The philanthropy world took notice when Jack Dorsey announced in 2020 that he would be giving away $1 billion of his fortune to combat the coronavirus pandemic. Forget the often tedious grantmaking process, which includes applications, review panels, and lengthy reporting guidelines—he would bypass all of it to make an immediate impact.

“I want to give out all of my money in my lifetime,” Dorsey told Andrew Yang during a podcast interview in May of that year.

MacKenzie Scott has taken a similar approach. According to the New York Times, she has already distributed $12 billion to 1,257 organizations ranging from Habitat for Humanity to groups led by women, people of color, and LGBTQ people. The efforts are having an immediate effect for millions of people served by the various grant recipients.

Both Dorsey and Scott are new wealth Gen Xers with new attitudes about philanthropy and giving that reflect the behavior of their generational peers and the millennials, who come after them. They want to put their money to work now, regardless of the amount. “We find that clients, particularly younger donors, enjoy giving while living,” says Katy Knox, president of Bank of America Private Bank. Amplifying the trend is the “spend down model,” in which the goal is to put money to work in the present, as opposed to building a foundation in perpetuity, a strategy employed by such leading organizations as the Atlantic Philanthropies and the Melinda & Bill Gates Foundation Trust. According to a 2020 report by the Rockefeller Philanthropy Advisors and Campden Wealth, nearly one third of foundations have now put deadlines on spending down to address serious issues such as climate change.

“The younger generation believe they are well prepared to take on philanthropic causes, but less than half of the older generation think the next generation’s philanthropic efforts will be as effective as their own,” says Dianne Chipps Bailey, a philanthropic strategy executive at Bank of America Private Bank, citing her organization’s recently released research. And the disparity between these generations is not just about philosophy—it extends to areas of focus, too.

According to a study by the BBB Wise Giving Alliance, younger donors have a higher portion of giving in areas such as civil rights, community action organizations, and environmental efforts, versus more traditional sectors such as religious groups and hospitals. “We work with a number of younger clients who are deeply passionate about racial justice, climate change, emotional wellness, and, increasingly, how these issues intersect,” Knox says. The next generations also have a more expansive view of philanthropy. “Their give-buy-invest framework includes donating to nonprofits but also conscious consumerism and ­mission-aligned investment strategies,” Chipps Bailey says. “Nearly three quarters of the rising generation, compared to 21 percent of older respondents, use sustainable investment strategies.” Next-gen philanthropists are also investing their money in organizations like Benefit Chicago, a collaborative effort that raises money for nonprofit and for-profit enterprises in Chicago that address unmet needs, with a special focus on communities of color and historically marginalized communities.

A key issue for traditional charities is how to cultivate a generation that expects transparency and metrics that show their donations’ impact.

Perhaps the most striking difference between older and younger philanthropists is the mechanics of giving: how they are attracted to fundraising and how they actually dole out the funds. Writing checks at gala dinners is a relic; a recent Wells Fargo survey found that millennials lead the way in new forms of giving, with nearly 60 percent having donated via such newer channels as GoFundMe, social media buttons, and direct payments to influencers. “According to our research, younger generations are three times more likely to inspire one another to give than older generations,” Chipps Bailey says. “They give in community, recognizing the power of many to create change that is enduring.”

Which means that a key issue for traditional charities that rely on donors is how to effectively cultivate a generation that wants to be inspired through storytelling and feel an authentic connection with a cause—and also expects transparency and metrics that show that their donations are having an impact. Over the next 20 years the largest generational transfer of wealth—some $60 trillion in assets—will be passed on to the generations that follow the boomers and their parents. For the philanthropy world, understanding how to be engaged in ways that appeal to not just major philanthropists like Dorsey and Scott but to everyone who has the desire to give back will be critical.

Lettermark
Michael Clinton
Special Media Advisor

Michael Clinton is the special media advisor to the CEO of the Hearst Corporation and author of ROAR into the second half of your life.