The first few years of Generation X are turning 50 and a shift in leadership is occurring. Now seems like a good time to consider what the coming transition of wealth from an older to younger generation means for philanthropy and Whatcom County. In a study released last year on NextGenDonors, it was estimated that some $40 trillion of wealth will be transferred during the next 20-30 years, with potentially half of that winding up in philanthropic causes. I fall right in the middle of Generation X and I see how myself and others of Gen X and Gen Y (Millennial) have a different focus in how we give, not just in legacy organizations but in giving with a vested interest in its impact and purpose.
The exact birth dates Generation X vary depending on who you ask, but it's generally accepted as early 1960s to early 1980s. According to the U.S. Census Bureau there are more than 40 million Americans in Gen X and they hold the highest education levels of any previous generation. Gen X likes to get involved, according to the Corporation for National and Community Service, with the highest volunteer rates at nearly 30 percent.
Gen X tends to have more entrepreneurial tendencies than previous generations, starting businesses at three times the rate of Baby Boomers. This entrepreneurial drive stems from values that focus on independence, autonomy and self-reliance developed after seeing so many boom and bust cycles in the '80s and '90s. While that may sound like a route to selfishness, Gen Xers carved out their own successes as entrepreneurs and now want to see their hard-earned money go to causes that are meaningful, impactful and provide opportunities to be involved.
Many of the Gen Xers I know are focused on having their philanthropy efforts not just be about the money, but also on their engagement in the organizations that will benefit from their dollars. Gen X donors spend time researching where their money goes and want to be active participants in the organizations they support, for the long term. They want to embrace the challenges a company is facing by sharing their resources and offering their time and talent, as well as their treasure. The rise in social entrepreneurship, B Corps and businesses that focus on "social good" is creating a business culture that also encourages impact philanthropy, something that Gen Y looks for in potential employers.
Not only is the way in which money is given to philanthropic organizations changing but many of the new targets of giving are changing. While many of the traditional outlets for giving won't change (education, religion and health), both Gen X and Gen Y look at the focus of projects within these organizations that will solve problems around topics like social issues, global impacts or sustainability.
With the changing trends in philanthropic giving, for-profit as well as non-profit businesses have an opportunity to embrace these values early to attract the upcoming new generation of wealth. Generations X and Y are more connected to their peers and topics that interest them through the various forms of social media. Their desire to be a part of things and have an impact can be seen in the dramatic rise of crowdfunding platforms, which are primarily based on donation or pledge models (for now anyway, that may change over the next few years). They are also more focused on customer-centric businesses, which opens the door for the community of consumers, locally and globally, to be empowered to shape the future of how business is done and what philanthropic causes succeed in their desired impacts.
With the largest wealth transfer from one generation to another coming up in the next couple of decades the potential for a new golden age of philanthropy is possible. Non-profit and for-profit businesses can take advantage of being on the forefront of these changing trends and adopt policies that allow the upcoming generations opportunities to become vested and engaged in the causes they want to support.
ABOUT THE AUTHOR
Lara Merriam-Smith is the program manager for NW Innovation Resource Center, a Bellingham-based organization that supports economic opportunities through entrepreneurial innovation in northwest Washington. It helps inventors looking to take products to market and connects new start-up businesses with resources to help them grow. For more information online go to nwirc.com.