Its a relatively small group of people, but they will have an outsized impact on the philanthropic landscape. Who are these young, influential philanthropists, and how are they already leaving their mark on the world of charitable giving? These are the principal questions answered in a series of reports that detail three prominent categories of young philanthropists: entrepreneurs, financiers and heirs. To find answers, we turn to leading experts in the fieldas well as young philanthropists themselves. In our exploration, we highlight differences with previous generations, while also identifying important distinctions within young philanthropists own ranks. Katherina Rosqueta, founding executive director of the University of Pennsylvanias Center for High Impact Philanthropy and faculty member at the School of Social Policy & Practice, explains that every philanthropist is unique and approaches charity through the lens of his or her own specific life circumstances. People bring who they are, what they know and who they know to giving, she says. Nevertheless, while recognising that there is no one-size-fits-all approach for any group of individuals, Gen X and Gen Y philanthropists remain united by a combination of factors: an increasingly global mindset, an active engagement in giving and a strong desire to have a measureable, enduring impact. Globally committed As globalisation and technological advances expand their horizons and connect them instantly to the rest of the world, Gen X and Gen Y philanthropists have developed a broader canvas and a deeper understanding of different communities than did their parents and grandparents. Young givers dont just embrace multiculturalism. They are multicultural by nature, says Aimee Laramore, associate director of the Lake Institute on Faith & Giving at Indiana Universitys Lily Family School of Philanthropy. Indeed, the growing popularity of global causes over the past 10 years largely reflects the growing influence of members of Gen X and Gen Y in philanthropy, Ms Laramore notes, if not necessarily their direct action. Since the Giving USA Foundation began tracking donations to the Sponsored by
- 3. September 2014 international affairs sector in 1987, those charities share of philanthropic gifts has risen steadily. According to the 2014 Giving USA report, while only 3% of charitable gifts went to the international affairs sector in 19992003, this percentage doubled to 6% in 20042008 and remained at that level in 20092013. Generation X and Y philanthropists are interested in contributing to their local communities but also their global community, affirms Dr Una Osili, director of research at Indiana Universitys Lilly Family School of Philanthropy. The international worldview embraced by Gen X and Gen Y philanthropists reflects cultural influences and growing global connectedness, but these donors also share the formative experiences of school-mandated community service and outreach programmes like Teach for America and AmeriCorps, founded in 1989 and 1993, respectively. As a result, they learned to look outside their own communities starting from an early age. Ms Laramore further explains, Young philanthropists are embracing giving, not as something they do on the side, but something central to who they are. Actively engaged Traditional philanthropy has often been about providing funding for and potentially sitting on the board of an established charitable organisation. The next generation of givers is substantially broadening their philanthropic toolkit by pursuing additional approaches that are both more active and more technologically innovative. Connected in myriad ways and active on multiple fronts, young philanthropists rely on the Internet and advances in communications technology to underpin the full range of their charitable activities. In particular, technology helps younger generations to research issues instantly and reach out to their peers and the wider public for support. According to Dr Osili, Gen X and Gen Y philanthropists are successfully using technology as a tool to connect with people and to create virtual communities of charitable givers. Dr Moody agrees, explaining that Gen X and Gen Y philanthropists are not just about delivering time, talent and treasure, but also their social network or ties. They are sharing their extended social network as a valuable resource to a charity they care about. Yet young givers dont hide behind a screenthey show up and get things done in person. According to Dr Moody, the younger generation of philanthropists is uniquely hands-on compared with the less engaged style of older generations. They want to be engaged in an organisation in a meaningful way, rolling up their sleeves, sitting down and solving problems, he says. And theyre reluctant to make a commitment to charitable giving unless they have the time to involve themselves fully. Sharna Goldseker, executive director of 21/64, a non-profit philanthropic consultancy, says she hears young givers remark frequently about their available bandwidth for taking on charitable activities. They commit on so many different levels, she says. Seeking results Gen X and Y are all about impact, says Ms Rosqueta, whose staff largely focuses on how individuals can achieve the most significant results in the areas where they want to concentrate their giving. Because of their focus on impact, Ms Rosqueta notes, young philanthropists are seeing opportunities everywhere. They might get behind a company and buy its products if its the right fit with their view of the world, she explains, or use investment capital to invest in a company focused on social issues. They are using their money in many different ways to pursue their philanthropic goalsnot just providing a grant to a non-profit, she says. This desire to see a practical, tangible result means the young generation of givers is focused on data, measurement and demonstrable results. More than any other generation, they want to check facts, know all the information ahead of time and ensure that they are well-informed at every stage of the process. The older generation displayed institutional trust, says Ms Laramore. But the young philanthropist believes in strategic trust: I will trust you based on what I see. They are definitely looking for demonstrated impact. In many respects, young givers are breaking down preconceived notions of philanthropy. We tend to think of a philanthropist as someone who is older, dies and leaves money behind, says Ms Laramore. But philanthropy literally means love of human kind. Its important to understand that generosity is everywhere, and we are all capable of giving. Young givers are living that. Sponsored by
- 4. September 2014 A wealth of vehicles Perhaps the most obvious choice philanthropists face is which causes to supportbut choosing the right method of giving can be just as important. Now, more than ever, donors can use a variety of philanthropic vehicles to support giving, including private foundations, donor-advised funds, giving circles and many others. The below graph draws from a survey of 310 Gen X and Gen Y philanthropists conducted by the Johnson Center for Philanthropy and 24/7 for their 2013 Next gen donors report. It shows the relative popularity of different vehicles among these younger donorsand also how their methods compare with the vehicles their families use. Personal and family use of philanthropic vehicles (by percentage of respondents) CHECK CASH DONOR-ADVISED FUND WORKPLACE GIVING GIVING CIRCLE/POOLED FUND PRIVATE FOUNDATION BEQUEST CORPORATE GIVING FAMILY BUSINESS GIFT ANNUITY CHARITABLE REMAINDER TRUST CHARITABLE LEAD TRUST OTHER Source: Next gen donors, the Johnson Center for Philanthropy and 24/7 84.8% 58.1 57.4 Personal Family (as reported by respondents) 32.6 23.9 60 17.1 10.3 14.8 4.8 11.6 53.5 6.5 11 5.2 21.6 2.9 8.7 0.6 11 0.6 7.7 7.4 1.9 0 20 40 60 80 100 Sponsored by
- 5. September 2014 Portraits of young philanthropists: Among the categories of Gen X and Gen Y philanthropists, business entrepreneurstech entrepreneurs in particularstand out for their boldness and expertise in innovation and formulating new charitable models. In addition to making their mark on business, they are transforming the methodology of charitable giving.