For decades, experts have talked about the intergenerational wealth transfer that will shift an estimated $84 trillion from older Americans to their Gen X and Millennial heirs. With the youngest Boomers celebrating their 60th birthday this year and the oldest in their 80s, an estimated $16 trillion will likely transfer hands during the next decade.
I have heard conversations about this wealth transfer for most of my career, usually in the context of nonprofits establishing and growing their planned giving program. While important, this intergenerational wealth transfer has other important implications for philanthropy. That is, as local companies transfer ownership from the current to future generations, their giving goals and approaches will likely change.
How can a nonprofit navigate this changing landscape?
First, recognize that this change will happen and prepare yourself by getting to know the next generation of leaders. Include them in conversations about your organization and giving to your cause.
Second, rather than always asking the CEO to serve on your board or committees, ask their heirs or the next layer of management. Nearly 30% of Gen X’ers (ages 47 to 60) volunteer and, when they do, it doubles their chances of donating to an organization, another reason to get to know them and get them involved.
Third, because each generation brings their own views of philanthropy, you need to change your approach. For example, nearly half of Baby Boomers — the outgoing generation — want to know about a nonprofit’s finances before they donate. Similarly, since they formalized the nonprofit sector, they value recognition and respect for their impact on the nonprofit world. Seek their counsel and advice.
Gen X, on the other hand, prefers collaboration, results, and peers over authority figures. Getting their peers involved will engage them more than your balance sheet will. Younger generations — like 27- to 47-year-old Millennials — value diversity, transparency, and social change. As such, treating a Millennial like a Baby Boomer will spell disaster for your chances of a corporate gift.
Company owners and executives can also help this transition by talking to your heirs and the next generation of executives about your and your company’s philanthropic philosophy. Involving them in conversations about giving and in the community can help them see first-hand both the Quad Cities’ extraordinary need and exceptional generosity and how they can support that.
Linda Wastyn, Ph.D., CFRE, GPC, is the president of Wastyn & Associates, Davenport. She can be reached at Linda@WastynAssoc.com.
