Episode 77 : Understanding Generational Giving and Using it to Your Advantage

Welcome to another edition of "Around with Randall," your weekly podcast making your nonprofit more effective for your community. And here is your host, the CEO and Founder of Hallett Philanthropy, Randall Hallett.

Thank you for joining "Around with Randall" with me, Randall. Today's conversation here on the podcast is talking about an interesting series of conversations that I've had recently with leaders as they're trying to decipher the balance, or the the kind of the infighting between what's needed now versus how we invest in the future. Frankly this comes from - as we come out of the pandemic, hopefully continuing to to flourish worldwide as we hopefully have direction with the needs of people in care for fighting Covid-19.

More and more nonprofits are being asked, those in the philanthropy area, to generate more revenue. We need more cash. We need more dollars today. And at the same time, there's this planning aspect of how do we build out over time, particularly if you're looking at things like capital campaigns or feasibility studies. It's kind of a two-to-five-year process, depending on the size of that particular need. What I've kind of begun to realize is that this juxtaposition of what we need today versus how we build for the future actually gets us into a deeper conversation around generational giving, and it allowed me to go back into some of my previous content where I have delivered - like in this particular case a kind of understanding of generational giving - multiple times. But there's updated statistics, updated information, which I found fascinating, which was kind of put on the back burner the last two years. So today I want to spend just a few minutes talking about the generations and their habits and giving, and what we know. But then the tactical piece as we always try to do here with "Around With Randall" is to better understand what to do with that information. And we're going to end up with, the word I used before, kind of a bifurcated approach because if you have one without the other either you're going to get caught now, you're going to get caught later, in some negative outcomes in terms of generating philanthropic revenue. We'll get to that in a few minutes.

So what is it we're talking about when we talk about generational giving? For most of us, we understand that we have generations and that social scientists have put them into groups and I'll kind of highlight each group just for maybe 30 seconds a piece just to give you some context. The greatest generation, which is now being called the matures, I'd never heard that term until about a year ago but anybody born pretty much before 1945. And so this is a dwindling group. They are obviously our most senior citizens they respond to very traditional ways of looking at philanthropy - direct mail, personal contact, they write physical checks, they give to things like what I think of as basic services, emergency needs. They are very supportive of the arts as kind of a secondary or tertiary area, and that they average about $1,350 a year in terms of their giving, just to give you context, those are the the greatest generation, before 1945 or so.

The next is the baby boomers, which we spend an immense amount of time talking about in part because they occupy many of our political leadership positions, although that's beginning to change. But to be candid, they have led the way in our country and somewhat around the world for the past 20 years or so, and this is 1946 being born up to about 1964 or so, is that they are people who respond to emails and calls, which is, I think sometimes surprising to people that emails are so prevalent amongst this group, particularly the older portion of the greatest generation. And the debate and the baby boomers is that we know that they give about $1,200 and just over $1,200 per year. They are very much into need in the moment, so first responders things that are of immediate need. They donate to human causes quite a bit, and they are kind of in this unique position that they are really beginning to acquire or beginning to realize the amount of wealth that they currently have. They have built an immense amount of dollars within their investment portfolios in their homes and their businesses and they're trying to figure out what to do with it, and that's going to come up here in a few minutes when we talk about the tactical generation.

x is next. That's from 1965 to 76. I always find this interesting. I've never had anybody be able to explain it to me why is it that all of these generations are about 20 years but generation X, for which i'm a member of, is only nine or ten years. What what happened here? What happened in society that made that big change? Don't have an answer. Just think it's kind of interesting. Something to ponder. Biggest things that generation X supports are things like health services, animal rights is a big issue for this group, as well as the beginning of the environmental philanthropy needs - the the first generation to really hone in on that. What's most important about generation X, and maybe the upper end of the millennials which we'll talk about here in a second, is the amount of money that they're going to inherit in the next 20 or so years. The estimates that are out there are - and generation X is a huge portion of this money - is somewhere between $40 and $60 trillion dollars will be inherited by this group. So the upper end of millennials, which is coming next but most of it is in generation X, which is again interesting considering it's the smallest in terms of the number of years, so how you leverage that and how you work with them is critically important, really. They they respond to the idea of volunteering and the idea of transparency. So generation X, this interesting group giving about $750 a year on average across the United States.

Millennials is next. That's 77 to 95. This is the first generation that's really being uh influenced by social media that text messaging has become the predominant way they communicate. Interestingly enough, about 84 percent of millennials have already given a gift. Most people think, well millennials are they're kind of off in their own world, social media, they actually have an incredibly high percentage of their population in that 18 19 year span of people who have made gifts. So it's an important aspect to them. They they intend, they tend to want to be more engaged by the purpose or thought process, particularly later in the generation, about mission. And we'll see this then kind of bleed over into generation Z, that what the organization does is really important. And in some ways generation X and baby boomers are more tied to the people in the organization.

The younger we get in today's world the more they're tied really to the mission, and what it does, and they're looking to make change with their philanthropy. They'll support things like human rights. They'll support things like child development. And they support things like victims of crime and abuse. And so we begin to see this shift towards the idea of a mission-driven philanthropy. It's not that the others don't believe in the missions but it it may be more of connected to the people within the organizations. What we're finding more and more is that millennials of generation Z, which we'll talk about here in just a second, are more driven by what the organization does and what they're intending to do.

Last is generation Z and this is from 1996 on and they're looking at cut off maybe uh somewhere in the mid-second decade of 2000's. There's still some questions as to how they're going to break that down. No question, and it's probably not a big surprise, that this is a generation that's deeply influenced by technology and by how technology is used. They are also believing, because of technological advances, that accountability and transparency is beyond critical and that they're willing to support things that are so ingrained in who they are as a person, what is their personal mission statement, and then that philanthropy is really driving where they give based on who they are as a person. Interestingly, about 30 percent of this generation, which in some cases is going to be pretty darn young, has already made philanthropic gifts. So they're engaging at a very high level very early on. And so when we think about well, you know, the millennials and the generation Zs, you know they're just not going to be involved, they're actually trending, in terms of percentage, higher than previous generations in terms of their philanthropy.

So we have these generations and we have an understanding - a little bit of who they are and what they believe in, what they give to. All very interesting things. But as we try to do on each and every edition of "Around with Randall" we try to put this into a tactical, "What am I supposed to do with this?" part of the podcast. And that's now. So here are some thoughts that you're going to have to figure out as a part of this long-term process. I've talked about it many different times that we know in the last 10 years that the number of donors is decreasing but the number of dollars is increasing. And we're now seeing it exponentially with gifts like Mackenzie Scott that very - a small group of people are making an enormous difference in what they do and how that affects our decisions that the idea of major gifts and principal gifts are really driving our organization's philanthropic goals and revenue. So what does that have to do with this? Well, at the same time we see this need, in terms of understanding a small group or smaller group of people, are nonprofit organizations demanding more and more money? It costs more to do business - inflation, pandemic set things back. Different way of looking at the business world in terms of the nonprofit sector. And so as a result we are concentrating very heavily on the idea of the matures for a little while more. The, certainly, the baby boomers. And then into generation X. the problem is is is that when we do that concentration, we're still fighting the problem, challenge of our organization's needing and wanting cash.

I'm having more and more conversations with chief philanthropy officers, boards, if it's like in healthcare or in education there's a CEO or president or someone who's maybe not a fundraiser but they rely on that chief development officer, chief philanthropy officer, greatly, to drive the philanthropy. I'm having more conversations with those ceos talking about this idea of the wealth transfer and planned giving. I can't tell you how many people I've worked with in my career that fit perfectly into the greatest generation. So before 1945 in terms of birth, baby boomers in particular 46 to 64 where they have said they are not leaving all of their money to their children they're gonna leave some to their children but not all. And so that leaves the option, well I guess they could leave it to the IRS but they're not gonna do that either. So it's gonna go to charity, to nonprofits. The problem is, it's not coming until most of the time until there's a death. But yet our CFOs and organizations are demanding more and more money.

There's never been a greater time in our history to really embrace the key and core components of planned giving, that if the organization can find a way to leverage the cash it has or the donations that are cash coming in today and allow a philanthropic office to build out a planned giving program, what will happen will be, organizationally, change the financial picture. Down the road you will be allowed to create endowments that will be able to substantiate and sustain programs in the overall organization as a whole well into this century. I have said for many years that those without larger endowments eventually are going to get caught. They have to make some very hard decisions. The pandemic sped that up in particular with some educational organizations who didn't have endowments or didn't have deep enough endowments they have. They didn't have fallback position. So what I would recommend is that we continually fight to look at our donors more holistically, long-term, and that we have an obligation not only to the donors to be donor-centered, but I think also to the organization that we represent to push, cajole, prod, argue, fight for that planned giving is actually a great financial long-term strategy for the entire organization, the entire nonprofit. And yet, we don't talk about it enough. We need this cash today so we're pushing and pushing and pushing on these generations.

The matures, our greatest generation, the baby boomers, a little bit of generation x, on more and more cash. Where I think there's a greater advantage, if we could find a way to do blended gifts and put less pressure on cash and more attention on planned giving. The other part of this is, because there's such a demand for today, is that we're seeing with shrinking budgets and in development advancement, foundation philanthropy work, fundraising, we're seeing having to make really hard decisions about how we spend our money. And here becomes part of the challenge is that the way in which a baby boomer or generation X individual reacts to your organization, the communication methodology you use, is completely different than what we see in millennials and generation Z's. The idea of how an annual giving mailing program. I'm seeing more organizations, like, well we shouldn't do this anymore because our younger donors don't do this. My question is why are you doing that? Why not segment it and get only to the people that will read the direct mail? Or they're saying we need the money today so we're not going to worry about digital strategies right now, and I'm like but you're allowing all these other nonprofits to get into the game ahead of you with generation Z and a little bit older or younger millennials and establish relationships. This is all critically important to having a diverse communication outreach process, and I've talked about this in various podcasts, from an annual report, which may not be just on paper but needs to be digital, and maybe interactive with video for those that are younger, because that's how they take in information, all the way to the idea of what I think of when we talk about the seven faces of philanthropy.

One of my favorite research projects done by Prince and File in 1994 that really defines seven faces of people who give money, one of which is the dynasty. One of the things that we're very poor at is really understanding that while we may even have the matriarch or patriarch who happens to be, let's say a baby boomer, as a part of our great philanthropy operations that the next generation may not give to your organization. A zionist is someone, according to Prince and File, in the study that will continue that family tradition but that doesn't mean they have to give to you. It just means they're going to give. So identifying that next generation or even more opportune, let's say you don't have that matriarch or patriarch, maybe that family foundation doesn't give to you, what are you doing to build out communication and strategy for that next generation? While you may not get that matriarch or patriarch to change their opinion that next generation could be someone that could be highly advantageous in terms of long-term relationships and future funding opportunities. Here's the problem back to where we start that's not going to probably generate a lot of revenue today, and yet we look at our metrics, we look at what our organization is asking of us, we look at how we budget, and everything's based on this year. Like we've got 12 months to raise this amount of money because we need it desperately. If we don't get it everybody failed, and yet there's no long-term strategy. Most of the time in conversations about what it is we're trying to get to it's almost as if it's like hand to mouth, and what I'd advocate is a much longer five-ten year strategy about how we build relationships and what does planned giving mean, and yes, that may not be viewed by the chief financial officer, finance committee, as the most opportune for today. But it may be best for the long-term. The more you understand these generations it's going to impart wisdom to you on marketing strategies, communication strategy, solicitation strategies. Everybody's different. We should build it be donor-centered. I think there's some trends here that are really interesting that can allow you to have some immediate impact on the short term but also on the long-term strategic vision for philanthropy within your organization.

Don't forget to check out the the blogs online hallettphilanthropy.com two or three a week just put up two or three I thought were pretty interesting just things happening in the nonprofit world leadership 30 or 90 second reads - doesn't take long. I don't write a dissertation there. I'm just writing about thought and what my opinion is and maybe something for you to consider. Most of them have some action or knowledge that might be helpful to you today and into the future, and of course tell a friend about the podcast whether you're doing it here on YouTube or you're listening on Downcast or Apple podcast app or you're at Spotify, I Heart Radio, tell a friend, say hey you might give this guy a chance or leave me a review. I'd be very appreciative. You can always reach out to me at podcast@healthphilanthropy.com. Interesting, challenging times. It's kind of crazy out there to be honest, but that's even more reason for philanthropy to be at the top of people's minds. You are making a difference and I can't impress upon you enough that even though you may not see it every day, you are a big part of what your community needs. Nonprofit work through philanthropy fills holes that the government, that society, that people who have great need. It's just there and it's almost like we take it for granted, and what I'm advocating is that you realize the value that you bring to your organization and your nonprofit. And don't forget my all-time favorite saying, some people make things happen, some people watch things happen, then there are those who wondered what happened. And at the end of the day, what we do, we are people who make things happen for people who are wondering or the things that are important in our community, they're wondering what happened. I'll look forward to seeing you next time right back here on "Around with Randall" and don't you forget make it a great day.