A Glimpse into the Next Generation of Philanthropy
The “next generation” may be the most civic-minded since World War II, with a desire to serve their communities and a general willingness to defer their aspirations to do so.1 This next generation2 appears to be interested in more than just accumulating wealth and retiring, as some previous generations espoused. The next gen believes societal needs are great and wants to make a difference starting at a young age.
This is a group that cares deeply about others, strives for a diverse community and is highly collaborative and social, among other characteristics. The next gen is concerned about inherited issues such as climate change, but also has a pragmatic attitude about the work that needs to be done to address those issues.3 It is a group that is helping to reshape philanthropy.
As parents and grandparents of next gen children, it is important to understand who they are — their mindset — and how you can help them achieve a common goal. Here we address some of the most common issues surrounding philanthropy and next gen.
A shifting focus
Twenty years ago, the focus was primarily on succession planning. Today, however, as the average lifespan has increased, there are five generations over the age of 21 in the U.S. Older generations bring their wisdom and experience, and the next gen contributes the technological or global know-how. Your generation may be viewed as traditionalists who can be pulled by the heartstrings as you protect the entrepreneurial spirit you have worked hard to build in family organizations and businesses. The next gen sees themselves as motivated more by impact and how they can make a difference in the world. But everyone can work together to make an impact through multigenerational philanthropy.
Most of the next gen learn about the value of philanthropy from your generation, transmitting values across generations. The next gen can learn to appreciate the legacy of parents and grandparents, the opportunities you created, the sacrifices you made and the potential of the next gen to make a difference in the world.
How the generations are defined
Post-Millennial generation: Born 1997 and later
Millennial generation: Born 1981-1996
Generation X: Born 1965-1980
Baby Boomer generation: Born 1946-1964
Silent and Greatest generations: Born 1945 or earlier
Source: Pew Research Center
Opportunities to engage the next gen at every level
The key to successfully engaging the next gen is to involve them over an extended period, providing ample time for them to naturally become more interested in — and knowledgeable about — your family’s philanthropic endeavors. Younger family members need age-appropriate preparatory experiences and meaningful roles that are consistent with their level of interest. For families interested in learning more about the development of a family giving program, whether through a foundation or other means, Glenmede provides wide-ranging and comprehensive networking and educational opportunities to clients.
It is never too early to expose younger generations to the ideals and disciplines of philanthropy. This could entail helping preteens to volunteer so they become more aware of the world around them, creating some kind of philanthropic mechanism, individually or collectively, as they become older teens or introducing them to the family’s philanthropic entity in their 20s.
There are developmentally appropriate opportunities at every level. Some families engage in volunteer activities such as serving meals at a soup kitchen or visiting elders in a nursing home. Others create a family giving fund and have the children decide the gift’s amount and recipient(s). One innovative approach is to give children charity gift certificates (such as those available at CharityChecks.us or DonorsChoose.org) in place of a birthday or holiday gift. Each of these measures instills in children empathy and responsibility.
And don’t keep the next gen at the “kids’ table” forever. If you are already engaging your children in a conversation about family philanthropy, it may be time to think about when they could “graduate” to handle more responsibility and have more impact.
Part of preparing the next gen for philanthropy is also discussing wealth and inheritance planning, as failure to do so can create other challenges. Successor generations must be prepared for the responsibilities that come with inherited wealth, both to ensure their personal financial sufficiency and assume stewardship of your family’s legacy. Younger family members need to develop sound financial management habits, understand family values and become familiar with your family’s investment, estate and philanthropic strategies. Age-appropriate education and ongoing family conversations are essential.
Navigating different personalities, interests and ideas
If your family has a foundation or donor-advised fund, there may be multiple families involved — and that can mean complicated dynamics. But having clarity about values, vision, mission, policies, governance, decision-making structure and roles helps reduce the family dynamics at play because everyone understands the goal, where they fit and how decisions are made. Sometimes it may take an outside advisor to help a family work through those dynamics.
Many next gen donors are in an identity-formation stage, trying to figure out who they want to be as donors. Sometimes they may feel “paralyzed” by their predecessors — the people who loom large in their lives and in whose footsteps they will follow — or by privilege, even if it is not their own wealth but philanthropic wealth they are stewarding. Even if they work out those things, they may be paralyzed by possibility. There are more than one million nonprofits in the U.S. and 10 million globally. Although figuring out which to fund can be a daunting task, it is made easier with a clear focus and mission.
Impact investing and the next gen
Millennials spurred the growth of sustainable investing throughout the 2010s, and the interest continues among the next gen today. The next gen wants to use their resources in a way that aligns with their values. They are interested in impact investing with the intention to generate positive and measurable social and environmental impact alongside a financial return. A huge focus for the next gen is climate change, and that may be a big reason for the growth in impact investing, according to a report from Morningstar.4
Since next-gen donors may be more comfortable with peer-to-peer collaboration, online research and digital communication, our Glenmede team of next-gen professionals conducts individual and group tutorials, seeking to establish personalized communication and long-term relationships.
Many next gen donors exhibit an intense earnestness and feeling of urgency: They are on the frontlines of effecting change. They know the climate is in peril and inequality exists, and they want to do something about it. They see the opportunity — and the responsibility — they have to engage, and they want to get involved.
If you have any questions, please reach out to your Glenmede Relationship Manager or email Ken Spruill at Kenneth.Spruill@glenmede.com.
1 Winograd, M., and M. D. Hais. Millennial Momentum: How a New Generation Is Remaking America (New Brunswick, NJ: Rutgers University Press, 2011).
2 In this article, we use the term “next generation,” or “next gen,” to refer primarily to millennials (those born between 1981 and 1996) and post-millennials, or Gen Z
(those born after 1996).
3 De Witte, M. “Gen Z Are Not ‘Coddled.’ They Are Highly Collaborative, Self-Reliant and Pragmatic, According to New Stanford-Affiliated Research.” Stanford News, Jan. 3, 2022.
4 Wendel, S., and S. Lamas. “Who Cares About ESG Investing?” Morningstar (May 3, 2019).
This material provides information of possible interest to Glenmede’s clients and friends, and does not provide investment, tax, legal or other advice. It contains Glenmede’s opinions and/or projections, which may change after the date of publication. Information obtained from third-party sources is assumed reliable but is not verified. Any potential outcome discussed, including but not limited to performance, legislation or tax consequence, ultimately may not occur due to various risks and uncertainties. Clients are encouraged to discuss anything of interest in this material with their tax advisor, attorney or Glenmede Relationship Manager.