Engaging younger members of a family to be involved in philanthropy is one way to preserve family legacies while creating an impact. Cultivating a sense of philanthropy from an early age can empower young individuals to become compassionate, socially conscious, and actively involved in making a difference in the world. Involving the next generation (or “next gen”) such as your own children, grandchildren, younger siblings, or other family members in family philanthropy can take many forms but ultimately it is a collective way of giving together.
The largest wealth transfer in history is underway in the U.S., with the next gen positioned to inherit more than $30 trillion within the next few decades. Baby Boomers (those born from 1946 to 1964) are currently the most generous givers out of all annual giving, but this will slowly start to trickle down as the great wealth transfer continues. This is an important time to engage and empower the next gen in how to make an impact with these funds as there is simultaneously a growing gap of inequality across the country. Overall, however, next gen donors are on average already doing things differently than their predecessors and in more innovative ways. They are giving more towards nonprofit organization’s general operating support, trusting the organizations on the ground to do what’s best for the community and are open to ideas outside of “traditional philanthropy,” such as impact investing, to make an impact. If these next gen donors are already involved in their family’s foundation, they are also more likely to not just use the annual grantmaking budget of 5% towards impact but are also considering their full family foundation’s assets (the other 95%) toward mission-aligned or program related investments (“PRIs”). In addition, according to the IUPUI Women’s Philanthropy Institute, young people have expanded the ways that they approach philanthropy such as through informal mutual-aid networks, supporting local small businesses through the pandemic or running errands for their elderly neighbors.
Parents can begin to have conversations with their kids at an early age around family values and helping others. Encouraging a culture of open communication and regular conversation between generations around pressing issues allows them to have their voices heard and gives them practice at voicing their thoughts and opinions. Additionally, volunteering together, organizing fundraisers, or even encouraging them to start their own small-scale projects are hands-on ways to make a direct impact on causes they care about. Just leading by example can help to spark generosity and gratitude when kids are young: 89% of millennial donors (those born between 1981 and 1996 according to Pew Research Center) are said to have learned philanthropic values from their parents and 63% learned from their grandparents, followed by 56% influenced by close friends. Gen Z (those born after 1996) are also a rising group of young philanthropists and activists and because of technology and social media, have different ways of getting involved in activism and supporting nonprofit organizations online which is already shifting giving trends.
For families with significant wealth, creating a more formalized family philanthropy plan can help ensure that charitable giving is aligned with the family's values and goals, while also providing opportunities for younger family members to learn about giving back and making a difference in the world.
Here are a few ways to begin thinking about how to create a family philanthropy plan:
1. Define Your Values and Mission: The first step in creating a family philanthropy plan is to define your values and mission. What issues or causes are important to your family? What impact do you want to have in the world? By clarifying your values and mission, you can ensure that your philanthropy is aligned with your family's goals and priorities.
2. Encourage Ownership and Decision-Making: Involving children (or other next gen family members) in the philanthropy process can help instill values of giving back and civic engagement. Consider creating a family philanthropy committee, where younger generations can participate in decision-making and learn about charitable giving. Allowing them to choose organizations or projects they are passionate about and guiding them through the process of conducting research and making informed giving decisions can help them develop a sense of pride, accountability, and commitment to these causes.
3. Determine Your Giving Strategy and Giving Vehicle: There are many ways to give back, from direct donations to establishing a family foundation or donor-advised fund. Your family may already have a giving vehicle such as a family foundation, but if not, consider what giving strategy makes the most sense for your family, based on your goals, values, and financial situation. If you already have a foundation, getting your children involved in charitable giving can help to prepare your children to eventually be more formally involved in the foundation.
4. Develop a Giving Process: Once you have a giving strategy in place, it's important to develop a giving or grantmaking process. This might include establishing selection criteria for organizations and determining how gifts will be awarded and monitored annually.
5. Set Goals and Metrics: Setting specific goals and metrics for your giving can help ensure that you are making a measurable impact. For example, you might set a goal to fund a specific number of scholarships or to support initiatives reducing homelessness in a specific community. By tracking your progress, you can see the impact of your giving and make adjustments as needed.
Philanthropy can be complex so it may be worth considering working with a philanthropy advisor or consultant, who can help you develop a giving strategy, establish the right charitable vehicle for your family, navigate the legal and financial aspects of philanthropy that best fits your financial situation, and work with you to make the most of your giving.
Engaging the next gen is a critical step in ensuring the longevity and impact of family philanthropy. Creating a family philanthropy plan can be a powerful way to pass on values and engage the next generation in giving back. Starting early, providing education and exposure, volunteering together, cultivating open communication around family values, and empowering young individuals to take ownership of their giving can help build family legacies and continue to create a meaningful impact on the causes and communities that your family cares about.
Generation Impact: How Next Gen Donors Are Revolutionizing Giving by Sharna Goldseker (Author), Michael Moody (Author)