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Patsy Kraeger, Ph.D.
Welcome to Research Friday! As part of a continuing series,we invite a nonprofit scholar, student, or professional to highlight current research reports or studies and discuss how they can inform and improve day-to-day nonprofit practice.
In the coming decades, over 40 trillion dollars will change hands. While a large portion of this wealth will be designated for charitable giving, the people who will inherit this wealth—and direct the charitable giving—are relatively small in number. They are called "next gen major donors," and according to a recent report issued by the Johnson Center at Grand Valley State University and 21/64, they will "have tremendous influence on the direction of and support for efforts to improve local communities and solve global problems over the next several decades."
"Next gen major donors" are defined as people aged 21 to 40 who are persons of wealth and are involved with their families' philanthropic activities. The report, titled Respecting Legacy, Revolutionizing Philanthropy, delves into all kinds of interesting questions about these donors. It suggests that they "will face immense, complex social problems in their lifetimes, requiring them to be both generous and smart in their giving."1 The report was based on 310 survey responses and 30 in-depth interviews with people identified as next gen donors. Four key findings about next gen major donors:
Driven by values, not valuables
These donors are mindful of their family's charitable legacy and want to connect with the needs of the day. They are driven by a deep sense of responsibility and values, and acknowledge their place as a privilege. They were influenced by parents (89%), grandparents (63%), close friends (56%) and peers (47%) in their approach to philanthropy; and for most, a philanthropic mindset was instilled early on in life.
Impact is first
This group wants to be "strategic." They want to add to their philanthropic toolbox, enhance what has been done in the past, and develop new philanthropic strategies. Says one, "we are more excited about projects than we are about place. I think if there is a project that we could choose to fund, we would want do it in several locations." There are five key strategies mentioned: (i) conducting due diligence through research; (ii) determining philanthropic goals and then searching for a fit; (iii) funding root causes that promote systemic solutions; (iv) wanting to see measurable impact and change from an organization before funding is received; and, (v) recommending the cause to others in their network.
Time, talent, treasure and ties
Yes, ties. They want to be hands on and linked in. These donors "want to listen and offer their own professional or personal talents, all in order to solve problems together with those whom the support." For example, one interviewee, David, is a financial adviser from a family of long-term philanthropists. David loves to offer his skills and interests as well as writing a check, becoming deeply engaged in one nonprofit at a time. "When I want to get involved in an organization, it’s all in. If I’m going to be involved with something it is going got be 100 percent, until I feel like I have run my course in that organization, and then I will move on to something else."
Crafting a Philanthropic Identity
This generation does not want to wait until the sunset of their lives to be philanthropic. They want to make this part of their social DNA. In addition to wanting to do more than write a check, "they are eager to be taken seriously." They are likely to use a variety of philanthropic vehicles, including joining giving circles and using pooled funds, and they are more likely to use donor-advised funds strategically rather than start their own foundations. Mutually reinforcing philanthropic connections are central to NextGen donor’s activities. This includes encouraging others to give, or promoting a cause online. Experiential philanthropic learning is also cited as a very important.
By actually practicing philanthropy with their families during their youth, many next gen donors have connected what they learned in their family with what they practice themselves. This is consistent with what research has found about the acquisition of philanthropic values and behaviors. Bjorhovde (2002) in Teaching philanthropy to children: why, where and what, finds that the value of philanthropy and the actions of giving and serving are the consequences of "three primary types of learning: (1) modeling, which involves seeing and hearing, (2) cognitive learning, which combines thinking and discussing, and (3) experiential learning, which involves doing."2 Bentley and Nissan, in a 1996 study, found that "learning is greatly enhanced when children are given the opportunity to engage in giving and serving activities." 3
The report concludes by suggesting that we seriously listen to the authentic voices of these emerging philanthropists. "They want to be proactive, build new skills and develop greater leadership capacities. They are not only willing but enthusiastic about ways of creating change on today’s fast paced and evolving world."
Do the four key findings about next gen donors really make them unique from traditional and past philanthropists? We know that many current and past philanthropists have sought systemic change, evidence of impact, involvement, and have actively created philanthropic identities. Will the next generation really create new institutions and models? Will they dive into new funding mechanisms? Only time will tell. Stay tuned!
Patsy Kraeger received her doctorate from the ASU School of Public Affairs . She also received a graduate certificate in nonprofit leadership and management from the ASU Lodestar Center for Philanthropy and Nonprofit Innovation. She currently works in the public sector. She is also a faculty associate with the ASU School of Public Affairs.
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