How different generations approach philanthropy
Each generation grows up in its own context. And that context influences everything about people: their views on social norms, the way they communicate—and even how they practice philanthropy.
That’s crucial to understanding how to work on your family’s philanthropic initiatives with several generations at once.
Four generations, many interests
Your family’s philanthropic efforts may span four generations, each with its own unique world view:
- The silent generation, born between the mid-1920s and the mid-1940s
- Baby boomers, born between the mid-1940s and the mid-1960s
- Generation X, born between the mid-1960s and the early 1980s
- Millennials, born between the early 1980s and the early 2000s
The “silent generation” and “baby boomers,” having grown up during wartime, are likely to support veterans’ issues. “Silents” also give more to religious organizations than later generations. The decline in religious giving among younger generations corresponds to a decline in individuals’ interest in organized religion, according to Sobel & Co.’s Generational Differences in Philanthropic Giving.
Both “gen Xers” and millennials grew up with revolutionary technology, connecting them to worlds beyond their own. These generations are likely to support international causes and human rights, and have a greater appreciation than their elders for progressive social issues, such as LGBTQ rights and gender and racial equality. Millennials are also the largest and most diverse generation of the four.
Different definitions of success
Different generations may have different reasons to give—and different criteria for success.
Millennials see philanthropy as a way to express their identities. Their top reason for giving is to “support a mission or cause that I believe in and that fits with my personal values,” according to NEXUS, a global network of young philanthropists and social entrepreneurs.
Silents and baby boomers feel they make the biggest difference through funding: 45% of boomers say their financial contribution is key, whereas only 36% of gen Xers and 25% of millennials feel the same, according the Sobel & Co. research. Instead, those generations place more importance on volunteering and spreading the word.
Gen Xers and millennials are more likely to evaluate their success based on evidence of their gifts’ social impact. Younger generations are more interested in contributing beyond money, NEXUS says—they want to use their time, networks, talents and skills to make a difference.
Social media, social responsibility
Millennials are driving other changes as well. With social media a dominant force in their lives, they are far more comfortable than past generations with being transparent in their giving and including peers in their efforts.
Millennials tend to want to align their work and values more closely than prior generations have, and they are far more likely to support brands and products that create a positive impact.
While millennials and gen Xers aren’t solely responsible for the rise of corporate social responsibility initiatives, impact investing and social enterprises, their enthusiasm for these approaches is increasingly encouraging their families to consider these new forms of social impact in their own philanthropy and business strategies.
The largest transfer of wealth
Baby boomers comprise the largest donor group, accounting for 42% of all charitable giving, according to a 2016 survey published by the Blackbaud Institute for Philanthropic Impact. However, baby boomers are expected to transfer roughly $30 trillion in assets to subsequent generations, giving their children and grandchildren increasing control over how to distribute wealth.
It’s in your family’s best interests to determine how to reconcile generational differences to create a philanthropic strategy that can evolve and thrive—and how to structure the mechanics and operations of your family’s philanthropy.
An operation built to last
Managing your family’s philanthropy among multiple generations raises a range of operational issues to consider:
- Which family members are interested in philanthropy? Not everyone necessarily wants to participate. The degree to which individuals get involved may reflect their stage in life. You may also want to have an outsider manage the family philanthropy instead of mandating participation from family members.
- What’s the right giving vehicle? Is it the right time to set up new vehicles, such as donor-advised funds, trusts or a family foundation? Before creating these structures, make sure every participating family member understands the time and resources it will take to support them.
- How will family members be involved in staffing decisions? Different structures require different choices, such as which provider to use or who to hire to manage a foundation. Think through and communicate who gets a voice in making those decisions.
- What’s the governance structure? Similar to the above, make sure you’re clear about which family members have decision-making authority, and if that will change over time. Be open and transparent to ensure the whole family has clear expectations.
- How will you manage publicity? Foundations and other vehicles may make a family’s giving publicly visible. Think about the degree of scrutiny your family may face, especially if you have a large family supporting many causes. Do you have a family spokesperson? Do you need a consistent message about your family’s giving philosophy and mission?
- What’s the transition plan? As with other aspects of your life, it’s prudent to communicate a clear succession plan to those involved.
Navigating generational differences and working through these conversations will take patience, understanding and trust. But doing so improves the odds that future generations will remain thoughtful stewards of your family’s legacy, wealth and philanthropy.
To learn more about how you can optimize your strategy for giving, please contact your J.P. Morgan advisor.
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