Generation Impact: How Next Gen Donors Are Revolutionizing Philanthropy

Sharna Goldseker & Michael Moody

339 pages, Wiley, 2017

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Gen X and Millennial major donors will be the most significant donors in history. This sounds like hyperbole, and we don’t make the claim lightly. But there is good evidence that these rising philanthropists will be the leaders of a new Golden Age of Giving. They will have unprecedented financial resources to give, of course, but they also want to give those resources in new ways, starting at a young age and continuing throughout their entire lives. They promise to revolutionize big giving, and we all need to know much more about them.

Our book, Generation Impact: How Next Gen Donors Are Revolutionizing Giving, pulls back the curtain on next gen donors, offering both extensive firsthand accounts and detailed analysis of the hands-on, boundary-blurring, nontraditional strategies they are beginning to pursue. We offer practical advice to those who work closest with next gen donors—their families, advisors, nonprofits, and others.—Sharna Goldseker & Michael Moody

We’d be hard-pressed to find any donors of any age who say they don’t care whether their giving makes much of a difference. But for next gen donors, impact is everything. As the leaders of the new Golden Age of Giving, as donors with unprecedented resources and the power to revolutionize philanthropy, making a tangible difference is their top philanthropic focus. They want an Impact Revolution. They want to reshape philanthropy in ways they believe can finally lead to meaningful progress on our toughest challenges. …

Our interviews with Gen X and Millennial donors of many backgrounds, from inheritors to earners, showed the same desire. Impact is what they want—and worry about—most. … When we surveyed over 300 major donors in their 20s and 30s, we asked them to indicate the importance of various reasons for engaging in philanthropy. Out of 23 possible choices, they ranked “seeing that my contribution makes a real difference and the organization has real impact” as one of the top three reasons for giving. …

When we asked next gen donors how they were different from their parents and grandparents, in fact, the most common theme in their answers was impact. Many rejected quite strongly what they saw previous generations doing―giving to “gain social status or participate in the right social circles,” giving merely out of “obligation,” or giving for the quid pro quo exchange of “you give to my charity and I’ll give to yours.” Instead, they insisted they give in order to make a real difference, to “move the needle fundamentally and substantially on an issue.” One donor claimed he was “impact-based rather than who’s-who-based,” unlike his parents, and another said she wanted to “be very focused on a problem,” not just on “having a reputation.” This donor made a similar stark comparison: “I want proof of impact. I believe my parents give much more for the ‘feel good’ feeling that comes along with giving, whereas I am dead-set on maximizing the impact of my philanthropic dollars.”

Next gen donor and social entrepreneur Daniel Lurie has built a new model to address the age-old problem of poverty in the San Francisco Bay Area, and he has leveraged over $120 million from donors, including those who are considered next gen and believe he’s onto something. He offers a terrific example of the next gen donors’ distinctive—some might say single-minded—focus on impact, their willingness to try out new models to change the philanthropic landscape and to finally move the needle on long-standing issues.

Daniel Lurie, founder and CEO of Tipping Point Community, told us:

…Tipping Point exists to make our community stronger and to improve the lives of the 1.3 million people who are currently too poor to meet their basic needs in the Bay Area. Tipping Point’s model is to search for and find the most promising organizations and then help them become more effective and efficient at serving children and families who are living in poverty. …

We have too many nonprofits—not only in this region, but in this country—that are well meaning and well-intentioned but don’t look closely at results. Good intentions are not enough. We need programs that are producing real results, because results are desperately needed. Poverty has not decreased in this country in the last 50 years; it’s gone up. We are seeing more inequality of opportunity in this country despite all these nonprofits that exist to close that gap. In order for us to move the needle, we need programs to be really effective. And in order to know which ones are effective, you have to have some measurement.

[W]e help grantees identify—using good data and impact measurements—which parts of their programmatic work are the real difference-makers. We love when groups go through their theory of change work and really figure out what is important and what is having an impact. We have had groups come to us and go through this process of real, deep self-reflection and end up eliminating entire programs. … We don’t want this measurement to be onerous on our groups, but we strongly believe we need better clarity on which programs are really making a difference. …

We cannot continue to do the same thing over and over again and expect different results. It won’t happen. …

Daniel is clearly passionate about trying to alleviate poverty, but he doesn’t think trying is enough. He wants results. And he’s frustrated that despite the previous generations’ efforts to fund poverty eradication programs, poverty continues to rise. Something needs to change to make more of an impact.

What Daniel has done to try to “move the needle” on poverty illustrates well what other next gen donors want to do to make philanthropy more impact-focused. They want to try different models, take new risks, and look for evidence of effectiveness. They want results.

The Power of Seeing

Next gen donors say they want impact, but what do they mean by that? Do they agree on the definition of impact? When we pressed our interviewees to describe what they meant by impact, we heard a number of explanations. For some it was about demonstrated outcomes—some sort of evidence that they had made a measurable difference, like the higher graduation rate among charter school students. This donor even said that seeing the impact in emotional ways was not as important as seeing these actual measurements: “Most nonprofits simply talk about the problem they’re solving and what they’re doing about it and show you pictures of happy kids to show that impact and to pull on your heartstrings. But they don’t necessarily measure how much impact you get, how many happy kids you get per dollar that you give in. It is not exactly clear.”

For others, impact meant clearer evidence that results were tied to their particular contribution, or that their contribution was being used effectively to help solve problems or create change. As one person explained, impact meant making sure that the money “actually is going to provide an added benefit to a user, a community, a school, or something, and to be able to see that happen.”

Ultimately, the most common answer when we asked what impact meant was an indirect one. Next gen donors define impact as “being able to see something happen as a result of giving.” These next gen donors might not have a single, shared definition of impact, but they know they want to see it. While this approach might not be the best definition of impact … it was by far the most common.

Not surprisingly, next gen donors are particularly enthusiastic about site visits. They love being able to “see the impact in front of your face.” One donor called it her most “fundamental experience” to “both see need and see the nonprofit community step in and make an extremely concrete, real difference in people’s lives.” Another donor talks excitedly about a site visit he made to Central Africa: “I traveled with a small team, to kind of see the situation in person and to come face-to-face with what we have been discussing in what I thought was a more abstract way, sitting around the board table in a Manhattan office. That appealed to me. It was an incredible experience. Coming face-to-face with what I hoped we would support more in the future.” ….

What Does This Mean?

The potential upside of the Impact Revolution is immense. If donors with unprecedented resources give in new ways that do in fact leverage significant impact, we can make progress on problems we’ve struggled with for a long time, and advance causes beyond what we’ve ever seen. We could, as Priscilla Chan and Mark Zuckerberg want, cure or manage all disease. We could, as Daniel Lurie wants, help millions more people find a path out of poverty. Big impact is possible if big giving envisions it.

But revolutions are messy—even revolutions driven by the haves versus the have-nots; even revolutions fighting for change in board rooms and institutions versus in the streets. Revolutions are messy even if the intentions of the revolutionaries are noble and positive. How can we prepare ourselves for the messiness? What changes should we brace ourselves for? And what unintended consequences or unforeseen pitfalls should we look out for?

The impact-first orientation of next gen donors can be a boon for nonprofits working to attract and retain these donors, but nonprofits need to think carefully and creatively about how they show impact. Fundraisers will certainly want to emphasize impact as the top-line message in their pitches to next gen donors. And nonprofits will want to find ways to put next gen donors in direct, personal contact with their organizations as well as with the people their organizations support, whether through site visits, volunteer opportunities, or simply the chance to hear the real stories of clients they serve. …

While seeing impact is exciting and motivating, providing personal meaning and fulfillment for the donors, we all need to be aware of some potential downsides of how zealous these next gen donors are for seeing impact. The primary focus must always remain on the real, complex needs and goals these donors are funding. Both nonprofits and donors need to be careful that the Impact Revolution doesn’t devolve into misguided efforts to keep big donors happy with staged site visits showing only the positive sides of the hard work for social change. This is a worry that many nonprofit leaders surely have, and the savviest of next gen donors we spoke with share the concern. They still passionately want their giving to show impact, but they want that impact to fit what organizations truly need and to do what will lead to substantial change regardless of the optics.

Another challenge is that not all causes or organizations do work that produces impact that we can monitor in clear, “face-to-face” ways. The outcomes that some groups fight for can be too big, too remote, too complex, or too subtle and intangible to see easily (think of changing attitudes about racial violence). And some of the solutions that will ultimately produce the greatest cumulative impact won’t be able to show tangible, donor-pleasing results in the short-term. (Think of basic scientific research to understand what causes cancer). …

Ideally, nonprofits and next gen donors can develop enough of a relationship that they define impact together. Donors can express the change they want to see in the world, and nonprofits can explain the complex nature of the problem they address and the struggles they face in fighting it. The two parties can mutually agree on what impact means in each complicated case and come up with the most appropriate performance and impact measures. Both parties then buy in to that meaning of impact and hold each other accountable for achieving it. …

Will next gen donors, with decades of giving ahead of them, have the patience to stick around to see the real change their giving can have on long-term, complex issues? Time will tell. But some of the next gen donors we talked to were keenly aware of this challenge and tried to take the long view. One thoughtful donor explained, “You’re investing in an organization; you want an ongoing relationship with them. It’s probably long-term. Real problems take several years to solve, laying the groundwork and identifying areas of need, and going through many, many different stages. You might not see the outcome for a while. But I think we’re able to operate at a scale where our giving would be most effective over a period of time rather than just a one-time, one-year thing.” …

Revolutions are never easy, but revolutions designed to create more good in the world can be worth the trouble. The coming Impact Revolution in philanthropy could be so, if we all go into it with eyes wide open.

Excerpted with permission of the publisher, Wiley, from Generation Impact by Sharna Goldseker and Michael Moody. Copyright (c) 2017 by Sharna Goldseker and Michael Moody. All rights reserved. This book is available wherever books and eBooks are sold.