GENEROUS FAMILIES: FAMILY GIVING ISN’T WHAT IT USED TO BE
GENEROUS FAMILIES: FAMILY GIVING ISN’T WHAT IT USED TO BE
Family Giving Governance — Navigating multi-generational giving, trapped wealth and more
Andrea McManus, ViTreo Group Inc
February 25th 2020
I’ve written about this before — the greatest generational wealth transfer in history (February 2019) has been taking place and will continue for the foreseeable future. And a shift of this magnitude, in terms of changing the giving power of those that inherit, will have a significant impact on the charitable sector. ViTreo’s most watched podcast also addressed this in 2018.
Over the next four decades, as baby boomers begin to pass on the riches they have accumulated, women, millennials and Gen X’ers will all be the beneficiaries of this passing of wealth.
“Women in the Canadian Economy
Women and WealthIn the 2013 Household Balance Sheet Report, Investor Economics suggested that Canadian women control approximately one-third of total household wealth in Canada. In terms of total assets, this would represent approximately $3.2 trillion and, in terms of financial assets alone, approximately $1.1 trillion. By 2020, the level of financial wealth controlled by women will likely reach $3 trillion.”
- TD Wealth, Time, Treasure, Talent: Canadian Women and Philanthropy, June 2014
Photo Credit: PwC, Managing Millennial Money, February 13 2020
“We are on the precipice of a $30-trillion transfer of wealth from baby boomers to Generation X and millennials. However, it’s going to be anything but business-as-usual over the next 30 years. The demographic inheriting this windfall loves technology and embraces change and disruption. Yet at the same time, “wealth management is one of the least tech-literate sectors of financial services.” This is a clear red flag for old-school service providers who are unable to evolve.”
To state the obvious — this information changes things for nonprofits and fundraisers who rely on family giving for donations or focus their work on Family Offices. The demographics of the audience to whom they address their efforts will alter significantly.
In the situations where women now make the giving decisions because of divorce or death, their giving priorities are reported to be different from those of their male parents and former spouses or partners:
“Different generations of women give in very different ways, but the common threads among women clearly distinguish their giving style from that of men—even when accounting for differences such as age, income and education. Women are more empathic, they’re more likely to collaborate and avoid risk, and they relate to social networks in a different way. They are more likely to give than men, but they also give more—and to more sectors—and are more likely to volunteer. Not only do we see differences emerge in this survey around motivations for giving between men and women, but also in how women approach the actions around giving. Women report more connection with the emotional side of philanthropy than men, who tend to seek a more strategic approach. However, interestingly, this norm flips when considering who to consult around giving: women favor advice from experts, while men gravitate to peers and others in their personal sphere.”
- Fidelity Charitable, Women and Giving - The Impact Of Generation And Gender On Philanthropy, 2016
Photo Credit: Fidelity Charitable, Women and Giving - The Impact Of Generation And Gender On Philanthropy, 2016
Working with younger generations such as millennials or Gen X means many of the old rules may no longer apply. Millennials are the first generation to be entirely digital. With that comes expectations for improved communication, easily accessible information and convenience. Each of these two generations have different lifestyle priorities. Many of them are globally aware — they’re well travelled and have studied and worked in other countries. Supporting local initiatives may not be as important to them.
Photo Credit: Concreit.com
“Millennials lifestyle priorities will challenge traditional advisor models. This group’s savings objectives are far different from those of other demographics and appear eager to pursue goals that are less focused on wealth accumulation. Plus, major life choices such as marriage, children, and college funding are being pushed to later in life, so it may be some time before millennials prioritize savings. These preferences will defer the need for traditional financial advice.
It may be early days, but it is critical to engage the millennial group and make inroads as early as possible. To do so, incumbents will have to understand these preferences and, in response, create a more human and credible marketplace position by using the tools this demographic prefers.”
What are the implications of the above for a nonprofit or fundraiser seeking donations or a consultant providing advice within a multi-generational family? And within North America, we now live longer than previous generations. This translates to the possibility of more generations co-existing within one family than previously seen.
How do we (nonprofits, fundraisers and consultants) help these diverse generations govern their philanthropic decision-making, a situation which could be fraught with the potential to go awry…..?
Dr. Sharilyn Hale of Watermark Philanthropic Counsel addresses this issue in her 2019 dissertation, A Qualitative Multi-Case Study of how Philanthropic Multi-Generational Families in Canada Govern their Non-Foundation Philanthropy: A New Model for Family Philanthropy Governance:
“Yet in the intimacy and complexity of families, experiences can be magnified and intensified serving as backdrop to philanthropic engagement and decision making. I have observed that multi-generational families who aspire to give together must navigate unique dynamics which swirl as they identify a clear philanthropic mission and strategy, organize their giving, make giving decisions together, and nurture family cohesion. These governance functions are shaped by family complexity, diversity, and longevity and are informed by the family’s goals for giving together (Gersick et al., 1990). With the potential to have as many as five generations participating around the philanthropy table (Gersick et al., 1990), there is much at stake. Giving together can increase family unity, extend a legacy, and be instrumental in the moral development and financial education of younger family members (Breeze, 2009; Gersick et al., 1990). Challenges in the giving experience can result in damaged family relationships, bitterness and/or exclusion, negative feelings about philanthropy, and ill-defined philanthropic strategy and resulting impact (Breeze, 2009; Wegbreit, Dauber, & Brody, 2018).”
Over the next two weeks, The Provocateur will address the challenges arising with family giving. Tune in next week for the second blog in this series penned by guest author, Dr. Sharilyn Hale. Sharilyn helps those who give, give well, and supports social purpose organizations to deepen their performance. With a 20+ year leadership career spanning the social profit sector, she draws on expertise in philanthropic strategy, family systems, organizational development, governance and research.
Our third blog post in this series will be authored by Gena Rotstein of Karma & Cents Inc., a social lab supporting family foundations and family enterprises in attaining their social and legacy objectives. Gena has over 20 years of philanthropy management experience with a Masters in Non-Profit Management and Jewish Communal Service from Brandeis University and as a certified Family Enterprise Advisor through the University of Alberta. She also has received certification from 21/64 in Next Gen philanthropy, is a member of the Purposeful Planning Institute and part of Canada’s Pro-Bono Marketplace.
Will you be at AFP ICON 2020? Check out Andrea McManus (ViTreo Group Inc) and Robbe Healey’s (Aurora Philanthropic) presentation Bright Light of Day or Dirty Little Secret? 2020 Ethics, on March 29th at 10:45 am to 12:00 pm.
ABOUT THE AUTHOR
Andrea McManus, Chair, Board of Directors, Partner
ViTreo Group Inc
Andrea McManus is a Partner with ViTreo with over 30 years’ experience in fund development, marketing, sponsorship and nonprofit management. A highly strategic thinker and change maker, Andrea has worked with organizations that span the nonprofit sector with particular focus on building long-term and sustainable capacity.