The Future Is Now: What Is Next-Gen Philanthropy?

Philanthropy is undergoing a profound transformation, characterized by the emergence of a new wave of donors that are poised to revolutionize the way charitable giving is perceived and practiced. Contrary to the common assumption that “next-gen” refers solely to younger age groups, for the purpose of this article, this term will encompass multiple generations of donors who share a common goal: to create lasting impact. Next-gen philanthropy is not limited to a younger generation of individuals in their 20s or 30s, but rather represents a collective approach that spans across generations.

This redefinition of next-gen philanthropy recognizes that experience, wisdom, and perspective can come from donors of all ages. It acknowledges that each generation brings unique strengths, skills, and values to the philanthropic table, and that together, they can create a more effective and sustainable approach to giving.

While the next generation holds the potential to alter the philanthropic sphere permanently, many prospective philanthropists currently lack the necessary knowledge and support to realize their full impact potential. This is where the philanthropic community can play a crucial role. 

Philanthropic institutions and organizations can harness the expertise and resources of Greater Houston Community Foundation to empower the next generation of donors to become effective, intentional, and impactful leaders in the philanthropic sector.

If you or a loved one are curious about how the Foundation can help you take the next step in your philanthropic journey, give us a call at 713-333-2210 or send us a message today. 

Key Insights

• The “great wealth transfer” is poised to change the philanthropic landscape. 
• Next-gen donors, whether through inherited or self-made wealth, will shape the future, they are still determining who they are. 
• Greater Houston Community Foundation’s Next Gen Donor Institute is a valuable resource for the next generation, whether they have inherited or generated wealth, who are looking to expand their network and enhance their understanding of philanthropy.
• Beyond this next generation of donors, it is essential that we support youth leadership and family philanthropy initiatives to make an impact across generations. 

Table of Contents

• The great wealth transfer
• Who are the next generation of donors?
• How can next-gen donors learn about giving?
• Family philanthropy and youth leadership
• Greater Houston Community Foundation’s Next Gen Donor Institute

What is the great wealth transfer?

The “great wealth transfer” is upon us, and while the lofty name already suggests something unprecedented, the reality is that the generational shift of wealth won’t just affect millions of households but may impact the nation’s economy on a large scale. How much wealth is expected to be changing hands, and how is philanthropy changing because of it?

According to the Federal Reserve, baby boomers currently hold over 50% of the country’s wealth, totaling over $80 trillion dollars, and the silent generation holds close to 12% of total wealth with around $20 trillion. Cerulli Associates estimates this wealth transfer could comprise $84 trillion, with $72.6 trillion earmarked for heirs and up to $12 trillion going directly to charities.

• Silent Generation—born 1925 to 1945.
• Baby Boomers—born 1946 to 1964.
• Generation X—born 1965 to 1980.
• Millennials—born 1981 to 2000.
• Generation Z—born 2001 to 2020.

As wealth is transferred from the silent generation and baby boomers to Gen X, millennials, and Gen Z, it will not only change generations, but also transition into the hands of individuals with distinct values and diverse perspectives on personal wealth and philanthropy.

Who is the next generation of donors?

The next generation of donors and philanthropists are poised to make a significant impact on the philanthropic landscape. With the transfer of wealth from previous generations, many individuals are now inheriting substantial resources, while others have built their own wealth. This convergence of inherited and self-made wealth means that the rising generation will have a historic amount of resources to give, and with it, the opportunity to shape the future of philanthropy.

Another important thing to note about the rising generation, who are vital to the future of giving, is that many of them are likely still learning to give at a more impactful scale. Previous generations of donors have often approached philanthropy in an ad-hoc manner, with a focus on giving without a clear plan or strategy. However, this next generation of donors is charting a new course by prioritizing data-driven and integrated philanthropic planning while building a peer network with similar goals. This shift is not a reflection of past generations’ lack of commitment or passion, but rather a recognition that there is a more effective way to make a meaningful impact.

Today’s donors are seeking to leverage their resources in a more intentional and strategic way, using data and research to inform their giving decisions. This approach acknowledges that philanthropy is not just about writing checks, but about creating lasting change that requires thoughtful planning, collaboration, and measurement. By adopting this more strategic approach, next-gen philanthropists are elevating the field of philanthropy and setting a new standard for effective giving. 

It is imperative that philanthropic organizations and leaders, like the Foundation, guide them through the process.

How can next-gen donors best learn about giving?

In 2022, Greater Houston Community Foundation was featured in a case study titled Next Gen Learning: Lessons for Effective Programs from Houston and the Field, where the Foundation’s years of next gen-focused work was evaluated by the Dorothy A. Johnson Center for Philanthropy in close collaboration with 21/64. By conducting an intensive evaluation, including surveys of program alumni and dozens of in-depth interviews, key insights became apparent for next-gen donors embarking on their philanthropic journey. 

Next-gen donors looking to learn and enhance their giving can do the following:

1. Focus on one type of giving or aspect of philanthropy at a time. While good philanthropic planning requires a high-level view of many moving parts, understanding each individual part is essential to a holistic approach. 
2. Ask yourself who you are as a donor. While the answer to this question will likely change over the years, affirming who you are, your values, and the causes you care about is an essential step in your growth as a donor. 
3. Find a philanthropic partner that can help guide you through your learning journey and takes into account your unique perspective. Having a philanthropic partner ensures not only accountability but also fosters innovative solutions tailored to your vision and goals. 
4. Build your network, seek out other active donors, and remain engaged with your peers over time. Mentorship and support are just as important for donors as they are for the communities they aim to support. 

It’s important for next-gen donors looking to make an impact to develop an understanding of key philanthropic concepts. Partnering with an organization, like the Foundation, whose goal is to help donors deepen their impact can be a great way to take the next step in your philanthropic journey. 

Continue reading:

What is a donor-advised fund?

How do you start a scholarship fund?

What is a Private Foundation?

The Importance of Charitable Giving in Financial Planning

Continuing the cycle: youth leadership and family philanthropy

Establishing a strong foundation of donors at the individual level is crucial for cultivating and sustaining a philanthropic culture within a community. However, one must move beyond the individual focus to effectively spread philanthropic principles and values on a wider scale. 

Family philanthropy plays a vital role in ensuring that the impact endures through generations, regardless of age. If you are a next-gen donor looking to give your family the tools to foster an enduring culture and lasting legacy of philanthropy, Greater Houston Community Foundation’s Center for Family Philanthropy can help. 

A few of the immediate benefits of organized family philanthropy include:

• Creating a bonding experience for your family while making a positive impact on the communities you are passionate about.
• Providing avenues for the younger generation to cultivate their values, critical thinking abilities, decision-making capabilities, community awareness, and leadership qualities.
• Empowering youth leaders to build significant connections with local nonprofit organizations.
• Ensuring a lasting philanthropic legacy for generations to come.

Greater Houston Community Foundation offers family volunteer days, other family programming, and consulting services so that your family can develop and maintain a culture of altruism and make community engagement a family tradition. 

Take the next step: Next Gen Donor Institute 

Next-gen donors looking to develop skills and knowledge around strategic philanthropy and community leadership are encouraged to learn more about Greater Houston Community Foundation’s Next Gen Donor Institute (Institute). Established in 2011, this transformative program has seen over 160 participants gain valuable insights and tools for effective philanthropy.

The Next Gen Donor Institute is a year-long program through which donors can develop a deep understanding of their philanthropic identity and how they may make a greater impact within their communities. The program features hands-on workshops that focus on:

• Establishing your philanthropic identity
• Reviewing the roles of nonprofit organizations and theories of change
• Developing an understanding of both local and national philanthropic landscapes
• Working with professional advisors
• Evaluating nonprofit financials and beyond
• Creation and analysis of strategic philanthropy roadmaps 

At the Institute, you’ll discover that your philanthropic identity is not just about your own giving habits, but also about the connections and relationships you form with like-minded peers. Through our peer network, you’ll gain access to a supportive community of donors who share your passion for creating positive change.

As you participate in our program, you’ll engage in discussions, learn from others’ experiences, and receive guidance from our experienced philanthropic advisors. You’ll gain a deeper understanding of who you are as a donor, and how you can make a meaningful impact in your community.

Next-gen philanthropists can grow with Greater Houston Community Foundation

At Greater Houston Community Foundation, we believe that the power of philanthropy lies not only in the generosity of individuals, but also in the connections they make with one another. That’s why we’re committed to connecting passionate individuals with a community of like-minded peers who share the same passion for impact. 

Next-gen philanthropy heralds a new era of dynamic and impact-driven giving guided by social responsibility. At the Foundation, we recognize the rising generation of next-gen donors as the future of philanthropy. We believe it is crucial to empower and support these passionate individuals by connecting them with one another and equipping them with the necessary tools to make a meaningful impact.

As the baton is passed from one generation to the next, Greater Houston Community Foundation is dedicated to ensuring that the flame of philanthropy continues to illuminate the way forward. Whether you are considering joining the Next Gen Donor Institute or looking to get started with a personal donor advised fund, the Foundation stands ready to assist you. Give us a call today at 713-333-2210 or reach out directly to start a conversation. 

Frequently asked questions about next-gen philanthropy

What is next gen philanthropy and how does it differ from traditional giving?

Next gen philanthropy is a term used to describe a new generation of donors whose values and approaches may differ from donors from older generations. Although many next-gen donors are still learning how to make a difference, they tend to take a data-driven, impact-based approach to charitable giving that prioritizes social impact and long-term transformation.

How are millennials and Gen Z changing the philanthropic landscape?

Millennials and Gen Z are reshaping philanthropy through their emphasis on social causes, commitment to transparency, and leveraging of technology. Younger generations tend to use social media and other technology to research organizations, connect with like-minded donors, communicate their goals, and amplify their impact.

They’re also more likely to seek guidance from philanthropic advisors and utilize complex giving vehicles to maximize their charitable effectiveness while building sustainable giving practices. While strategic philanthropy is in itself nothing new, younger generations are taking strategy to new heights.  

What role does the great wealth transfer play in next-gen giving?

As we discussed above, the great wealth transfer involves an estimated $84 trillion shifting from baby boomers and the silent generation to younger generations, with up to $12 trillion potentially going directly to charities. 

While it’s difficult to predict the role this unprecedented transfer of wealth will have on a global economic scale, we do know that it will create countless new opportunities for strategic philanthropy. As inheritors seek to honor their family’s legacy while establishing their own philanthropic identity and values, the philanthropic landscape is likely to transform alongside broader culture and financial markets. 

How can families preserve generational wealth while maintaining a culture of giving?

Families can prioritize both wealth preservation and philanthropic traditions through family philanthropy programs designed to engage multiple generations in giving activities. These bespoke programs can feature volunteer-based activities, grantmaking discussions, and many other types of family programming to keep the younger generations engaged and informed. 

By establishing structured giving vehicles and educational opportunities, families can teach younger members about responsible wealth management while fostering a culture of community engagement. Preserving generational wealth requires balancing growth strategies with intentional charitable giving that reflects family values.

What are some tax benefits available to younger generations?

Next-generation donors have the same tax benefits of charitable donations that older generations do, including income tax deductions up to 60% of adjusted gross income for cash gifts and 30% for appreciated assets.

They often have even more opportunities for long-term tax benefits that go far beyond utilizing simple charitable deductions; younger generations starting earlier in their philanthropic journeys have opportunities to incorporate complex giving vehicles into their overall financial and estate plans, giving them a long-view of both the tax benefits available to them and the impact they can make with those dollars saved. 

Should next-gen donors consider establishing private family foundations?

While the benefits of a private foundation are many—and include significant control, tax advantages, and family engagement opportunities—they also require substantial initial funding and ongoing administrative responsibilities.

Next-gen donors should understand the full scope of requirements and responsibilities related to private foundations before they begin, to decide whether the complexity aligns with their philanthropic goals, especially when simpler alternatives like donor advised funds may better suit their needs.

Although the increased complexity means increased demands, donors with significant wealth or existing family infrastructure can often benefit from starting a private foundation, with the help of their trusted advisors. 

Continue reading: What is a private foundation?

What are the trends for Gen Z philanthropy?

Gen Z is bringing many new ideas and outlooks to the philanthropic landscape. Their core focus areas, giving preferences, technological aptitude, and approaches to giving are some of the things that most distinguish them from their predecessors. 

Some of their core focus areas include:

• Social justice: Systemic change and equity initiatives
• Environmental issues: Climate philanthropy and sustainability
• Mental health: Community wellness and support systems
• Educational access: Breaking down barriers to opportunity

There are also some big differences between legacy approaches and Gen Z’s preferences for giving:

Some ways in which technology makes a difference include:

• They research organizations through social media and value credibility and authenticity
• They’re open to crowdfunding and micro-donation platforms
• They appreciate and utilize digital storytelling for communication
• Their peer network (and therefore word-of-mouth fundraising) occurs mostly online
• Real-time impact tracking is a necessity

In essence, Gen Z donors are trying to make a difference in the communities that they care about most, just like legacy donors—they just place emphasis on collaboration, transparency, and long-term outcomes, all in service of making a bigger impact. 

What role do philanthropic advisors play in next-gen giving?

Philanthropic advisors serve as essential guides for next-generation donors taking their first steps in charitable giving. Some of the most important services that philanthropy professionals can provide the next generation include:

• Planning to align giving with personal and financial goals
• Help in choosing the right charitable vehicles and structures
• Providing due diligence and evaluating the impact of different charities
• Maximizing charitable deductions and benefits
• Creating sustainable, multi-generational strategies and help build legacies

Network building can also be particularly valuable for next-gen donors. Building connections with like-minded donors in your community can be one of the most important steps in a lifelong philanthropic journey, and Greater Houston Community Foundation’s Next Gen Donor Institute can help you do just that. 

More Helpful Articles by Greater Houston Community Foundation: 

• The Power of Intentional Philanthropy
• How To Get Started with Legacy Giving
• The Power of Collective Giving
• How Charitable Giving Can Enhance Your Legacy Planning
• What to Do with an Inheritance

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