Demographics of fundraising and the need for charity innovation

tough times

The changing demographics of wealth and philanthropy in the US will put pressure on charities’ fundraising efforts. Most of the donations that funded the growth of today’s major charities have come from what demographers call the War Generations, born between 1905 and 1944, and the Boomers, born between 1945 and 1964. Together these generations have been responsible for the vast majority of charitable giving in decades past. Because the War Generations are reaching the end of their lives, the Boomers are carrying most of the “giving” weight. Because these generations are similar in size, giving has not dropped significantly.

The two generations following Boomers vary greatly in size: Generation X includes about 49 million members; Generation Y (Millenials), about 86 million. For the period of time that Gen X, born between 1965 and 1974, dominates the work force and giving world, charities will have fewer donors than during the height of Boomer giving. Smaller generation means less giving. And despite the enormous size of the Millenial generation, charities will not be able to rely upon this generation for giving in the same way as their elders. Millenials will bear the weight of unfunded entitlements, meaning they will face increased taxes and less cash flow for giving.

It’s not just the size of the generations that will change the face of giving. First, the diversity of these generations will affect where they send giving dollars. The Millenial generation is more ethnically diverse, including twice as many Hispanic members as the Boomers. Further, Barna research suggests that this generation sees a 43% drop off in church attendance from high school through age 30. Barna offers a variety of explanations for this, but essentially this means that Millenials will not fund the same types of charitable efforts as their parents and grandparents.

Further, generational differences will also change how they give. Generation X is more skeptical than the Boomer generation, and typically wants to be very involved in the giving process. Millennials are more cause-oriented than any generation before them and are less likely to draw a firm distinction between charity and business. So, if nonprofits are doing less for their cause than social enterprises, for example, those nonprofits won’t be receiving Millennial resources

Resources: 1/16/2014 1/16/2014 1/16/2014