HOW FAMILIES CAN FIGURE OUT WHERE THEY CAN DO THE MOST PHILANTHROPIC GIVING WHILE STRENGTHENING THEIR OWN BONDS.
Like any global crisis, covid has both exposed longstanding social problems and economic problems and created new ones. This has been reflected in philanthropic giving over the past year or so, with many donors increasing their giving to hunger relief organizations and efforts to fight the pandemic. Donations to other causes, however, such as non-covid-related illnesses and medical research, declined in 2020, largely because their primary ways of raising money, such as galas and marathons, were canceled. The arts were the hardest hit due to the closures of theaters, live music venues and museums, while, as this Wall Street Journal article reports, there are countless smaller nonprofits going under because of cuts to government funding.
Philanthropy has also been affected by the organic shift in priorities that occurs as each new generation comes of age. Boomers, who still make up the largest percentage of donors, typically give to traditional causes like the American Cancer Society, while millennials and zoomers are more likely to support organizations that promote sweeping social change, such as health equity and the environment. The shift also affects investment strategies, as millennials as more likely to support mission-based companies that align with their personal values, rather than simply looking at potential returns. This has the very real potential of causing conflict within families, with Boomers seeking to preserve their legacy and their children and grandchildren exploring ways they can give according to political and social trends.
The challenge, then, is how families can figure out where they can do the most philanthropic giving while strengthening their own bonds. The solution lies in finding common ground. For example, offering assistance to “mom-and-pop” businesses devastated by covid may appeal to all generations because it makes a local impact (something millennials and zoomers favor), while also bolstering the economy. A willingness to listen to new perspectives is also important when it comes to growing and preserving the family’s wealth. For many matures (those born before 1945) and boomers, the successful transfer of wealth is a significant and valid concern, one that might be assuaged if they understand their offsprings’ process in vetting investment opportunities. For example, businesses based on covid-era medical innovations and service-based industries can be very profitable while supporting underrepresented communities. At the same time, younger generations must remain respectful of the family’s legacy, even if it doesn’t always align perfectly with their own agenda, and be willing to honor that when they come into their inheritance.
The key to bridging this gap quite possibly lies in technology. One silver lining of the pandemic is that it has changed the ways in which people communicate, both individually and collectively. Lockdowns and travels restrictions have forced everyone to become more tech savvy; for example, charities have had to create digital campaigns that build the same emotional connection with donors as in-person events. While for many this transition has been painful it does bode well for the future sustainability, as the younger generations are swayed by grassroots campaigns conducted via social media. Technology has also expanded their reach to donors who might not have attended their traditional fundraising events.
Similarly, family members of all generations have had to rely on technology to connect, for example, using virtual meeting apps while celebrating the holidays. This has the potential to evolve the way they communicate around financial matters as well. All-in-one solutions can help them share information in real time, whether it concerns current family holdings or the next great business or charitable investment opportunity.
As the pandemic draws to a close, we find ourselves in a transitory period that may last for years. Philanthropic giving, which is always affected by the overall health of the economy, will continue to deal with a myriad of challenges, from shifting tax laws to finding new, innovative ways to engage younger donors. For families, navigating this new landscape will also be challenging and require guidance from professional advisors. However, embracing digital tools can make it easier for principles and their heirs to align their priorities and ensure the protection of their own wealth while continuing to be a force for good in the world.
