GRAND RAPIDS — $40 trillion could do a lot of good for the world.
That is the collective amount of money that will be transferred from older to younger generations in the coming years, according to a new collaborative study released in late January by the Dorothy A. Johnson Center for Philanthropy and 21/64, a New York-based multi-generation consulting group.
“A relatively small group of GenXers and Millennials is inheriting over $40 trillion in wealth, much of that designated for charitable giving,” the report states.
But while the philanthropic community has a good read on its current crop of donors, they’ll admit they lack information on these up-and-coming philanthropists and what motivates them.
“This report is based on the idea that there are rising generations of high-capacity donors … and we don’t know much about them,” Michael Moody, the Frey Chair for Family Philanthropy at the Johnson Center, told MiBiz. “These are 21- to 40-year-olds who are at the stage right now where they are starting to take some role in their family’s philanthropy.”
The report, which can be viewed at www.nextgendonors.org, highlights four key findings:
- Driven by values, not valuables: While people may expect that these children of privilege have no concept of struggle, the report finds otherwise. “Values drive these next gen major donors, not valuables — values they often say they have learned from parents and grandparents,” according to the report.
- Impact first: The report explains that next generation donors see “strategy” — while being an overused word in the world of philanthropy — as one of the most important aspects in their work. “[Next generation donors] see philanthropic ‘strategy’ as the major distinguishing factor between themselves and previous generations.” In other words, they are open to any idea that achieves greater impact.
- Time, talent, treasure, and ties: While these next generation donors all possess the tangible assets of “time, talent, and treasure,” they live in a highly connected world where one can gather information from a huge multitude of sources. The report finds that they aim to use their peer networks to do more good.
- Crafting their philanthropic identities: Even the wealthiest of donors must go through their own period of achieving independence and crafting their own legacy. “How do you craft a philanthropic identity? Mostly, these donors say, through personal experience. They learn most from seeing and doing, or even hearing from others about their own authentic experiences of seeing and doing.”
While Moody says the report highlights many key points and goes in-depth on many of its findings, he emphasized that this upcoming generation of wealthy donors is largely not looking to stray from many of the norms of philanthropists who came before them.
“We found that rising generations are not, as some might think, looking to rebel against their parents and grandparents,” Moody said. “We found that they are not looking to reject all things traditional about philanthropy.”
Marilyn Zach, vice president of development at the Grand Rapids Community Foundation, agrees.
“We’ve found that young people of wealth in this community tend to be … hard working, driven and generous,” Zach said. “While they, in some cases, follow in the giving footsteps of their parents and grandparents, they’re focused on a bigger world.”
However, just as the nature of business has changed for these younger generations — as the climate shifts to more of an entrepreneurial, startup community — so too is philanthropy moving in that direction.
“[Donors] are looking for this balance between honoring the philanthropic legacy that they have inherited and doing things in new and different, sometimes riskier, entrepreneurial, innovative ways,” Moody said.
On a local level, Moody cites Rick DeVos, the Amway scion and founder of ArtPrize and Start Garden, as a good example of this trend.
“[Rick DeVos] is involved in his family foundations and is helping make decisions about where grants go. But he is also doing all kinds of other things in the community where he is starting up organizations. He’s creating platforms for entrepreneurial activities,” Moody said. “He is blurring the boundaries a bit between traditional nonprofit philanthropic activities and for-profit business activities.”
Moody also believes this rising generation of philanthropists — a combination of Generation X, Generation Y, and Millennials — aims to be more hands-on and in the trenches than those who came before them.
“They want to have meaningful, close relationships, to be brought in to do important, significant, on-the-ground tasks. They want to be taken seriously as people who don’t just bring money … but also skills and talent,” Moody said. “They want to be on the ground as opposed to just write a check or sit on a board.”
Moody also explained how this newer generation was more focused on being peer-oriented, or taking advice from those in their social circles. He believes it’s becoming more common for these younger philanthropists to bring assets, financial or otherwise, from their peers.
“Next generation donors think of the assets they can give as not just their own time, talent, and treasure, but also the time, talent, and treasure of those people in their peer networks, people who can give as well,” said Moody. “[By offering access to their peer groups] they can exponentially increase the overall assets given to the organizations they believe in. So we find that they are constantly telling their peers and friends and others about the organizations and causes they support, hoping to spread the word and get others in their networks to give also.”
In a recent interview with MiBiz, Dr. James Edwards, the executive director of the Johnson Center, said many of the philanthropy works that people pay attention to are the large buildings with familiar names on them. However, far more of the philanthropy occurs on a smaller scale, Edwards said.
“Most philanthropy is individual giving,” he said. “Those are the pieces I would focus on.”
However, Moody made clear that for purposes of this study, the researchers looked at the large-scale, high-capacity donors. Moody did note, however, that one of the key differences between this new generation and those before them is their openness and ability for “true-impact giving.”
“We find that overall, like donors of previous generations, they’re looking for impact, knowing that their donations have made a difference. Sometimes they just go about that in a different way than their parents or grandparents,” said Shaun Shira, development officer for the Grand Rapids Community Foundation.
“The next-generation donors are less interested in names on buildings,” Moody said.