The Great Wealth Transfer: The Rise of Next-Gen Donors

We are in the midst of a significant wealth transfer among generations. Tens of billions of pounds will be transferred from the Silent and Baby Boomer generations to Gen X (born roughly 1965-79), Millennials (born 1980-1994) and Gen Z (born 1996-2010) in the next 20 years. Private client advisors and philanthropic organisations need to be ready to help the recipients of this wealth, the “Next Gen,” to further their financial and philanthropic goals.

So how do advisors assist next-generation donors? Understanding what motivates Next Gen philanthropy can help you support your clients. Next Gen philanthropists want to be able to pursue their own passions and interests with their philanthropy. They want to access their resources quickly and efficiently to respond to needs in their areas of interest. Next Gen donors may also get their information in different ways than their parents and grandparents. Gen Z donors are more likely to use social media to research a cause and to donate to organisations.

 

Finding efficient ways to be philanthropic

To help younger donors, advisors should educate them about the advantages of using a donor-advised fund (DAF) to pursue their philanthropy in a timely and cost-effective way. Contributions to a DAF provide immediate tax benefits and a tax-efficient way to give, especially as taxable income increases.

In addition, donors with a DAF at NPT UK can quickly and easily make online grant recommendations to charitable organisations all over the world. The donor makes the recommendation, and NPT UK does all the necessary due diligence to make the payment.

 

Educating younger family members

Millennial, Gen X and Gen Z donors are engaging in charitable activities at younger ages than previous generations, and their inspiration to get involved comes from their families. However, they may be less familiar with how to structure their giving. Advisors can provide information and programmes to help families educate their younger members about philanthropic vehicles, such as DAFs. With a DAF, a family can share decision-making on advancing their philanthropy and provide a way for young people to be involved.

 

Impact investing

Next Gen donors also may want to support their missions through more than cash gifts. They also want to make financial investments towards important causes. Donors with a DAF can recommend that their assets are invested for social and environment impact before they are given away. This enables donors to have impact even beyond the values of their grantmaking.

Next Gen donors want the ability to support their causes efficiently and effectively. For further information on how a DAF can help your Next Gen clients, please contact NPT UK, and our advisors will be happy to help.