Will the next generation of givers revolutionize philanthropy?

A new wave of philanthropists that will inherit the unprecedented wealth of the baby boomer generation is poised to shake up the giving sector. The next generations of wealthy givers aren’t looking to follow their parents’ and grandparents’ traditional paths of setting up charities or naming buildings after themselves. Instead, experts say, they are seeking out new ways of giving that will increase their impact. Generation Xers and younger in the United States could inherit up to a whopping $70 trillion from the baby boomer generation, according to a study of wealthy U.S.-based “next-gen” givers from the Women’s Philanthropy Institute. And these younger givers “tend to be more open-minded, liberal-leaning, and actively engaged in advocating for the fair and equal treatment of others compared to previous generations,” according to the report, which focused on giving trends and demographics in the U.S. “They are going to be the most significant philanthropists in history,” said Michael Moody, co-author of the book “Generation Impact: How Next Gen Donors Are Revolutionizing Giving.” Recent research from WPI and other groups compares giving trends among those born roughly between 1965 and 1980, who are known as Generation X, with Millennials, who are born between 1981 and 1996, and an even younger cohort, Generation Z. Early data shows that younger generations tend to be especially interested in equity issues and social justice philanthropy. This includes providing funds to marginalized people and underserved communities in the wake of the COVID-19 pandemic and the 2020 racial reckoning sparked by the death of George Floyd, WPI found. “They’re coming into their roles at a time of tremendous change in this world of philanthropy and related other social innovation enterprises, and they are very eager to embrace that,” he said during a panel Wednesday at WPI’s All In, All Rise Symposium in Chicago. However, philanthropy researchers know much less about these younger donors compared to previous generations, he said. The sector must gain more data because their giving behaviors will impact everyone in the sector, including fundraisers, advisors, foundations, and individual donors, according to Moody, who is also a family philanthropy researcher at the Dorothy A. Johnson Center for Philanthropy. So far, research also has shown that these new givers are more interested in experimenting with different giving styles, taking risks, and investing in ways that create positive social and environmental impacts, he said. Women at the forefront Another key difference is that the people inheriting wealth now are more diverse than previous generations, and more of them are women, Moody said. In family philanthropy, there are more women to take on leadership roles, he said. That trend is emerging in the U.S. and elsewhere, according to Moody, who recently launched research on family and community philanthropy in Mexico. “We know that women are going to be at the forefront of the next generation of donors,” he said. Heidi Roddenberry took the reins of her family foundation because she wanted women to gain more “visibility” within the sector. She launched the California-based foundation with her husband Rod Roddenberry — son of “Star Trek” creator Gene Roddenberry — in 2010. She was named president and board chair in 2017. “I saw how important it was to say that I am the board chair, I am the president, I run this show,” said Roddenberry, who identifies as a member of Gen X. Roddenberry said her goal has been to identify more innovative ways to tackle global issues such as food insecurity and education in lower-income countries. The foundation’s Catalyst Fund provides $2,500 to $15,000 grants for early-stage ideas or projects that address “pressing global challenges.” And its +1 Global Fund responds to “large-scale societal problems” by funding locally led global south organizations focused on water sanitation and hygiene, education, food security, and health. “Almost the entire platform that we stand on is that we think charitable giving is broken,” Roddenberry said during a symposium panel Wednesday. “Too many billions of dollars are given every year and the same problems persist. We need more visibility, transparency. We need more collaboration.” Roddenberry said she considers the foundation “traditional” in that it meets the U.S. tax law requirement for private foundations to pay out 5% of the value of their net investment assets annually. However, it has taken the additional step of changing how it invests the other 95% of its over $90 million endowment to ensure those investments align with the foundation’s environmental, social,and governance goals, she said. The kind of values-aligned investment strategy Roddenberry champions has become popular with younger donors. In 2015, then-Rockefeller Brothers Fund Chair Valerie Rockefeller Wayne announced that RBF would divest from fossil fuels holdings. Rockefeller Wayne is a great-great-granddaughter of American oil tycoon and philanthropist John D. Rockefeller, whose five grandsons established the fund. Born in 1971, she also is part of Gen X. "Young people, of course, are the ones who must live with the world we are building now," she wrote in a 2015 op-ed for The Guardian. "Times change – what was right once, is now wrong – and new innovations beckon." RBF is run by family and nonfamily trustees and its investment assets are estimated to be worth roughly $1.3 billion. The Rockefeller Foundation, a separate philanthropy founded by the Rockefeller family, made a similar commitment to divest its more than $6 billion endowment from fossil fuels in 2020. Working within traditional systems But for now, the oldest generations are still running many of the world’s most powerful foundations. And the next generation of leaders is often trying to work within those systems. When young donors can’t convince investment committees from their family foundations to change, many look for other ways to spend their wealth that more closely reflect their values. Asking investment committees to shift toward investing based on environmental sustainability or potential social impact can be challenging because it means taking on “entrenched” thinking among parents and other older stakeholders, said Abby Pucker, a Chicago-based philanthropist and entrepreneur, during Wednesday’s panel. The 31-year-old is the granddaughter of Hyatt Hotel co-founder Jay Pritzker. Her parents, Gigi Pritzker Pucker and Michael Pucker, operate the Pritzker Pucker Family Foundation. They also head DNS Capital, a family investment office in Chicago. A better option for young people of means can sometimes be to work outside of the traditional philanthropy model and find ways to blend charitable dollars with private capital to create for-profit companies focused on impact investing, Pucker said. She founded a for-profit “community venture” called Gertie that promotes arts and culture in Chicago with a focus on underserved and marginalized communities. The company partners with philanthropies and corporations to help cover its overhead costs and “pay the artists that we work with, and the vendors and the photographers, all the people that we work with equitably and well,” she said. “I think we need more models like that because not everyone is so forward-thinking and as open to changing the way that they’re spending that 95%,” she said. “That’s definitely a big struggle for people who are second, third, fourth generation, who don’t necessarily have control over the 95%.”