Giving Compass' Take:
- Here are some predictions on how the generational wealth transfer will shape future giving and how giving practices might change.
- What are the implications of the wealth transfer for the philanthropic sector?
- Learn more about Gen-Z donors.
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In the coming years, trillions of dollars in wealth held by the Baby Boomer generation (born from 1955– 1964) are poised to transfer to their children and grandchildren, millennials (1981 – 1996) and Generation Z (1997 –2012). Today’s younger generations show signs of a radically different approach to giving than that of older philanthropists.
The big question is: How will generational shifts and donors’ evolving values and social interests shape the face of future philanthropy and perceptions of giving?
By some estimates, the greatest generational wealth transfer in the history of the world is already underway. Through 2045, some $84 trillion dollars will pass mostly from baby boomers to Gen X (born 1965-1980) and millennials. What’s more, an estimated $12 trillion of that will find its way into philanthropy, either through foundations, donor-advised funds, impact investing, or personal direct action.
To understand the scale of this change, consider that in 2020 all U.S. foundations together distributed about $472 billion in grants. Adjust for these figures for inflation, and you are still looking at enough fuel to drive philanthropy for more than a century.
A study by Bank of America in 2022 found that people in their forties and older have different views on investment risk and financial preparedness than younger people, impacting their approaches to philanthropy. For example, older individuals are more likely to use donor-advised funds, charitable trusts, and family foundations, whereas younger people are less likely to support charities through these traditional contribution avenues.
But the generational differences don’t end there. Younger generations’ philanthropic engagement extends beyond direct giving to include direct involvement and participation in the work being done. While not a new dynamic, younger generations are explicitly and holistically leveraging their wealth as an expression of their philanthropic values. This offers a glimpse into the significant role their charitable priorities will play in the future of philanthropy.
Today’s digitally native generations also have myriad new ways to engage philanthropically, from personal fundraising over social media, using crowdsourcing platforms, and amplifying both messaging and fundraising for a broad array of causes they care about.
Read the full article about generational changes in philanthropy by Daniel X Matz at Candid.