States jumped from 7 percent to 22 percent.7 Between 1978 and 2014, according to the Economic Policy Institute, CEO pay in the United States increased by almost 1,000 percent, while pay for the average worker went up only 11 percent.8 Data from the annual Forbes lists shows that in 1987 there were 41 billionaires in the United States; 30 years later, in 2016, there were 540.9
So will this current era of extraordinary wealth creation and concentration also be an era of extraordinary amounts of giving? Research has shown that nearly every high‐net‐worth household (91 percent) reported some giving to charity, and that American families with $1 million or more in net worth account for 50 percent of the total amount of charitable contributions, even though they are only 7 percent of the total population.10 Even if the giving rate stays the same for the wealthiest individuals, the sheer amount they will give will climb. How these big donors give will make a big difference.
Furthermore, as more wealth is held by fewer families, this wealth is being transferred across generations within those families. In fact, we are living in the midst of the greatest transfer of concentrated wealth in human history. A 2014 study by the Boston College Center on Wealth and Philanthropy estimated that just over $59 trillion will be transferred across generations between 2007 and 2061.11 Not $59 billion —$59 trillion. Most of this wealth transfer is happening within a relatively small group of high‐net‐worth families. The study estimates that 20 percent of affluent families will account for approximately 88 percent of the wealth transfer.
This remarkable amount of wealth passing between generations also means a remarkable amount of money available for charitable giving. The Boston College study, considering both normal giving rates and the amount of transferred money earmarked for charitable purposes, estimates that during these same 55 years, almost $27 trillion will be designated for charity, either at some point during the wealth‐holders' lifetimes or as bequests from their estates. Of course, if heirs decide to give more of their inherited family assets to charity, this philanthropic largesse will expand even further. Many of the next generation inheritors discussed in this book will be the active stewards of enormous assets for decades to come. Some have already taken on this role with verve.
At the same time, others in the next gen are busy making their own wealth, often in staggering amounts. Techies, hedge‐funders, and other young entrepreneurs are becoming part of the 1 percent – or even the 0.1 percent – that owns a bigger and bigger slice of the pie.
In short, with these two socioeconomic dynamics converging, Gen X and Millennial philanthropists have access to dramatically greater resources than any previous generation. And more money means more potential for giving.
But we are entering a new Golden Age of Giving not just because donors will have more money to give. Even more significant is the fact that next gen donors want to revolutionize philanthropy to make it more effective. These leaders of the new Golden Age want nothing less than an Impact Revolution.
The Coming Impact Revolution
Next generation members of wealthy families, as well as our modern nouveau riche, are sometimes criticized for playing in the charity space merely because it is an expected accoutrement of privilege and status. Having a family foundation becomes de rigueur. Of course, this will be true for some of the next generation of prominent donors. But as the research in this book shows, we find that the next gen donors in the vanguard of philanthropic change don't conform to this image. In fact, they hate it. They certainly encounter peers who are just in it for the photo on the society page, but they emphatically scorn those kinds of donors. And it is these active, earnest major donors who are emerging as the trailblazers of the next gen, setting the path for their generation's style of giving. What's different about them? They dislike the showy donor appreciation walls and fancy galas. They would much rather be out in the field contributing to programs that really work or trying out some experimental idea that has the potential to go to scale. They want to give for tangible results or not at all. What they have in mind for their era of giving is nothing short of revolutionary change.
Next gen donors are so focused on changing philanthropy to increase impact that we believe they are on the leading edge of what will become an Impact Revolution in philanthropy. They are eager to change whatever needs to change – even if that makes other donors, nonprofits, or anyone else uncomfortable – if doing so will help move the needle in a significant way on the problems philanthropy is trying to address. And they want to revolutionize philanthropy now, while in their 20s and 30s, rather than wait until their mature years. They want impact to be their generation's defining feature.
So how will big giving change during Generation Impact's evolution? These rising donors want to disrupt giving strategies, much like young tech entrepreneurs have disrupted business. They prefer to focus on fewer solutions and organizations rather than follow the “peanut butter” method of spreading their money around. They want to change systems not treat symptoms, funding change over charity. These rising donors also want to be bolder and more experimental; some might even say brazen. They want their tool belts to contain more than just grants and gifts. They are pushing for more impact investing and trying out microloans, giving circles, crowdfunding, and other nontraditional funding methods that blur the classic lines between for‐profit and nonprofit ventures – all in the name of greater impact. Next gen donors want to go all in with the organizations they support, giving talent rather than just treasure, building more intimate relationships, and working closely as partners who share in the subsequent challenges and successes. They are, frankly, more high maintenance than their predecessors. But they say this makes them better donors who get better results.
A revolution designed to increase impact, to produce more good in the world, sounds wonderful. But even if this goal is eventually reached, revolutions are never easy. And the Impact Revolution that these next gen donors are pushing will do more than ruffle a few feathers. They plan to transform philanthropy in disruptive ways, not unlike what we've witnessed already in other sectors. Consider, for example, how streaming has transformed the music and home entertainment industries, or the changes we see in the shift to a “gig economy.” Philanthropy, like those industries, will look remarkably different in 20 years.
It would be more dramatic – and more conveniently sound bite ready – for us to lament that these revolutionary next gen donors want to throw the baby out with the bathwater, that their passion for change will disrupt philanthropy in dangerous ways, leaving our core nonprofit infrastructure – libraries, hospitals, and so on – in the lurch and neglecting tried‐and‐true programs. Fortunately, our research shows this description of their plans isn't accurate. Most next gen donors we studied are exceedingly respectful of the philanthropic shoes they're stepping into; they're not bomb‐throwers. Contrary to the “spoiled rich kids” image, this generation's more active big donors are driven by values and are keenly aware that “with great privilege comes great responsibility.” They are asking questions and listening as they engage deeply with nonprofit partners or as they eagerly take their seats on the family foundation board. Those who hail from a legacy of giving are proud to carry that legacy forward, though they want to do so by innovating to improve that legacy. And while next gen donors see themselves as disturbance generators, they temper their drive for change with humility and a focus on change for impact rather than on change for attention or, perhaps worse, simply for the sake of change.
These next gen revolutionaries want to live out their values seamlessly in their families, their giving, and their investments – aligning their professional, personal, and philanthropic lives more than any previous generation. And while some newer causes – such as climate change and LGBT rights – will rise in importance, our research reveals that, contrary to popular predictions,
Saez and Zucman, “Wealth and Inequality.”
Lawrence Mishel and Alyssa Davis,
Based on data published annually in
Havens and Schervish,
