Four Ways Next Gen Donors Responded to 2020Submitted by American Endowment Foundation on December 27th, 2021
By Sharna Goldseker, Michael Moody, and Holly Honig, Guest Columnists
By now, most of us have read or heard about how the philanthropic world has responded — and is still responding — to the dual crises of 2020. At this time last year, as communities and nonprofits began to struggle with the consequences of the pandemic and the economic fallout, funders searched for ways to help (or at least not cause harm). Then came a national racial outcry and reckoning, raising tough questions about philanthropy’s often rocky relationship with social and racial justice.
We have since learned about the many foundations that, in response to the 2020 crises, have streamlined application processes, converted program grants to operating support, relaxed reporting requirements, and committed new dollars to emergency needs. Some funders also initiated new giving to social justice causes and advocacy groups or conducted internal reviews to bring a race equity lens to their grant making or operations procedures.
However, we’ve heard less about how one incredibly important cohort of major funders responded to 2020, the group of rising Gen X and millennials we call “next gen donors.” As Sharna and Michael have pointed out over the past few years, these next gen donors promise to be the most significant donors in history, due to their unprecedented resources (both earned and inherited), their already evident appetite for revolutionizing philanthropic norms and practices, and their willingness to experiment with new innovations.
How did next gen donors in their 20s, 30s, and 40s shift their giving patterns, if at all?
To help answer this question, we fielded a survey last summer asking next gen donors what they were doing — personally, with their extended family, or with their peers. We also asked next gen donors about this as we encountered them in our work. We received over 100 replies to the survey, filled with details of specific new ventures and family engagements, as well as stories of frustration as they scrambled to respond in appropriate yet effective ways.
We summarize here four major categories of those next gen donors’ responses to the crises of 2020, many of which are now continuing into this new year.
1. Still Looking to See Impact
In Sharna and Michael’s research on this group of emerging major donors over the years, we have been calling them “Generation Impact” because of their intense, almost single-minded focus on seeing the results of their giving. They do not want to give merely out of obligation, because friends asked, or because their advisors told them it would be good for tax deductions. Rather, they want to see the needle move on a range of long-standing challenges.
So it is not surprising that in our survey about what they did in 2020, these donors also talked a lot about impact. But they seemed to define “impact” differently this past year. They highlighted rapid and creative crisis response, stories of trying to “get more money out the door” quickly, of supporting those they saw “working on the front lines” in their communities or in movements, and of looking for ways to intensify their local engagement with racial equity and social justice causes. Many said they increased their giving during the year, and some did so substantially. For instance, some talked about making big new gifts to nonprofits on the front lines of the pandemic or to the movement for Black Lives, or partnering with local institutions to funnel direct cash transfers to struggling families.
Like other funders, many mentioned how they worked to make giving easier and faster, moving new money quickly and letting on-the-ground partners decide how best to use it. One woman who runs her family’s foundation in a large East coast city told us she pushed for allocating all of their 2020 grants in the spring so grantees wouldn’t have to wait. But for next gen donors, these shifts in giving practices seemed to come easier than for others. For one thing, they were already chomping at the bit to make giving and grant making move faster, to streamline some of the glacial bureaucratic processes they dislike about traditional giving. And again, all these responses were designed to create tangible impact these donors could see.
2. Going All In With All the Tools
Like many of us, next gen donors didn’t have just one response to 2020. They had many. And they didn’t just react by giving money. They looked for ways to give their time, talent, and ties as well as treasure. They did more outside of giving, too, from political action to changing where they shopped and invested.
We were somewhat surprised by the long lists of actions many donors detailed. It wasn’t unusual for an individual to describe home-crafting masks, making food pantry deliveries, marching in protests, and working the phones for a political campaign. And, 68% of respondents to the survey mentioned — without prompting in an open-ended question — some form of political or movement activism in response to the crises. This was in addition to the funding for BLM and other organizing that many of them offered in 2020.
Many emphasized giving their talent, such as offering pro bono advice or lending business, financial or legal acumen to organizations in need — e.g., helping nonprofits apply for Paycheck Protection Program (PPP) loans, advising them on how to adjust their budgets or devise a new business plan. Hadi Partovi, a tech entrepreneur/investor featured in Generation Impact, now gives his acumen through Code.org, a nonprofit he founded. During the pandemic, Code.org began hosting a weekly live-interactive classroom for students around the world to learn computer science, to support parents and students while schools were closed during the height of the pandemic.
Next gen donors also leveraged their “ties” for action, inspiration, shared learning, and of course giving. This isn’t a surprise given how much these rising donors already embrace peer networks. One 2020 donor found strength and comfort in this peer collaboration and learning: “I think I am less overwhelmed [now] by the idea of a ‘big’ problem. The way people and communities have come together has inspired me to face these big problems head on and tackle change with my peers. I am more inclined to work with others.”
We also heard a lot about responses that transcended traditional gifts of philanthropic treasure, as the next gen wants to use their political, business, consumer, and personal choices to create change. Many talked about buying from local and BIPOC-owned (Black, Indigenous, People of Color) businesses rather than online. Some said they shifted their investment portfolios to include more community-focused investments. A few talked about using their businesses to help — e.g., lending their technical experts to help streamline application processes at the local United Way.
3. Leaning Into Relationships, Facing Their Power
Many next gen donors explained how the crises of last year not only put a spotlight on social inequality, but exposed the inevitable, persistent, yet often unspoken power differentials that underlie all philanthropy. They came to see 2020 as a signal moment calling for them to do more to try to acknowledge, name, examine, and begin trying to work through those systemic power dynamics.
The crises of last year led many next gen donors to look carefully and critically at their — and their family’s — privileged and powerful position in the philanthropic landscape. Some began diversifying their boards, some their investment managers. And for others, last year exposed the need for fundamental change in the field, along the lines that have been proposed by those working on “trust-based philanthropy” or “participatory grant making”. As one explained, “I feel like we need to disrupt the top-down donor structure all together, [to] trust communities to know what they need and distribute funds accordingly. We have to level the playing field. I am in a group conversation with community organizers about how to do this differently.”
This humble reckoning, for many, called first and foremost for improved and increased listening and engagement with their grant partners, as well as community leaders and organizations doing the work “on the ground.” They tried to shift from a donor-directed mode of researching their own ideas and searching for appropriate partners to implement them, to a mode where their first move was an urgent ask, “What do you need?” Some of the answers they got then became what they funded — e.g., emergency support to cover payroll, Zoom licenses for grantees, supplemental gifts to replace annual fundraising events that couldn’t happen during the pandemic, and the like.
4. Bringing Racial and Social Justice to the Surface, for All Generations
The social disruptions of last year — both the unequal effects of the pandemic and the protests about police brutality and systemic racism — raised tough and troubling questions of racial inequity and social injustice. So it is not surprising that many next gen donors talked a lot about “diversity, equity, and inclusion” when describing their responses to 2020 – both in their philanthropy and in other aspects of their lives and engagements.
Those who have been focused on these issues for a long-time said they were amping up their efforts. Others said they were de-emphasizing other giving priorities to place these issues more at the center. One noted, “I think that the cracks in the system are showing more than ever and that we [as people with wealth and privilege] have a great opportunity and responsibility to actually have a part to play. I think this is a catalyst moment.”
Taking this a step further, quite a few of these donors said they were using this “catalyst moment” to broach difficult yet necessary conversations about race and inequity with other members of their family, conversations they hadn’t been able to get started previously. One donor said, “If anything, what’s been easier [in 2020] is getting my parents’ generation to pay more attention to what I want to do and getting them to understand why it is I start with a racial justice lens. In the past I felt like I often had to work around the racial justice motivations and sell them in another way. Now they seem slightly more open to racial justice work for racial justice’s sake.”
Some white next gen donors described having new conversations about whether their family was doing enough to tackle racial and social inequities in their grant making, about how implicit bias might be affecting their giving decisions, or about how to reach out beyond their comfort zones to incorporate more voices and be more inclusive in family decision-making. One explained, “I’ve also been engaging with my family in challenging conversations about race and how internalized racism and classism shows up in our lives — in our fears and decisions, whom we trust, and how we view ourselves compared to others.”
Of course, not every next gen donor participated in these four types of responses above. And there are myriad other activities that individual donors pursued, for sure. But our survey evidence and numerous conversations with this critical group of donors clearly distinguished these as four of the most common responses to 2020, even among this diverse group of donors.
The big question for all of us now is: What’s next? Which of the changes we saw from next gen donors in 2020 will “stick,” and which will fall away once the crises abate and families want to return to traditional practices?
We feel confident that many of these responses will continue, especially as several are simply accelerations of trends we had already been tracking among next gen donors — e.g., their thirst for seeing impact, their desire to go all in and to build closer relationships with grantee partners, and their hope for multigenerational conversation and collaboration. But will they retain the specific changes to grant making practices? As the cliché goes, “only time will tell.”
Sharna Goldseker, executive director of 21/64 and one of today’s leading experts on multigenerational and next generation philanthropy, provided this column that she and Michael Moody from the Frey Foundation originally created for the Dorothy A. Johnson Center for Philanthropy in May of this year. Visit the post here. And for more information about Generation Impact visit here.
At American Endowment Foundation, we look forward to discussing how DAFs can play a role in making a charitable impact. Contact us or call at 1-888-660-4508 to learn more.