What does the Great Wealth Transfer mean for philanthropy?
Global wealth has grown astronomically in the past two decades, with a $160 trillion inflation of assets alone. Researchers estimate that global wealth will increase by 38% to $629 trillion in the next two years. But these climbing figures aren’t the only numbers garnering attention: Altrata’s 2024 Family Wealth Transfer report estimates that $31 trillion of these assets will change hands to the next generation by 2033.
This won’t just represent a seat change in generational wealth distribution — it’s an incredible opportunity for fundraisers to connect to new donors and generate more support for their cause. But next gen donors have different wants and needs than philanthropists of previous generations, and this requires a very different donor engagement strategy. Fundraisers that don’t adapt to new donors risk getting left behind.
What does it take to successfully reach the next generation of philanthropists? In a recent conversation, Altrata’s VP of Philanthropy, Valentina Guerrini, sat down with Global Philanthropic’s Founder & CEO Ben Morton Wright, and Executive Director for Europe and Asia Srishti Bakshi to discuss exactly that.
Who are the next gen donors?
For decades, members of the Boomer, Silent Generation, and Greatest Generations have been leaders in philanthropy. Fundraising efforts have been geared to their style of communication and level of engagement, as well as the causes they care about.
However, Gen Xers, Millennials, and Gen Zers are poised to become the dominant philanthropists by the end of the decade, and these ‘Next Gen Donors’ have wildly different values, needs, and approaches to giving. The entire fundraising landscape is changing to accommodate them.
Research from the Abacus Cooperative found that Gen Z adults have already eclipsed Millennials and Gen Xers in amount of donations per donor. However, those currently in their mid 40s and 50s are next in line to inherit immense family fortunes. Millennials and Gen Zers may receive wealth from their grandparents in the next decade, but the legacies won’t be as substantial as parental wealth transfers.
In spite of the vast differences in wealth between these generations, Guerrini points out that next gen donors by and large want to integrate philanthropy in all aspects of their life — viewing charity as a responsibility rather than an obligation.
She goes on to highlight additional characteristics that set next gen donors apart from previous generations. These next gen donors:
- Focus on new metrics, with a special interest in transparency and impact measurability that differs from most traditional non profit reporting models
- Prioritize long-term impact, especially how giving can create or contribute to tangible, systemic change
- Champion philanthropy as business, blurring the lines between charity and for-profit endeavors through social enterprise, B corps, and other emerging forms of social impact
- Understand global citizenship, understanding themselves as part of a larger whole rather than isolated individuals or members of a smaller community, and with an outsize impact on the world
- Prefer digital engagement that allows them to communicate, give, and track impact on the go, especially from their phones
But next gen donors have different wants and needs than philanthropists of previous generations… Fundraisers that don’t adapt to new donors risk getting left behind.
What it takes to create a next gen donor engagement strategy
Summarizing the outlook from his organization’s Talking Philanthropy event, Wright pointed out that the upcoming wealth transfer isn’t just the largest in modern history, it’s a source of hope for the entire nonprofit sector.
If just 1% of that $31 trillion goes to charity it would create a remarkable impact in the world. But given next gen donors’ higher interest in charitable giving, we have the opportunity to direct even more than that into philanthropy. Allocating just 2 to 5% of that wealth transfer could literally change the world.
Guerrini, Wright, and Bakshi then discussed at length what fundraisers need to keep in mind if they want to realize the full potential of this moment. Here are the top elements of an effective next gen donor engagement strategy:
- #1. In-depth donor prospect research
Do you know if your current donors are actively involving their heirs in philanthropy discussions? Who are these heirs, and are they in your database?
How involved are each of your individual donors in giving? Do they prefer symbolic participation or deep, hands-on engagement?
Do you have a map of the relationships between your high net worth donors?
Are your high net worth donors aligning philanthropic endeavors between their corporations, foundations, and trustees?
Guerrini identified these questions as some of the most essential to answer before you begin trying to engage next gen donors. If you understand your donors at this individual level, you’ll be well equipped to create highly targeted and engaging outreach campaigns, and leverage relationships for maximum impact.
Guerrini also stressed the importance of having complete data around family wealth, household wealth, and individual wealth for each donor. Fundraisers need to understand how wealth is flowing through a family rather than just having a picture of individual net worth.
- #2. Transparency
In addition to understanding who the next gen donors are, you have to understand what they want. Gen Xers, Millennials and Gen Zers tend to have much different expectations and attitudes about the impact they want to make with their philanthropy, what they look for in reporting, and their level of involvement, not to mention the types of causes they support.
Before you begin executing your next gen donor engagement strategy, it’s important to update your framework for reporting impact and campaign contributions to better align with the metrics and data that next gen donors are looking for.
- #3. Thorough Vetting
In today’s digital media landscape, news of any scandal or corruption in the nonprofit sector can spread faster, further, and wider than ever before. What’s more, next gen donors pay closer attention to ethics and authenticity than previous generations. Any negative piece of media can incur massive reputational damage to your organization and impact the way that next gen donors look at you.
In fact, public outcry against the Sackler family’s wealth (built on an opioid addiction epidemic started by their company, Purdue Pharma) was so strong that many prestigious institutions had to repudiate the family’s funding. It’s now more important than ever to conduct thorough background checks and due diligence on prospective donors to ensure they’re in alignment with your ethical fundraising practices.
- #4. Intergenerational Dialogue
Wright highlighted that a major indicator of philanthropic success among high net worth families was whether or not they have a dialogue about giving. Even though these discussions are incredibly private, fundraisers can and should play a role in helping to facilitate these conversations — not only to promote ongoing philanthropy, but to raise awareness of their causes.
For example, savvy fundraisers can speak directly to high net worth individuals about philanthropy as a wealth transfer strategy or support existing donors in having conversations with heirs about the philanthropic expectations of their legacy. On the other hand, content and materials targeted to next gen donors can help them advocate for their own charitable interests and causes as they discuss their plans as stewards of the family fortune.
- #5. Digital First
Millennials and Gen Zers are notorious for preferring mobile experiences, but Gen X has also adapted well to the digital landscape. With online banking now the norm, Global Philanthropic has found next gen donors are more inclined to use a similar platform for charity as well — especially since smart tools can provide more visibility and help make more informed giving decisions.
Fundraisers should update existing presentations and outreach materials to digital- experiences with enhanced features, like interactive media, AI analysis, and even personalized video messaging to reduce the need for scheduled meetings.
Altrata: a treasure trove for prospecting and engaging next gen donors
No matter how much next gen donors differ from their forefathers, strong relationships will always be the biggest key to donor engagement strategy. It’s critical for fundraisers to find ways to maintain a human element as they incorporate more data into their approach.
Altrata, a leading provider of people intelligence, is key for developing the deep understanding needed to successfully engage both current and next gen donors. Researchers build detailed profiles of each subject, gathering data about individual, household, and family wealth, relationship maps, causes supported, personal interests, and even how giving is scheduled.
These capabilities are invaluable to improving engagement of any donors interested in your cause, not just high net with individuals. Altrata’s latest Ultra High Net Worth Philanthropy Report found that $312.6 billion of the $502.4 billion of total individual giving in 2022 came from non-UHNW individuals.
No matter how much next gen donors differ from their forefathers, strong relationships will always be the biggest key to donor engagement strategy.
Regardless of your donor engagement strategy, Altrata’s in-depth insight equips fundraisers to engage donors as real, well-rounded people, encompassing not only them as individuals, but as legacy bearers who can change the world.
Want to learn more about next gen donors? Watch the full conversation between Guerrini, Wright, and Bakshi here. Learn more about Global Philanthropic’s groundbreaking outreach tools here.
Ready to engage the exceptional? Schedule a demo of Altrata, today.