Despite — or perhaps even in response to — the major global disruptions over the past few years, charitable giving continues to grow. Altogether, individuals, bequests, foundations, and corporations gave an estimated $484.85 billion to U.S. charities in 2021.
By far, the biggest percentage — 67% of all contributions — continues to come from individual giving, which —as reportedly by Giving USA’s 2022 report — totaled an estimated $326.87 billion in 2021.
Those numbers shouldn’t necessarily come as a surprise to advisors who discuss philanthropy with their clients, as a Bank of New York Mellon report shows that 91% of high-net-worth individuals (HNWI) agree that charitable giving is a part of their overall wealth strategy. In that report, “personal satisfaction” and “personal connections” rate as the top two motivators to give — all the more reason for advisors to understand the specific needs, goals, and values of their clients.
While having an in-depth discussion with clients is the best way to understand their motivations, knowing the trends that drive different demographics can be a key advantage. Different generations have distinct values and thoughts concerning the concept of philanthropy, in addition to different approaches in how to use technology or what part charity will play in their wealth management strategy. Advisors who are knowledgeable about demographic trends have a leg-up in talking to clients about which charities they’d like to support and how their assets are donated
Here’s the essential details about the different generations and how they approach charity.
Baby Boomers (1946–1964)
Currently the second largest generation, baby boomers came of age during the civil rights era. Baby boomers largely benefitted from the post-World War II economic boom, and many took action in marching for peace or holding rallies for causes they believed in.
Due to a combination of their generated wealth and strong support for movements and good works, they’re considered the “most charitable” of generations, responsible for 43% of total giving within the United States. Baby boomers are some of the wealthiest Americans, and charitable gifts from these HNWIs reached a total of nearly $15 billion in 2021. Giving USA’s 2022 report shows that those “megagifts” of $450 million or more represented about 5% of all individual giving in 2021.
Generation giving trends for baby boomers in the US*:
- An average of 51 million donors
- 72% give to charitable organizations
- Give an average annual gift of $1,212
- Support on average four to five charities per person
The charities that baby boomers are most likely to support include religious organizations and places of worship, local social services, children’s charities and animal rescues. They tend to want details about the organizations that they donate to — mainly their mission, financial structure, and ability to enact lasting change. Being more comfortable with older technology, baby boomers tend to prefer using email and easy-to-use online forms to communicate and manage their wealth.
Because they have the largest amount of assets, including property, estate planning is very important for baby boomers who want to leave something to their children and to causes that they believe in. Accordingly, the tax deductions and ability to avoid capital gains taxes make donor-advised funds (DAFs) a good charitable vehicle for this generation. DAFs also offer ease-of-use and the ability to set up a legacy of giving, making them even more attractive to baby boomers.
Gen X (1965–1980)
Aside from the elderly “Greatest Generation,” Gen X is recognized as the smallest generation, comprising only 19.83% of the total U.S. population. While Gen X grew up during the economic boom of the 80s and 90s, they also experienced market crashes, corporate scandals, and major recessions while establishing their careers. As a result, they’re more likely to have less trust in institutions. That may account for why, as a generation, they are less likely to donate money and more likely to contribute to charities through volunteer opportunities.
Generation giving trends for Gen X in the US*:
- An average of 39.5 million donors
- 59% give to charitable organizations
- Give an average annual gift of $732
- Support an average of four charities per person
The charities that Gen X are most likely to support include local social service organizations, religious organizations and places of worship, children’s charities and animal rescues. Having grown up as the computer revolution was taking hold, they’re more comfortable with using technology, though they still tend to prefer “older” tech such as email and established social media outlets.
Though Gen X is the smallest generation, it is one of the generations that is set to inherent baby boomer wealth as part of the upcoming Great Wealth Transfer. Gen X is also approaching their prime giving years, so while they tend to prefer active volunteering, there’s opportunity for interest in charitable vehicles such as DAFS, which offer them greater flexibility in terms of which organizations they contribute to.
Millennials are the largest generation, comprising 21.75% of the total U.S. population. They may also be the most beleaguered generation, having grown up in the wake of the 9/11 terrorist attacks and subsequent wars in Iraq and Afghanistan. They came of age and started entering the workforce during the height of the Great Recession. Not coincidentally, they are also likely to have struggled early in their professional careers, having been encumbered by low starting salaries and high college debt.
Millennials are the second most racially and ethnically diverse adult generation in the nation’s history. As a result of this diverse makeup and their own experiences with hardship, millennials tend to have a greater awareness of other communities and are the generation that gets most involved in advocacy and public-society benefit causes.
Generation giving trends for millennials in the US*:
- An average of 32.8 million donors
- 60% give to charitable organizations
- Give an average annual gift of $481
- Support an average of three charities per person
The charities that millennials are most likely to support include children’s charities, public society benefit charities, public health charities, religious organizations and places of worship, and charities dedicated to human rights and/or international development. In general, they’re more likely to believe in success obtained collectively as a group, greatly value transparency in organizations, and want to see the direct impact of their giving. Having grown up with the internet, millennials are very comfortable using technology, especially social media and online resources.
Though they currently have less assets to give than other generations, Bank of New York Mellon reports that 97% of millennials consider charitable giving part of their overall wealth strategy. That’s important because, as the largest population, millennials are likely to inherit the bulk of baby boomer wealth as part of the Great Wealth Transfer.
Even with currently limited assets, millennials have played a key role in the 23.5% increase in giving to public-society benefit organizations, which Giving USA calculated as a total of $55.85 billion. These organizations, which include national donor-advised funds, the United Way and civil rights organizations, are steadily gaining in total share of all donations.
Millennials are also supportive of environmental, social and governance (ESG) considerations, with Morgan Stanley reporting that 99% of millennials are interested in sustainable investing. Millennials are more likely to want to work with advisors who are able to match their ESG impact investments with charitable giving.
As a result of the COVID-19 pandemic, more millennials are writing wills and considering estate planning, which may include charitable trusts and planned gift annuities. With this generation’s increasingly forward thinking, DAFs can also serve as great “sticky assets” that can keep them and their children engaged and invested with giving.
Having grown up during periods of economic instability, millennials are more likely to be receptive to “checkbook giving” — that is, doing more ad hoc donations over strategic, regular giving. DAFs can serve as a great option for millennials who want to give, but don’t feel comfortable with committing to regular donations. This may be reflected by a study from Bank of America, which found that donors aged 38 or younger were two and half times as likely as older generations to donate to DAFs and other giving vehicles.
Gen Z (1996–2012)
As for the upcoming generation, Gen Z looks to be the most racially and ethnically diverse adult generation in the nation’s history. They are coming of age in a post-pandemic environment and, even more so than millennials, are rapidly becoming one of the most socially conscious generations.
There are no numbers for Gen Z generational giving trends yet, as they are too young for their charitable giving to be on a measurable scale. However, there are a few basic trends to consider as they continue to mature:
- Often referred to as the “always online” generation, Gen Z’s primary means of communication is through mobile devices and social media.
- As they are extremely comfortable with digital technology, they are quick to jump on board with new fundraising trends and tools, such as crypto — which is continuing to grow in potential as a viable fundraising option.
- Similar to millennials, Gen Z is highly interested in environmental concerns, prefers transparency with organizations they’re involved with, and are highly dedicated to social benefit causes.
- As they have the least amount of capital to invest, Gen Z donors may make use of flex giving accounts, which can provide the benefits of DAFs without the high minimum investment.
Other general trends to consider
- Public-society benefit organizations continue to grow in popularity. Patrick M. Rooney, Ph.D., executive associate dean for academic programs at the Lilly Family School of Philanthropy notes that this is one of the few charitable sectors that grew in 2020 and 2021, a trend that has held steady in 11 of the past 12 years. He notes that “growth in this subsector aligns with increased support for legal rights and voting nonprofits, but it is most strongly driven by giving to national donor-advised funds.”
- Women are increasingly involved in charitable giving. The Women Give 2021: How Households Make Giving Decisions report found that younger couples are more likely to make separate decisions about their charitable giving. In those couples with male and female partners that give jointly, it’s more likely the woman who handles everything. Additionally, it’s been found that women are more likely than men to give to charity as their income rises — with 51% of single women indicating they would give to charity, compared with 41% of single men.
- Donors are more likely to value flexible giving options. The economic uncertainty of the past few years have made younger donors wary of committing to regular donations. As a result, younger donors are drawn to digital giving applications, which not only offer greater convenience, but also allow donors to adjust the time and amount of their donations. Flexible charitable vehicles such as donor-advised funds are also an increasingly popular choice.
Hear why DAFs are able to offer donors greater security in even difficult economic times with our webinar: Opening a DAF in a Volatile Market.
Remember that these general and generational observations are trends and are not necessarily applicable in all cases. Every donor is different, and other demographic attributes such as race, religious affiliation, and geographic location will influence how they give and to whom. In addition, while donors of lower economic means are still likely to contribute to charities, they may prefer more flexibility in how and when they give.
Talk to us to see how you can position the right charitable planning vehicles for your investors. Contact one of our charitable giving experts today to see how you can make philanthropy a part of your holistic wealth management services.
*Generational figures sourced from Generations.com https://www.generations.com/insights/four-generations-for-charity-who-really-gives-a-buck