In July, Giving USA released their Annual Report on Philanthropy, the industry’s largest in-depth analysis of findings on total charitable giving, giving by sources, and giving to major recipient categories. This report is looked at to define charitable giving trends and opportunities to make an impact. In 2022, Americans gave an estimated $499.3 billion to U.S. charities. While this is a significant amount of charitable dollars, it represents a decline from the extraordinary generosity exhibited during the pandemic era when giving surpassed $500 billion for the first time in 2021. Individual giving, which comprises the largest portion of giving, was about 6% lower last year compared to 2021—13% less when adjusted for inflation.
Yet, there are many reasons to be optimistic about the current state of philanthropy here in the U.S. Individuals are becoming much more sophisticated with their giving. Donors at all levels are seeking savvy and strategic ways to support charities including making larger, multi-year gifts and utilizing complex assets such as appreciated and closely held securities. Gen Z and Millennials want to take a more agile and active approach to giving, and tend to gravitate toward supporting causes through volunteerism, disaster response, and annual giving. These are all encouraging signs, and coupled with the forthcoming wealth transfer, will position individuals and families to make significant impacts through their philanthropic pursuits.
The Rise of the Next-Gen Donor
Technology, always-on media, and a massive “wealth transfer” windfall of trillions of dollars make the current state of philanthropy more prolific than ever among today’s younger generations with some clear generational subtleties shaped by prevailing societal trends. For example, Gen X and Baby Boomers consistently give despite economic conditions, maintaining donation rates year over year. Despite economic concerns, these groups' financial security enables stable philanthropic habits.
Next-gen donors—Millennials and Gen Z’ers—however, are more responsive to, and impacted by, economic changes, making significant lifestyle adjustments. Economic conditions have a profound impact on their philanthropic behaviors and capacities, although despite the economic landscape, Millennial giving has increased, having recently surpassed Gen X giving.
Despite the generational differences, we’re encouraged by certain charitable similarities. For example, the positive social equality values borne from the 1960s movements, in many ways, have transferred to today’s next-gen donors, as highlighted below:
Social Movements
Young people increasingly engage in social movements, with women's rights being a prominent cause. Their engagement involves educating themselves about causes, signing petitions, and changing their purchasing habits in response to social issues.
Beyond Monetary Contributions
Next-gen donors view philanthropy expansively, focusing on social justice and personal involvement. Their involvement extends beyond monetary contributions to volunteering, political giving, and mutual aid networks.
Impact Investing
A notable percentage of Millennial donors participate in impact investing, underlining a shift towards responsible and sustainable giving. This reflects a move beyond traditional philanthropy to incorporate long-term, sustainable investment in positive change.
The Importance of Multi-Generational Philanthropy
With an estimated $72 trillion earmarked for what many have dubbed the “greatest wealth transfer in history” over the next decade, family philanthropy is an excellent vehicle to bridge generations and to introduce the rising generation to family values, mission, philanthropy, and investments.
One of the key questions clients ask is How exactly do I execute a legacy philanthropy strategy? Whether your family has been involved in philanthropy for years, or you are considering the next generation’s wealth transfer, we recommend the following steps to consider, along with working with trusted advisors, to ensure that your values—and the value of your charitable giving—meet your expectations.
Read more about engaging the next generation in our thought leadership piece, Inspiring Philanthropy Across Generations.
Be Planful and Optimize Assets for Charitable Impact and Tax Benefits
As well, think strategically about your charitable giving. Just as no two families’ philanthropic legacies are identical, the strategies used to achieve these legacies should be carefully crafted to each family’s unique set of goals, financial goals, resources, and time frame. In addition, using charitable giving strategies to enhance the tax-efficiency of your donations can play a vital role in maximizing the impact of your gifts. Such strategies include:
- Donating appreciated non-cash assets
- Donating private business interests or restricted stock
- Activating strategies like bunching multiple years of giving into one calendar year
- Including charitable giving considerations into investment portfolio rebalancing
- Offsetting tax liabilities on a retirement account withdrawal
- Naming a charity as a beneficiary of IRA assets or a life insurance policy
- Establishing vehicles to grow philanthropic wealth such as a donor-advised fund, foundation, or charitable trust
Act now, before the end of the year, to maximize your charitable giving. William Blair is dedicated to your charitable mission.
The above contains excerpts from a recent webinar Philanthropic Strategy–Trends and Tips to Activate Your Giving. Please contact your William Blair wealth advisor or contact Laura Coy, partner, head of philanthropy strategy, for more information.
To learn more about charitable giving, read our recent report: Thinking Strategically About Charitable Giving.