Was it Inherited or Earned? Why the Nuances of Millennial Donors Matter

In the most recent installment in our ongoing exploration into millennials' aversion to arts giving, we cited rationales straight from the mouths of various Seattle-based donors. For example, Elizabeth Van Nostrand, age 31, said, "Having your life changed by music is incredibly privileged. People whose lives are changed by not dying—that’s a bigger thing."

Now, for additional corroborating evidence. 

recent study of millennial giving, Next Gen Donors, conducted by the Grand Rapids, Michigan-based Frey Chair for Family Foundations and Philanthropy program at the Johnson Center and 21/64, a consulting group specializing in "next generation philanthropy," showed that this demographic favored "education and basic-needs charities, and preferred animal welfare, environment, civil rights and activism." Arts and culture, meanwhile, didn't fare so well.

You may be disconcerted by the news, but at the same time, not entirely surprised. Yet, sometimes these kinds of studies and can be tricky, so let's first contextualize some of these findings.

A foundational component of the study echoes a key data point from a related IP post on a certain segment of the millennial demographic: They have very rich parents. According to the Next Gen Donors study, these inheritor millennials stand to receive over $40 trillion in wealth from bequests, and more during their lifetimes, all in a time of increasing wealth concentration among high-net-worth families.

Two takeaways here. First, millennials' lack of enthusiasm for arts-related giving should be viewed relative to that enormous $40 trillion figure. If arts organizations can move the philanthropic dial just slightly, the payoff from this demographic will be significant.

Secondly — and more importantly — a closer analysis of the study suggests it should actually be titled Next Gen Donors from Very Wealthy FamiliesMore than half of the profiled donors come from families that give over $250,000 annually or families with over $5 million in endowed charitable assets. When viewed through this lens, it's obvious that an "inheritor millennial" may be different than, say, a newly rich Silicon Valley millennial.

It's a subtle, yet crucial difference, because in some — but not all — cases, millennial giving depends on how they came into their fortunes. It speaks to the classic adage that those who inherit their money are more conservative than those who've amassed their millions from the tech world and decide to, say, buy The New Republic despite lacking any journalism experience. (Turns out Chris Hughes' gamble, by the way, didn't pay off. The magazine is up for sale. The Facebook co-founder lamented that "our search for a workable business model has come up short.")

Now, if we further explore this distinction between "inheritor" and "new-money" millennials, some related points of consideration emerge. For example, a millennial who inherits millions and whose family runs a foundation committed to education should, relatively speaking, be sympathetic toward this cause. The Next Gen Donors report corroborates this logic. "The philanthropic values learned from their families drive them," the report says, "and they want to be good stewards of the philanthropic legacies they stand to inherit." Which would suggest that "disrupting" the social sector is not on the top of their to-do list. 

Now, compare this type of millennial donor to a Chris Hughes-type figure or a techie whose app was just purchased by Google. He has no ties to "old money" or a philanthropic legacy, and may be more attracted to the ideas of disruption that hold sway in business life, as well as the "effective altruism" argument. On the other hand, just maybe, with the right outreach effort, such a donor may be inclined to give the arts a second look. It's precisely these types of donors — those who wake up one morning in their Palo Alto apartments to suddenly find themselves millionaires many times over — that are under-represented in this study, proving the obvious: Millennials aren't a homogenous bunch, and arts organizations must make an effort to understand what makes them tick.

To that end, the report lists affluent millennials' "Top 5 Most Important Components of Philanthropic Strategy." The top three are:

  • I conduct due diligence and do research before deciding who to support.
  • I first decide my philanthropic goals or ideal solutions, and then search for potential recipients who fit those.
  • I fund efforts that address root causes and attempt systemic solutions.

Nothing too shocking here — millennials, like most donors, want a compelling return on investment. The main difference is that the demographic is more data-driven than older donors.

Which brings us to the promised bad news regarding arts giving. Turns out it isn't as bad as you would think. The report organizes philanthropic interests across three areas: Shared, Emergent, and Divergent. Shared fields are those of interest to both Next Gen Donors and their parents. Emergent are those of particular interest to Next Gen Donors. Divergent fields are those where Next Gen Donors are especially lukewarm. 

The arts falls into the latter category, but it's not alone. It's joined by Health, Religion/Faith, and Youth/Family. Now, if you're like us, you're scratching your head wondering, "Wait, we can see how activist, socially engaged millennial donors don't 'get' the arts. Yet, why is something like Youth/Family also cited as a 'Divergent' field?" (And while we're on the topic, "Animal Welfare" is an Emergent field. As much as we love animals, the idea that millennials prefer this area over Youth/Family is a bit counterintuitive, given their purported devotion to "effective altruism.")

We could go on, but as you can tell, the study raises a bunch of interesting questions. Perhaps the biggest takeaway, here, is to resist using the term "millennial" as a broad brush. Just as there's a difference between inherited and earned wealth, there are also differences pertaining to how the inheritor and earner donates said wealth.

Related: Thanks, But No Thanks: Why Do Millennial Donors Continually Pass on the Arts?