BMO Family Office
If you think that philanthropy means stuffing checks into postage paid envelopes that arrive in the mail, you haven’t been paying attention to how millennials and Gen Z-ers do things. This new way of giving will be on display as $30 trillion will transfer from Baby Boomers to their millennial and Gen Z children over the next 30 years.
Millennials, for example, are a generous bunch. Of the 80 million people in that generation, 84% give to charity, according to the Millennial Impact Report. As Gen Z-ers mature into their careers and hit their earnings stride, they are likely to do the same.
But the new generation of donors isn’t content to just give to organizations and let them take the reins. They want a meaningful experience to accompany the giving. Their entrepreneurial spirit also helps them see new avenues for doing good in the world that older generations never considered, such as supporting creative fundraising efforts and starting businesses that can help address problems while also turning a profit.
Young consumers are less interested in material goods, but keen on experiences. That’s evident in their affinity for services like Uber rather than car ownership, for example. Philanthropy is no different.
For past generations, galas and annual fund drives were the opening to get involved with causes. But millennials, defined as those born between 1981 and 1996 by the Pew Research, and Gen Z-ers, those born after 1996, aren’t content to let organizations do the heavy lifting for doing good. They want to roll up their sleeves and get to work. Volunteering helps to connect with a cause on a different level, giving an on-the ground view of what the key issues are and what type of assistance works best. Volunteering can be the first step in their philanthropy journey and getting involved can lead them to open their wallets (digital wallets, that is) later on.
Volunteering is a way to make a difference if a financial contribution isn’t feasible. After all, the younger generation is the one most saddled with substantial student debt.
What’s more, volunteering also makes for compelling social media content. Almost half of millennials create their own social media content and share it widely, according to the Millennial Impact Report. Sharing the experience helps millennials and Gen Z-ers promote causes they care about online and in real life, potentially prompting their peers to get involved too, either through volunteering or donations.
Fundraising, not giving
And when the younger donors do give to charities, how they give may look different too. Because of their penchant for experiences, they may prefer fundraising, which may require a smaller cash outlay from them, but could potentially have greater impact.
Fundraising has a social component, too, allowing them to broadcast their passion for a cause and get friends and loved ones involved too. Through the power of social media, fundraising efforts can amplify the message, helping to raise greater awareness for a cause—not to mention more money. After all, 30 people pitching in for a cause can bring in significantly more money than one person doing it on his or her own.
Participating in an endurance event to raise money for scientific research or the famous Ice Bucket Challenge from a few years back that gathered funds for ALS, provides a visceral experience that giving money alone doesn’t. And it helps the next generation connect with others who are likeminded. Crowdfunding sites like Crowdrise or Indiegogo can help young donors organize their networks and collect small donations for the causes they support.
Millennials are the first generation of digital natives, and Gen Zers weren’t even alive at a time when email and e-commerce didn’t exist. But it’s not just a strong social media strategy that young donors are looking for from charities and organizations. They expect technology to enable them to give.
That might mean a monthly payment (and favoring a platform that supports this financial model) or giving through their mobile phones. Again, they will favor those charitable organizations that make giving easy.
What’s more, young donors are also looking for the transparency and data analytics that tech enables. They want to be able to research and conduct due diligence on a not-for-profit’s website. In addition, they want those organizations to provide easy-to-digest data insights so they are able to judge the effectiveness of their donations.
Tell me a good story
Changing consumer tastes have pushed the power of storytelling to the fore. It’s no longer enough for not-for-profits to ask for money just to support a worthwhile cause. Millennials and Gen Z-ers want to know why they’re being asked to donate. It’s all part of this generation’s emphasis on authenticity. Some not-for-profits deliver by highlighting videos of the people who are helped through donations on their websites or incorporating them into their annual reports.
The organization Pencils of Promise, a not-for-profit that builds schools and trains teachers in the developing world, for example, tells the true stories of students, teachers and schools in remote pockets of the world on its website.
Those stories also make for great content to share, too, further creating a virtuous cycle of giving.
Corporations can play a role, too
Baby Boomers may have been suspicious of anyone trying to turn a profit, but millennials and Gen Z-ers believe that companies—especially mission-driven startups—have a role to play in solving big societal problems like resource scarcity and climate change.
Everyday consumer decisions can drive positive social and environmental outcomes and young consumers are willing to spend more to make that happen. Factory processed meat? No thanks. Younger consumers are more likely to seek out food companies practicing small-scale, ethical farming of plants and livestock, even though it costs substantially more.
According to a report by The Boston Consulting Group, millennials expect companies to care about social issues and avoid doing harm.
As a result, younger donors are less concerned about the corporate/not-for-profit divide than older ones. They are willing to see consumer choices, especially when it goes to a company that puts social responsibility front and center, as part of their “do good” spending.
Younger generations get a bad rap for being disengaged, more interested in the latest selfie than what’s happening to people, animals and the planet. But that might be because they simply have a different approach to charitable giving that may look radically different than it did for generations before. Millennials and Gen Z-ers are deeply passionate about causes, but they have different expectations about how they’ll give their time and treasure. Their outlook is changing the face of philanthropy.
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