[Editor's note: The following article was prepared by Wachovia Trust Nonprofit and Philanthropic Services.]
They aren't their parents or grandparents. When it comes to philanthropy, younger affluent individuals have a different outlook on charitable giving and different motivations for sharing their wealth with charitable causes. To successfully engage these individuals as donors, nonprofit organizations need to know who they are and how to approach them.
Who They Are
Essentially, younger donors encompass the so-called Millennials and Generation X, those individuals ages 20 through 44. They make up more than 36% of the U.S. population. Individuals ages 50 and younger currently account for only about 7% of the contributions made by high net worth individuals (identified as those households with annual income above $200,000 or a net worth greater than $1 million).1 But, as a group, younger donors anticipate giving greater time and more money to philanthropy in the future.
Younger high net worth donors tend to have wealth that is "new," rather than inherited. They are in their wealth and profession building years. However, a segment of Gen-X and the Millennials already possesses significant wealth. Nearly 30% of Americans with a net worth of $1 million or more, not including the value of their primary residences, are age 43 or younger.2 Among ultra-high-net-worth individuals (investable assets of $5 million or more), those under age 45 report a higher current level of giving than their elders.3
Overall, younger donors' philanthropy is primarily mission driven, with the mission being the donor's mission, not necessarily the nonprofit organization's. These individuals tend to have specific goals they want to accomplish with their charitable giving, and they are interested in targeting their contributions to address those goals. They see themselves as partners with the charities they support and want to work side-by-side with those organizations to produce results.
"While the Silent Generation donor is often content to write a check and let the charity do the mission work," says Kathryn Miree, President of Kathryn Miree & Associates, Inc., a consulting firm that works with nonprofit organizations, "Millennial and Gen-X donors like to be personally engaged with the charity in fulfilling its mission. Meeting younger donors on their playing field makes it easier for charities to communicate mission and build relationships."
H. King McGlaughon, Managing Executive of Wachovia Nonprofit and Philanthropic Services, adds that younger donors also:
- Have a sense of moral obligation to do good in the world
- Want to protect their assets and preserve their capital, while at the same time creating a legacy
- Like to be connected to other donors who share their interests
- Are concerned about the effects of wealth on their heirs
- Have a long horizon for planning
- Often work with professionals outside the nonprofit ranks, such as financial firms and wealth management professionals, or even start their own foundations
Why They Give
The factors that motivate Millennial and Gen-X charitable gift giving are not always the same ones that motivate their parents and grandparents. For example, a recent study, Generational Differences in Charitable Giving and in Motivations for Giving,4 found that Millennials are much more likely to cite a desire to make the world a better place as a motivation for giving than are their parents or grandparents (see table). Compared to older individuals, both the Millennials and Gen-X are somewhat less likely to say they give due to a "need to provide services the government can't or won't" provide.
Top Five Motivations for Charitable Giving
Source: Generational Differences in Charitable Giving and in Motivations for Giving, The Center on Philanthropy at Indiana University
As for where their charitable dollars go, younger donors are less likely than older groups to give to religious organizations. Millennials are more likely than Gen-X or Boomers to give to international causes. Education gifts are a higher priority for Gen-X, perhaps because they are most likely to have school-aged or college-aged children. And a greater percentage of Gen-X than Boomers gives to environmental causes (see graph).
Giving to Various Causes (% of survey respondents)
*Umbrella organizations include any charity that serves a multiplicity of purposes, such as the Salvation Army, the United Way or combined or federated programs, commercially sponsored, donor-advised funds, and other types of charities that collect funds and allocate them to a wide range of recipients.
Source: Generational Differences in Charitable Giving and in Motivations for Giving, The Center on Philanthropy at Indiana University.
How To Approach Them
What can you and your nonprofit organization do to engage these younger donors? Miree suggests several strategies.
Connect in Person. Through Mission Partnership. To gain new volunteers and greater visibility in the community, consider registering your organization with volunteer networks, such as HandsOn Network (www.handsonnetwork.org) or Youth Service America (www.ysa.org). Alternatively, focus on building your own young volunteer corp by recruiting young leaders in your community. Check school leadership organizations or young community leaders organizations for names of top leaders.
Connect Online. Online engagement is critical in working with younger donors. According to Miree, the Internet is neither a novelty nor a convenience for these individuals. It's a way of life. Post information about your organization on social-networking sites, such as FaceBook and Myspace. On FaceBook, a program named "Causes" is used to connect donors to charitable causes and friends. It encourages giving by posting charitable gifts contributed through the system on the donor's home page.
Consider starting a blog that focuses on your mission and what your organization is doing. To see what other organizations are doing, The Chronicle of Philanthropy's "Give and Take" column maintains an ongoing list of blogs with links.
Give Younger Donors a Role in Governing. Your Organization. Junior boards or young leader societies are becoming increasingly important in developing relationships with younger donors. Because a junior board doesn't have fiduciary responsibility, the greatest challenge is how to use and manage the board members. Miree suggests you begin by setting clear and meaningful goals for member participation that include:
- Connecting board members with each other
- Connecting members with the organization's main board and staff
- Engaging junior board members in substantive work
- Partnering with them to create positive outcomes in the community
- Educating them as you engage them, instead of simply talking to them about your work
Also consider adding one or two spots on your board of directors reserved specifically for younger individuals. Assign another board member as their mentor to help them learn about the board's fiduciary role and board member responsibilities and encourage them to participate in policy decisions.
Similarly, when possible, hire young people to staff your organization. Without younger individuals among your donor, prospect, volunteer, staff, and governance pools, your organization may find it difficult to tailor marketing messages or develop volunteer opportunities that are attractive to younger donors.
Create Your Own Marketing, Volunteer, and Governance Structure for Younger Donors. This structure should uniquely reflect your organization. Do not assume that an approach that works for another organization will work for you.
In addition to these strategies, McGlaughon recommends:
Learning to Work with Other Professionals in the Philanthropic Field. Strive to be a team member with the other trusted advisors of your donors. Think of yourself as a life partner with the donor.
Becoming Donor Centric. Focus on the donor's mission, rather than your own. Young affluent donors want to give their money where specific problems are addressed. They may not be as interested in broad unspecified gifts to an alma mater or to help with a building fund. Think of how you can help the donor achieve "philanthropic actualization."
Striving to be Nimble and Adaptable. Explore new ways of giving for the donor. Young affluent individuals may no longer be interested in the ways donors have given in the past.
Providing Opportunities for Donors to Interact with Their Peers. Consider donor circles, donor teams, and other collaborative tools.
For more information on how Wachovia Nonprofit and Philanthropic Services can help your nonprofit organization work with donors, please contact your Wachovia Philanthropic Consultant.
1Study of High Net Worth Philanthropy, The Center on Philanthropy at Indiana University for Bank of America, 2006
22007 Phoenix Wealth Survey, The Phoenix Companies, Inc.
3Charitable Giving and the Ultra High Net Worth Household: Effectively Reaching the Wealthy Donor, Spectrem Group, 2001
4Generational Differences in Charitable Giving and in Motivations for Giving, The Center on Philanthropy at Indiana University, 2008
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