Millennials have been making a lot of waves in philanthropy. Already poised to become the most generous generation in history, millennials approach giving in a way that differs fundamentally from that of previous generations. In the workplace, the tension between millennials and both Generation Xers and baby boomers has been significant in the last couple of decades; while older generations resent millennial attitudes about hierarchy, the younger generation has criticized the impact of Generation Xers and baby boomers on the economy and environment.
The Ways in Which Millennials Think and Give Differently
While the world still belongs largely to Generation Xers and baby boomers, the transition to millennials is occurring quickly, and it is important to understand what this change could mean for finance and philanthropy. After all, millennials have quite different ideas about money than prior generations.
According to Fidelity, every respondent to a questionnaire that it recently distributed to 4,000 people had donated at least $1,000 to charity the previous year. When those who had donated were asked whether they consider themselves to be philanthropists, only 35 percent of baby boomers and 48 percent of Generation Xers replied yes, whereas 74 percent of millennials answered affirmatively.
One interpretation of these results is that millennials are more conscientious about economic systems and the role that they play in them. As a result, they may be more organized in the ways in which they give with specific goals in mind. Moreover, millennials are likely influenced more by technology than any prior generation. Many of their economic decisions are based on social media campaigns, and they rely on digital platforms for a lot of their giving. In many ways, philanthropy is not its own silo for millennials, who think about giving via their hobbies, jobs, and shopping.
Nearly 90 percent of millennials say they want to work for a company that engages in corporate social responsibility. Moreover, 65 percent of millennial respondents to the Fidelity questionnaire say they prioritize purchases from socially responsible companies, and more than 40 percent of respondents had already engaged in impact investing, which has also gained momentum largely because of the millennial focus on generating wealth responsibly and using earnings to reinvest in the community. By comparison, only 12 percent of baby boomers had engaged in impact investing. For some philanthropy experts, all these figures indicate that charitable giving has transformed into charitable living for millennials. This new mindset will likely only gain more prominence as millennials become a stronger economic force.
How Surveys Can Point to Larger Shifts in Overall Mindset
Of course, one survey is insufficient for drawing sweeping conclusions, and the Fidelity study only looked at people with enough wealth to make significant philanthropic contributions. However, several other studies reflect a similar mindset. For example, according to a 2019 survey by Morgan Stanley, 95 percent of millennials stood behind sustainable investment, whereas only 85 of all investors surveyed supported such an investment strategy. According to another study by U.S. Trust, 76 percent of millennials think about impact when they invest compared to 29 percent of baby boomers, and according to an Allianz study, 64 percent of millennials make investment decisions based on values compared to 42 percent of baby boomers.
One interesting thing about these findings is that they do not necessarily align with what many would expect given current economic conditions. Even before the coronavirus pandemic, which exacerbated things, millennials experienced substantial economic insecurity, arguably more than any preceding generation in recent memory. It would therefore make sense for millennials to be more anxious about money than earlier generations, according to classical economic theory, and more focused on the maximization of wealth rather than social responsibility. Because of this, some Generation Xers and baby boomers may think that the shifts in thought are just a reflection of idealism, or even guilt, among younger people with wealth, but it is important that the phenomenon not be so easily dismissed.
The Economic Future under the Control of Millennials
The key thing to consider when it comes to millennials is that they will inherit trillions of dollars of wealth in the coming decades. When this happens, the inequality between millennials with family wealth and those without it will become even more apparent. The guilt associated with this disparity is likely to increase along with fear of a social backlash. These factors could put further pressure on the generation to retain current attitudes and maintain a focus on value-based investing. Industry experts also expect this shift to come with a greater focus on digital platforms, especially in terms of achieving greater company transparency.
The other point that this shift in attitude brings up is the fact that millennials in general seem to have less tunnel vision when talking about major concepts like politics, finance, and social issues. All of these concepts are interconnected in the minds of millennials, which is why charitable living – and not just giving – has become such an important mantra. This belief could drive much more conversation about impact investing and point to a future that is more focused on integrating philanthropy with efforts to make money rather than embracing the traditional model of making as much as possible and then giving a certain percentage back to the community.