Redefining philanthropy: the next generation's approach to wealth stewardship
A full sphere of influence
When asked about the most powerful tools they had to exert influence, 44% of participants felt they could best drive change through their businesses, 41% through investments, and only 25% through philanthropy. This reflects the younger generation’s view that traditional philanthropy has become outdated and fails to address systematic issues effectively. A popular concept was the sphere of influence – a holistic approach to running businesses, managing investments, leveraging societal and industry positions, and strategically applying philanthropic capital.
Shifts in focus
External research indicates that the primary interests of current global ultra-high-net-worth (UHNW) philanthropists are education, religion, healthcare, and arts and culture. Climate change and the natural world receive less than 2% of global philanthropic fundingi. However, the priorities of the rising generation invert this picture. For workshop participants, climate change and the natural world are top priorities, followed by inequality and conflict. Topics related to religion and arts/culture barely registered.
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Changing motivations
Participants expressed a profound sense of responsibility to address social and environmental issues, fuelled by a general awareness of global societal challenges. The emergence of organisations like Tax Me Now, Resource Generation, and Patriotic Millionaires underscores a desire for greater wealth distribution. Some participants felt discomfort over their multigenerational inheritance, as it was unearned or amassed through industries that conflicted with their values.
While the next generation might not identify with the traditional image of philanthropists, their aspirations for impact align closely with the essence of the term. (…) The future of giving is about creating a holistic and aligned approach across the sphere of influence, with a focus on building a resilient and regenerative economy, redesigning systems where businesses and investments play crucial roles.
The desire for innovation
There is a growing demand for professionalisation and strategic review support among family foundations. While traditional grant-giving was acknowledged as remaining essential to certain causes, there was a strong belief that philanthropy should act as a catalyst for innovation to drive systemic change, rather than providing short-term relief.
New approaches such as partnering with others who share common goals and blended finance were highly-regarded. Participants were aware of the inherent power imbalances in traditional philanthropy and referenced MacKenzie Scott, the co-founder of Amazon, as a pioneer in transforming the traditional dynamic through the trust-based model.
Impact investing is also gaining traction, with 86% of millennialsii interested. But many admitted this would only account for a small portion of their portfolios, emphasising the importance of ESG criteria and mission alignment in their broader investment strategies.
Conclusion
As part of the projected USD84 trillion Great Wealth Transfer between now and 2045, an estimated USD12triii is expected to flow directly into philanthropy. The remaining USD72tr will be left to a generation more socially and environmentally active than its predecessors, but choosing different methods of effecting change. While the next generation might not identify with the traditional image of philanthropistsiv, their aspirations for impact align closely with the essence of the term. A consensus was clear: more conscientious wealth management and responsible stewardship is needed, with a focus not simply on growing wealth, but on applying it effectively to foster positive change. The future of giving is about creating a holistic and aligned approach across the sphere of influence, with a focus on building a resilient and regenerative economy, redesigning systems where businesses and investments play crucial roles.
