In recent years, billionaire donors have been the subject of scrutiny from the public. Much of the criticism comes from how these major donors have chosen which organizations to support in the past and the information that they have made available about these decisions.
The newest generation of billionaires seems to have listened to the criticism. They are actively changing the ways in which they give to ensure that their giving is both more effective and more in line with people’s expectations.
Young billionaires are taking a hands-on approach and embracing significantly more transparency in their giving. This is demonstrated by research coming from Wealth-X and published in its 2019 Trends in Ultra-High Net Worth Giving report. The research also showed that these young donors are more focused on giving away their wealth over the course of their careers rather than waiting until they retire.
Some of the other key ways in which young billionaires are changing how they give include:
1. Collaborating with other donors on new projects.
The traditional form of philanthropy involves donors acting alone and making grants through their independent organizations. However, younger entrepreneurs are more focused on impact than ever before. They see strategic collaboration as the best way of effecting lasting social and environmental change.
Some of the most effective philanthropy from the past years has been achieved through collaboration. This strategy makes it possible for donors to learn from each other and pool resources in unique ways.
Perhaps the most obvious example of philanthropic collaboration is the Giving Pledge. This agreement was started by Bill Gates and Warren Buffett, two members of the older generation. It holds individuals accountable for donating. The Giving Pledge may actually have served as inspiration for more recent collaborative giving, which is more strategic and born from shared dedication to lasting change.
2. Becoming more actively involved with organizations.
In recent years, there has been a trend toward billionaires sitting on the boards of nonprofits rather than putting their names on buildings. Philanthropy experts call this trend “co-creation.”
The trend seems to have grown out of the rising criticism of billionaires who push money toward a problem without following through on how those funds are used. Young billionaires want to understand exactly how their donations are being used to make an impact, which in turn could inform how they approach giving in the future.
One of the prime examples of this trend is REFORM Alliance, an advocacy group focused on criminal justice and founded by Meek Mill and Jay-Z. This organization has received large donations from a number of younger billionaires, several of whom have subsequently joined its board.
The group’s leadership includes Vista Equity Partners CEO Robert F. Smith and CNN host Van Jones, as well as full-time philanthropist Laura Arnold. The different points of view provided by these individuals have become a primary strength for this organization.
3. Donating less to the arts and more to education.
Regardless of the age of donors, education is a popular cause. However, among donors who are older, arts and cultural institutions are a close second. More than 65 percent of billionaires who are older have donated to the arts, compared to about 35 percent of the younger generation of donors.
In general, it seems that priorities among donors have shifted somewhat between generations. Moving forward, it will be interesting to see how the arts world reacts to reattract donors and keep themselves alive.
Perhaps part of the reason that younger donors have avoided supporting the arts is the connection between art donations and conservativism. This trend is best demonstrated by David Koch, who recently passed away at 79.
Koch became one of the primary patrons of the Metropolitan Museum of Art and the Lincoln Center for the Performing Arts. However, he also gave millions of dollars to conservative causes these organizations were criticized for accepting his money.
4. Focusing primarily on one philanthropic issue.
In generations past, philanthropists would often contribute to a wide range of different causes. The next generation shows a predilection for specializing in a particular type of philanthropy.
Perhaps because the newer generation started its giving at a younger age, individuals have more time to become experts in a particular field of giving. This trend may also result from a larger interest in impact giving than was present in prior generations.
Experts believe that this trend will only become more intense as people who are younger start to accumulate wealth, but its impact is already rather apparent. For example, a group of young Chinese billionaires has focused solely on the topic of climate change, which is the fifth most popular cause for philanthropists in China.
With their money combined and focused, this group can achieve much more than was previously possible. This group also demonstrates the principal of collaboration among multiple donors at once. Since all donors will choose different focuses, it is unlikely that any causes will go unfunded.