Mark Greer

Mark Greer

Managing Director - Philanthropy Services

What do young donors want from their philanthropy?


Article first published, on 26 of August 2022, in Issue 8 of ThoughtLeaders4 Private Client Magazine.

Next generation’ donors, broadly defined as those aged between 18-40 years old, are coming into wealth as part of “The Great Wealth Transfer”, where an estimated £5.5trn wealth is being moved from baby-boomers to millennials. Advisers to the next generation need to understand how this transition is already affecting the philanthropy sector, with younger donors driving major change.

Philanthropy as an action to take while living

Many younger philanthropists embrace giving while living – more so than previous generations – and have a long-term outlook. A focus on results and impact characterises next generation philanthropy and translates to younger donors wanting to see the impact of their philanthropy in their lifetime. In some cases, they might even want to become involved further by using their time, talent and in some cases influence, to further causes, rather than giving purely in monetary terms. 

Speaking to the notion of philanthropy as an ongoing action, younger donors are also more hands on. They want to understand an organisation’s theory of change, make visits to see the impact in action, and evaluate and learn from a programme’s success. According to KPMG’s Global Philanthropy Report, almost three-quarters (71%) of donors surveyed place measurable impact as key when selecting causes to support. 

The trend towards prioritising impact and leaving a legacy for future generations also links to younger donors’ interest in environmental causes. The Environmental Funders Network found that ‘eco-givers’ are concerned that the climate emergency is now reaching the point of no return, and these givers – who tend to be younger – believe that funding causes to alleviate environmental disasters and help slow or reverse the effects of climate change is the most important way for them to help.


Influencing and inspiring others 

Younger donors are conscious of the valuable influence they can exert and the impact they can create through inspiring the broader public to get involved with a charity, cause or campaign. Not only are younger donors more socially conscious and inspired to be a force for good, but they also hope to inspire others to do the same.

The Environmental Funders Network found that HNWs would be motivated to donate even more if they had a better understanding of the positive impact of their giving and if they could see how their contributions effected social change. To connect with these younger philanthropists, it is worth noting that they want to ensure that the way they give takes environmental interests, social equity, and diversity into consideration.

The new generation of younger philanthropists are using their platforms to exert influence and amplify the impact of significant sums of money.  A growing emphasis on equity, for example, is highlighted by younger donors leveraging their positions and success to promote change, including rapper Stormzy and sporting stars Lewis Hamilton and Mo Salah, who lead the Sunday Times Giving List in 2022, which CAF helps to produce. These considerations are crucial as opposed to optional – a departure from the traditionally private nature of philanthropy.

 

Broadening the concept of philanthropy

Significantly, for next generation donors, there has been an expansion of the very concept of philanthropy. Philanthropy is not a passive venture for them, particularly when it concerns investment.

Younger donors are far more likely to be involved in impact investing or mechanisms which allow them to choose both social or environmental and financial returns. They may put together a portfolio of philanthropic investments – just as they would a portfolio of for-profit investments – marrying a balance of risks with potential social returns. We also know of several family offices who have given their younger representatives control over charitable funds to invest in innovative ways, to help them learn about what it means to be responsible for significant amounts of wealth. 

Investing strategically for younger philanthropists might also involve investing in expert-led, innovative initiatives geared towards solving some of the world’s most pressing problems. Take Deutsche Bank’s Ocean Resilience Philanthropy Fund as an example, which CAF is administering. The fund was launched at COP26 in Glasgow in November 2021 to provide donors with a path to support ocean conservation, and it encourages work with scientific experts on innovative projects by focusing on advancing nature-based solutions. The fund is open to donations from philanthropists around the world.

A further increasingly popular method of giving strategically is social investment – which can also have an environmental impact. CAF Venturesome for instance, blends traditional charity with supporting social enterprises through a combination of grants and 0% loans to provide wrap-around support. A recent example of this type of investment is social enterprise Energise Barnsley, who are particularly notable in the context of the current energy crisis. Through CAF Venturesome, Energise Barnsley have paid for solar panels in low-income households in Yorkshire. This has not only led to lower energy bills for the community, but also reduced CO2 emissions across Barnsley significantly. Since these investments are primarily loans, this money is then ‘recycled’ to benefit further causes.

The next generation are expected to be the most significant donors in human history – and it is how they approach their giving that makes them different from previous generations. Understanding the motivations, values and attitudes of the next generation can help foster better client relationships as well as help place us all on the path to more effective, impactful charitable giving.