Charities Learn How to Raise Money from Young People
December 30, 2015
Surveys suggest that arts funding ranks at or near the bottom of Millennials' giving priorities. Millennials tend to be driven by data and outcomes. How can arts-related non-profits fulfill their missions and attract the support of new generations of donors? Here's an opinion from Ben Gose, reprinted from The Chronicle of Philanthropy.
Young donors want more from charities. Are nonprofits ready to meet their needs?
By Ben Gose
Tim Manning is a 28-year-old lawyer in Minneapolis, but he hasn’t forgotten his roots in Spearfish, S.D.
Every few months, he flies home to help improve the public schools that he attended a decade ago.
When Mr. Manning was still in college, his parents began contributing heavily to the Spearfish Foundation for Public Education, which now provides more than $50,000 a year to improve arts education in the town’s schools. Mr. Manning serves alongside his mother on the organization’s board and chairs its finance committee.
In Minneapolis, Mr. Manning says, he donates 4 to 5 percent of his income a year to charities, including to the education foundation, and he is looking for other opportunities to get involved. He recently heard a presentation by the founders of the Rêve Academy, which helps low-income students explore careers in digital marketing, and he zapped off an e-mail asking how he could help.
“My generation is easily engaged,” Mr. Manning says. “Nonprofit groups just need to make sure that they harness that energy for a long-term commitment.”
Figuring out how to corral “next gen” donors like Mr. Manning is a challenge for charities throughout the country, and the puzzle has created a cottage industry for fundraising consultants who study how the giving patterns of younger generations differ from those of their parents and grandparents.
Generation X donors—those born from 1965 to 1980—tend to be more skeptical than older donors about how their charitable funds will be used, experts say, but at the same time they’re eager to volunteer. Millennials—the generation born from 1981 to 1995—share those characteristics.
The millennials are also more likely than earlier generations to learn about charities from peer networks, as Mr. Manning did when the founders of Rêve Academy addressed a group of young philanthropists to which he belongs. The two younger generations are also more likely than their elders to restrict their gifts to specific programs rather than provide general support.
Fundraising consultants say charities should be working hard to woo these younger donors, who currently account for about 31 percent of the $144-billion that individuals give to charity, according to a study released this month by Edge Research, Sea Change Strategies, and Target Analytics.
“When they get into their prime giving years, they’re going to reward the charities that engaged them early on,” says Alia McKee, a fundraising consultant at Sea Change Strategies.
Disappointing So Far
Last year was something of a coming-out party for “next gen” philanthropists. Three of the top five donors in The Chronicle’s most recent Philanthropy 50, its ranking of America’s most generous charity supporters, were under 40: Mark Zuckerberg and Priscilla Chan, John and Laura Arnold, and Sergey Brin and Anne Wojcicki.
Yet in spite of the generosity of the young billionaires, fundraisers say that donations from the younger generations have been disappointing so far.
Many people under 50 came of age during an up-and-down economic period that included the tech-bubble bust and the Great Recession. As a result, members of Generation X are far behind where baby boomers were at the same age in preparing for retirement, a Pew Charitable Trusts study finds, which doesn’t bode well for their philanthropy in coming years. Meanwhile, a number of charities have expressed frustration at finding a formula to persuade people in their 20s and early 30s to pull out their checkbooks.
“Reaching more 25- and 30-year-old donors may very well be the key to the future, but it’s not the key to the present,” says Mark Rovner, a fundraising consultant at Sea Change Strategies and the author of the new study. “If you’re following where the money is now, it’s still in the gray-haired, or at least the gray-streaked, generations.”
In the new survey, members of the elder generations (those born before 1946) and boomers gave far more to charity (an average of $1,367 and $1,212 a year, respectively) than Generation X ($732) or millennials ($481).
Young donors often want to “see behind the curtain” before they commit to a charity, says Robert Wahlers, co-author of a book on generational giving, and senior director of development at Meridian Health, a nonprofit hospital system in New Jersey.
A 40-year-old donor who recently agreed to lead a fundraising event for a children’s hospital also asked to tour new buildings, see medical equipment in action, and meet incoming physicians, Mr. Wahlers says.
“The younger generations will dip their toes in to see if a charity is worthy of their time and energy,” he says. “If they decide it is, then they’ll immerse themselves and you might start a relationship that could last the rest of their lives.”
In the new survey, 57 percent of millennials and 49 percent of Generation X donors said that seeing the impact of their gift would motivate them to make larger gifts to a particular charity. Only 37 percent of boomers and 33 percent of the elder generations said seeing a gift’s impact might elevate their giving.
Ms. McKee says upstarts like Charity: Water, which allows donors to use Google Earth to check the status of water wells that they have paid for, are poised to outcompete traditional charities because they provide greater transparency.
“The competition is coming,” she says.
Established organizations aren’t standing still. In 2011, the International Rescue Committee, which helps refugees rebuild their lives after wars and disasters, started GenR (for Generation Rescue), a group for donors 45 and under that holds its own events.
“We really needed to find a way to reach a younger audience,” says Melissa Meredith, the committee’s director of strategic events.
In New York, GenR recently participated in a career-counseling event in which members advised resettled teenage refugees on their options for college. The same chapter also hosted a holiday party for local refugees.
The International Rescue Committee believes these first-hand experiences will ultimately bolster gifts from young donors. “What we’ve found is that when people feel more connected to our work, it’s easier to make the ask of those people when the time comes,” Ms. Meredith says.
While young people may demand more from charities, they’re also better educated about the nonprofit world than their parents and grandparents were at the same age.
Children with rich parents can often get a sense of the family’s net worth through a simple Google search. And with fewer secrets about wealth, families are becoming more open about discussing finances, including philanthropy, says Sharna Goldseker, managing director of 21/64, a nonprofit consulting firm that specializes in multigenerational philanthropy.
Many family foundations are establishing youth boards so that children can gain philanthropic experience.
The $6-million Frieda C. Fox Family Foundation, in Los Angeles, lets each of its youth board members, ages 8 to 18, make grants worth up to $2,000 per year. The children must first conduct site visits and then make a case to the adult board about why the charity is worthy, says Alan Fox, 73, a real-estate investor who set up the foundation with his wife, Daveen.
The fund also sponsors an annual conference at Disneyland, called Youth Philanthropy Connect, that brings together youth boards from other family foundations to share ideas. Mr. Fox says he decided to get young family members involved after sitting next to a forty-something man at a philanthropy conference who was miffed that his parents had only recently involved him in the family’s giving. “If the children don’t get any experience,” Mr. Fox says, “they’re not going to be any good at it.”
As charities put up more information about their activities—on their own sites and on social networks—young people are often the most adept at finding it.
Mr. Fox’s granddaughter, Jamie Semel, joined the youth board at age 12 and has made grants through the foundation to several Los Angeles charities, including No Limits, a theater group for deaf children.
Ms. Semel, who will be a freshman at Brandeis University this fall, says she goes online immediately after she hears about a charity she might be interested in.
“The first thing I will do is Google it and look at their Internet page,” Ms. Semel says. “And the next thing I do is go to their Facebook page, which is often more casual and less intimidating.”
Serious About Helping
The growing awareness about strategic philanthropy—with explicit goals and the use of data to chart progress—is lending cachet to grant making, in contrast to earlier periods when “charity work” might have been viewed as something that privileged heirs did to pass the time.
“Today, you can go to a cocktail party and say, 'My life is all about social impact,’” says Katherine Lorenz, who in 2011, at age 32, became president of the $115-million Cynthia and George Mitchell Foundation, a fund started by her grandparents. “It’s a profession now.”
Ms. Lorenz exemplifies the depth of experience that some young people are bringing to their philanthropy. She started a nonprofit to fight malnutrition in a rural part of Mexico in her 20s and served for a time as deputy director of the Institute for Philanthropy, in New York. Now she’s bringing more strategic thinking to the causes that her grandparents cared about, including the environment and education.
Mr. Mitchell, who pioneered the fracking technology that ushered in the shale-gas boom, died last month. He vowed to leave the majority of his net worth, estimated by Forbes as $2-billion, to philanthropy, and Ms. Lorenz says that his death will probably increase the assets of the foundation from $750-million to $1-billion. Mr. Mitchell and his wife, who died in 2009, cared about needy youngsters, but much of their giving—to groups like the United Way—was reactive and came in response to worthy requests from fundraisers, Ms. Lorenz says. The fund is now trying to help Galveston, where the Mitchells grew up, craft a comprehensive plan to improve its schools.
“My grandmother’s work was centered on individual lives—people she knew and people she came into contact with,” Ms. Lorenz says. “Our philanthropy is now moving toward more of a 30,000-foot view. We want to help transform the school district so that it can work more effectively. We’re going to go out and find the people who can help do that.”