Baby Boomers are expected to donate $6 trillion over the next 20 years.
Philanthropy for social good has a huge positive impact on society and the world in which we live. Our collective desire to maximise positive social impact means that as the world continues to evolve, so too must the practice of philanthropy.
The next wave of globalisation will lead to a major increase in private philanthropic investment. A new millennial philanthropic generation is rapidly emerging. It is projected that in the coming 10 years, 14,000 ultra-high net worth individuals globally are expected to pass on USD 3.9 trillion to the next generation, with a further USD 26 trillion passed on within the subsequent 20 years.
From a demographic point of view, Baby Boomers currently are the greatest economic force in giving, and are expected to donate more than $6 trillion over the next 20 years. However, as they give way to the next generation, the rationale and focus of where and how to give is changing.
Millennials recognise the need for change and are looking round for new and innovative ideas to make better things happen. The next generation has grown to expect transparency, sophisticated storytelling and technical savvy from their charitable organizations.
Research by Deloitte found that, across the globe, many millennials feel accountable for societal issues. Philanthropy is integrated into their lifestyles. “Doing good” is directing their choice of career and employer as well as life choices, where and what they eat, what they wear, what they watch and other wider behaviours.
Determined to see results in their own lifetimes, tech philanthropists are more willing to make big, often risky bets, with a focus on solving problems rather than serving needs.
Transparency and Data Driven Philanthropy
Those who seek to maximize the impact of philanthropy and social investing today are keen on changing the current state of paucity of data, transparency and effective feedback loops.
Often enabled by digital technology, donors are increasingly able to follow their money, see change, and directly link results to their donation. Greater transparency enables more focus on areas that can make the most difference. Better collection and use of data has other benefits alongside driving efficiency. It builds Trust.
Women are having an increasing influence in the field of high impact giving. Historically women have always been associated with good causes but recently we can see that they are changing where money is spent and there is a greater focus on helping other women. Women are also more likely to volunteer — and volunteer more hours — than men.
Emotional Giving vs. Effective Altruism
Measuring and monitoring the impact of a donation is clearly data-driven, but what about that first decision, the one where a potential donor chooses to engage with a cause or not? Many begin their philanthropic journey with a personal connection to a specific cause. In the US only 3% of individuals compare organisations before making a donation and only 35% do research of any kind in making a philanthropic gift.
Impact Investing / Venture Philanthropy
Impact investing – investing in assets that offer measurable social or environmental benefits as well as financial returns – is becoming an increasingly popular way of being both philanthropic and profitable. So much so in fact that several establishment names including Goldman Sachs, UBS, BlackRock and TPG, with its $2Bn Rise Fund, have all recently launched impact funds.
Impact Investing has also been endorsed by international organisations such as the UN. At a time when low interest rates around the world have made financial returns harder to find, 75 percent of respondents said that the performance of their impact investments had met or exceeded their expectations. For wealthy millennials, particularly those with business backgrounds who aim for the same efficiency in their giving as in their work, “impactdriven philanthropy” and “venture philanthropy, modelled on venture capitalism, have gained rapidly in appeal.
Used as a tool of both direct giving and raising donations for charities, crowdfunding allows pretty much anyone with a laptop and a bit of connectivity to quickly start and share a campaign for any imaginable social issue, funnelling the proceeds directly to the recipient. Crowdfunding works particularly well in ‘response causes’, with powerful stories including news events, local appeals and disaster relief requests. The crowd is not only being leveraged for the giving of money, it is also being used to access individuals’ time and talent.