Philanthropy’s New Release

The Bay Area has a different profile than most of the rest of the country: An annual income of $80,000 puts an earner in the 50th income percentile compared to the 30th percentile in the rest of the United States on average. Those who make $300,000 are in the top 2 percent nationally, but in the top 7 percent in the Bay Area (Hope Consulting, US Census). This wealth also reflects the Bay Area’s philanthropic potential. According to a Wall Street Journal study in 2012, the top names in tech gave $1.4 billion to charity in 2012.

Understanding this new wealth and its philanthropic leanings continues to be the subject of great interest overall, but especially in light of this region’s two realities: escalating wealth and steadfast poverty. Many feel that a place with this much wealth should be closer to tackling its local social problems. So it begs the question: Who are these new donors? How do they think?

For the sake of simplicity, let’s define a “new donor” as an individual who has made or inherited significant wealth in the past seven years. We can glean three things about this group, despite the fact that many new donors have not yet fully engaged in philanthropy (they still work and have families!). First, while some of these individuals have billions of dollars, the majority has millions. Second, the new wealth in the region seems more self-made than inherited. And finally, these donors have largely come into wealth through the technology industry, with some in finance. As such, they tend to be young or youngish (primarily Gen X and Y), busy, and technologically oriented—traits that strongly influence their behavior. Specifically, new donors:

1.  Want to be problem solvers, creators, and doers—not joiners. This group has largely made its money disrupting industries, creating user-centered products and services, and setting audacious goals to solve problems, then set about solving them. Take Facebook: The company celebrates a phrase called the “hacker way,” which Mark Zuckerberg describes: “Hackers believe that something can always be better, and that nothing is ever complete. They just have to go fix it—often in the face of people who say it’s impossible or are content with the status quo.” In philanthropy, it is no different. This group is attracted to the prospect of solving entrenched problems and believes—whether arrogantly or not—that it can solve them, picking issues of personal passion or interest. One interview subject summed it up this way: “This is the Uber, AirBnB, Kickstarter generation. The notion of giving money to someone else is totally foreign. We want to do it ourselves, on demand, when we want, how we want.”
    
2. Seek opportunities to use their skills and time, as well as their wealth. A recent report on next gen donors calls this “time, talent, treasure, and ties” and shares: “Once engaged, these next gen major donors want to go ‘all in.’ Giving without significant, hands-on engagement feels to them like a hollow investment with little assurance of impact.” Of Millennials studied in 2014, 44 percent had volunteered their skills to benefit a cause.
    
3. Value their network, are social, and like collaboration. This group is highly networked and enjoys learning about and sharing cause strategies with their peers. They like making connections among seemingly unrelated areas and have the capacity to do so, according to recent research. They show interest in and support for what one subject dubbed “radical collaboration,” applying design thinking and diverse teams to solve problems.
    
4. Think and act in a cross-sector way. Lines are being blurred among government, business, and civil society. Organizations such as Code for America, the Taproot Foundation, and Fuse Corps, and incubators such as Fast Forward and Y Combinator, are beginning to connect industries and apply skills and talent from one sector to help another. In giving, this cohort sees sectors as levers, but does not see social change as simply the realm of nonprofits. They value, design for, and seek out multi-sector partnerships.
    
5. Like a variety of approaches to philanthropy and value data-driven impact. “Philanthropy” is increasingly seen as the act of trying to achieve social change, rather than equivalent to a specific vehicle or legal form. New donors are using a variety of vehicles, are innovating new forms of giving, expect companies to have a giving strategy, and believe that interdisciplinary and cross-sector approaches will lead to faster change. The through line is impact, which they understand through data. Research points to a deep interest in understanding, seeking, and showing impact with a focus on the issue, not just an organization or a leader.
    
6. Emphasize giving now, even if it isn’t their primary focus. New donors shared, “Rather than waiting until the autumn of one’s life, techno-philanthropists emphasize giving social, intellectual, and financial capital now—because giving now means compounding social returns later.” Interview subjects said that the biggest piece of advice they gave to other new donors was to start right away, because there is no better way to learn. That said, new donors are very busy and, with few exceptions, giving is not their primary focus or responsibility.
    
7. Value information transparency and believe that failure is OK. This cohort is curious and optimistic. They largely work in companies that value continuous improvement and where user data is king. New donors have an appreciation for failure but believe it should be shared so that others can learn. They also don’t consider overhead negatively; there seems to be a growing understanding that impact requires an implementer’s time, resources, and talent.
    
8. Expect efficiency and eschew cumbersome processes. The how of philanthropy is of great interest to donors, and some new donors expressed distain for ways of the past, which they see as inefficient and slow, with an emphasis on paperwork. New donors referenced significant interest in innovating the philanthropic process. Pacific Ventures Foundation, for example, now led by a former Apple executive, has a 48-hour grant cycle, with no formal reporting requirements. New donors like donor-advised funds for their simplicity and speed. Innovators from the tech world launched a new grants management platform that is mobile-accessible, cloud-based, user-centric, and simple in design. Good Ventures is blogging about its process as it builds it.

New donors may well change business as usual, whether they spend that energy on creating social change or the way social change efforts are funded. They may also challenge the traditional assumption that local wealth translates into local giving: Where one lives and works may not become a motivation for local community change. New donors who built significant wealth by disrupting entrenched markets or creating new information paradigms may find the prospect of working on issues that affect a relatively small population not as attractive. Even with much of the wealth not yet activated, we can see that this cohort thinks differently and has particular expectations from philanthropic activities. What that will mean for giving or ultimately for social impact remains to be seen. Stay tuned, as they say.

Read more stories by Kimberly Dasher Tripp.