Make way for the next generation of philanthropists

Olivia Jenkins is the senior philanthropy advisor in JP Morgan’s award-winning Philanthropy Centre in Europe, the Middle East and Africa.

As affluence grows, so does the imperative for giving back. Across the globe, there’s a growing movement in affluent families dedicating their time, and money, to furthering different causes, be it initiatives to tackle climate change, gender equity, forced migration, to name a few. 

But the face of philanthropy is changing. The number of women philanthropists is rising, and the next generation of wealth holders are starting to get their seat at the table of the family business, the first order of business being philanthropy. In fact, we recently surveyed the 190 family offices from around the world to understand their intentions and ambitions and almost half (46%) cited Philanthropy as a top priority. 

Not only is the face of philanthropy changing but so is the role that philanthropic initiatives play in financial planning. Siloed approaches to philanthropy vs. investment decisions are becoming a thing of the past, clients now want the entire spectrum of their wealth planning to be reflective of their goals. Introducing the next generation of philanthropists 

We are currently in the midst of a great wealth transfer, and it’s estimated that 1,000 wealthy people will pass on £4.1tn to their heirs over the next two decades1. As the next generation gear up to inherit their families’ wealth, many will be considering how they can use some of their newfound wealth for philanthropic causes. The next generation are more philanthropically active compared to their parents, with 74% of Millennials considering themselves to be a philanthropist, compared with 35% of Baby Boomers2  – and this shift is leading to notable changes within the overall giving landscape. 

We’re seeing the next generation of philanthropists embracing a broader definition of philanthropy beyond just donations, thinking about giving time, talent, and leveraging their networks to further causes they are passionate about. They also recognise there does at times need to be a step change from the usual ways of working. This includes being more open to embracing innovation; identifying when they’ll need new tools and approaches to further their impact goals.

The causes they care about are also notably different from their parents, it’s perhaps unsurprising that younger generations are considerably more focused on climate change and how they can support efforts to tackle this. However, issues are not clear cut, they rarely exist in a vacuum and in fact, they intersect with many other philanthropic causes. The World Health Organisation has said that climate change is going to be the single biggest health threat facing humanity, so even those wanting to focus on health also need to address climate. I encourage my clients to approach these issues in a more holistic way to see what overlapping issues there are – whether that’s looking at how gender equity or healthcare is being impacted by climate change, or exploring ways in which they can complement their existing education funding with a climate tilt by supporting qualifications in the green economy.Junior boards and how they are helping prime next-gen philanthropists

We often talk to our clients about their succession plans. Philanthropy for many is an incredibly cohesive force that can bring families together, cutting across generations. I’ve seen a number of different approaches which have been successful at getting the next generation more interested and invested in family matters.

Firstly, it’s worth encouraging family members to commit time to learning about the key issues the family is passionate about. There are several ways younger family members can learn about what interests them from joining donor networks, to visiting projects so that they can learn from the management of the organisations the family are already supporting. 

It’s also worth encouraging the next generation to identify their own philanthropic mentors separate to the family’s and help create their distinct identity. These mentors can help them learn more about particular areas and also about the power of philanthropy. 

Perhaps the most impactful way to prime the next generation has been junior boards. We’re seeing a growing number of family foundations establishing junior boards, which are essentially unofficial structures made up of 18–25-year-old family members. These boards are a great training ground, to help them learn about the family’s historical focuses and really help them understand why and how they’re focused on specific giving initiatives. It creates a forum for education and discussion around philanthropic topics, empowering them to develop opinions and convictions before they join the official board. The rise of women philanthropists and donors 

It is also an exciting moment for women in philanthropy. We’re seeing a huge rise in women in philanthropic leadership roles and more women donors than we’ve seen in the past. This is causing an interesting shift in the giving space, as the way women give often differs to men. Women are typically more willing to think more broadly about philanthropy, looking beyond just giving their money, but giving their time, leveraging their networks and having a public voice on these matters. From what we observe, although women spend a longer time researching an issue, they will commit to philanthropy over a longer period of time once a relationship is established. 

Women philanthropists are also more willing to collaborate with each other to strengthen their impact. At the moment, we’re seeing an uptick in the number of collaborative funds, which are essentially a group of philanthropists who get together to tackle a certain cause, map out how they’ll achieve this and pool their resources together behind these shared goals. There are now over 400 such donor collaboratives in operation globally, estimated to be giving around $2-3 billion a year, which can be a strategic, innovative and efficient way to give. 

The way in which people are giving is certainly changing. We’re moving into a more innovative, collaborative way to tackle philanthropic issues, and the next generation and women philanthropists are leading the charge. It’s an exciting time and the outlook and potential for philanthropic giving to catalyse and achieve long run change looks bright.

jpmorgan.com