As wealth transfers between generations, capital is falling into younger hands. And as Millenials and Gen X’ers acquire capital and resources, they view philanthropy differently from older generations. Gone are the days of disinterested capitalists who make their millions any way they can and then write a check or two in the interest of getting their name on a building. Young philanthropists blend their giving with investments and want to see the real-world impact of their donations.
In the past, capitalists typically spent their prime years trying to maximize their profits. Then they turned to philanthropy later in life. This is not true for younger generations. Once Millennials acquire some wealth or capital, they immediately seek to invest in socially-progressive projects.
Older philanthropists also tended to separate their money-making ventures from their charitable giving. They would focus most of their energy on their companies, from which they hoped to make as much money as possible. Then they would seek to make some donations, but in areas that had nothing to do with their businesses. That way, they could separate their philanthropy from their “real jobs.”
Modern philanthropists don’t see their contributions in the same way. They envision a complete business profile in which profits and social contributions are inextricably linked. They are comfortable making money in an endeavor that is also meant to be socially optimal. But they are also happy to consider social factors in all their business endeavors. For them, profits and philanthropy are two sides of the same coin.
Younger donors are also keen to take a hands-on approach. Gone are days of the cigar-smoking philanthropist who writes a check and then puts his feet up on his desk. Modern donors want to see the tangible, direct results of their charity. They want to be personally involved with the management of the charities they give to. For them, it is a serious part of their lives, and they desire the maximum possible involvement.
All of these developments will result in significant evolution in the philanthropic landscape. Charities will have to change the way they operate to attract this new breed of younger donors. But by doing so, they can bring major charitable investments.