Strong market performance and the increased pace of November and December grantmaking may generate record giving for 2024, according to Foundation Source, a provider of scalable philtech solutions.
According to CEO Joe Mrak, Foundation Source is watching several trends:
- The next generation’s rising influence and how it is redefining philanthropy.
- The increasing popularity of organized giving and the utility of a varied philanthropic toolkit.
- The ability of advanced technologies to overcome challenges and make giving easier.
“It’s an exciting time for the philanthropic sector,” said Mrak, who issued his findings in an industry outlook report. “The rise of organized philanthropy, the aspirations of the next generation of givers, and the potential for technology all promise to make charitable giving easier and more efficient for donors, nonprofits and charities, and the financial advisors and institutions serving them.”
Through the end of September, private foundation clients of Foundation Source have granted over $865 million to almost 19,000 recipients. If that pace continues, those donors will match or exceed their record for giving in one year. Market performance and the traditional high level of grantmaking in November and December are expected to generate strong overall giving for the year, Foundation Source predicts.
One of the biggest trends is the rise of younger donors as the Great Wealth Transfer continues. Foundation Source recently surveyed 1,000 Gen Z and Millennial donors and listed a number of key findings.
The younger generations want to be seen as “givers,” “volunteers,” “advocates,” “changemakers” and “humanitarians,” indicating a generous and caring attitude and a desire to be directly involved in giving. They focus on the plight of individuals and communities. Gen Zers seek to spark systemic change and want evidence of progress.
These younger givers view a variety of activities as part of their commitment to change, including donating items, volunteering time, assisting fundraising and sharing their knowledge and expertise.
Their financial giving is influenced by their resources. High earners donate larger amounts, so the potential for giving will increase as they grow older.
The younger generations’ giving has been largely informal and direct, but they express interest in learning about formal charitable vehicles and other giving approaches. Giving circles and trust-based philanthropy generate the most interest, and among formal charitable vehicles, DAFs and family foundations get the most traction. Younger donors may be interested in more tax-efficient ways of giving as their taxable income increases as well.
Next-gen donors are primarily motivated by family, having a passion for a specific cause and wanting to assist the local community. Millennials who engage in charitable activities started at an average age of 18; Gen Z started even younger, at age 14. This early start is likely to inform their lifelong commitment to social change.
Mrak said clients are using a combination of vehicles and approaches to achieve their philanthropic goals and drive impact. Advantages this approach include enhanced tax benefits and a better mix of simplicity, flexibility, autonomy and personalization, Mrak writes. “For example, we often discuss with private foundation clients the latitude they have to run their own charitable activities, like a clothing drive or tutoring program, or invest in for-profit mission-aligned companies, and give directly to individuals in the form of hardship grants or scholarships,” he wrote.
The report also notes that philanthropic sector is evolving with the increasing use of artificial intelligence. A recent survey by the Technology Association of Grantmakers found that 81% of foundations report some degree of AI usage within their organizations. Individuals are the most likely to be leveraging AI, while it’s still early days for adoption on the organizational level.
