THE FUTURE OF PHILANTHROPY | The Impact of Demographics Is as Fascinating as It Is Challenging

It’s far too easy to oversimplify the term “demographics” as just referring to age, i.e., more boomers are retiring. Yes, between 1994 and 2017, according to Deloitte, the number of boomers in the workforce dropped by half. But what else happened in those years?

Religious giving as a share of total giving also dropped by half, as religious participation among all Americans dropped from just over 70% to 47%. Between 2010 and 2020, America’s urban population grew 8.8% while the rural population declined by 0.6%, an important statistic given that rural households give a higher percent of their income to charity. America’s racial diversity continues to grow, according to the U.S. Census Bureau, particularly in Southern and Sun Belt states, and particularly in the under-18 population.

Wealth inequality is also still growing: the average income for America’s top 1% quadrupled between 1979 and 2007; and their share of total wealth grew from 30% to 39% between 1989 and 2016. Women’s lifetime earnings are still only 60% of what men make. But because women live longer, their share of total wealth is growing, and women are more likely to give than men.

Millennials, surprisingly, are very charitable, with 87% giving to charity and more than half volunteering. Of Gen Z, currently the under-30 group, about one quarter volunteer and about one third have already donated to charity—as difficult as their financial situation is, they want to bring about positive change in the world.

Demographics isn’t a single issue, and it surely isn’t just about age; it covers a wide group of trends and population shifts, in areas of religion, race, urbanization, gender, immigration, income and wealth distribution, usage of technology, and charitable outlook, to name a few—in addition to an impending $30 trillion transfer as the Silent Generation and Boomers pass along their wealth.

Demographic shifts pull resources in new directions

One of the biggest implications for advancement teams is that demographic trends may require re-allocating resources, or deepening expertise in under-resourced areas. Consider, for example, that many fundraising programs are heavily weighted toward major gifts; planned giving is a narrow sub-specialty, even though the enormous inter-generational wealth transfer that’s about to happen is, well, a once in a generation opportunity.

Over the next couple of decades, planned gifts will become an ever-bigger opportunity, one that may warrant greater investment in planned giving, which also requires specialized expertise on the organization’s legal team, to help fundraisers structure potentially complex gifts in ways that suit the donor’s needs—e.g., gifts in kind, blended gifts of cash and securities, and deferred gifts. It also requires marketing and communications work to build a reputation for sophistication and trust among the estate planners, attorneys, and financial advisors who act as gatekeepers and advocates for donors.

As my colleague Clare observed in her article about leadership, connectedness and trust are critical to fundraising work, and that is especially true in the sensitive world of estate planning and planned giving.

Working with younger donors requires its own set of accommodations. They’re motivated by different goals, more tech-savvy, and only beginning to build wealth. For example, they might easily make a donation via text; they’re 16 times more likely than Boomers to use a digital payment platform like Apple Pay; and 41% prefer to give via online payments. They are much more likely to prefer being described as a “giver” (80%) compared to being called a “philanthropist” (40%), and they start giving as early as age 18. The biggest drivers to giving are family, passion for a cause, and community, as opposed to loyalty to an institution. But 40% say they do “a lot” of research on a nonprofit before donating, with social media being the most common research resource.

Advancement shops have to be ready to meet these donors where they are, in terms of engagement channels (i.e., digital engagement), motivation, opportunities to give and volunteer, and their need for transparency. And all those aspects of the program have to integrate seamlessly. For example, at Miami University (Ohio) during our Day of Giving initiative, we created a one-day digital program that enabled immediate recognition for online gifts—in less than an hour—with a short personalized thank-you video.

For that matter, in a fast-paced, tech-driven world, stewardship may look completely different than it does today.

Where in the past, major gift donors were lucky to get an annual report and have a few lunches during the year, the major gift donors of tomorrow may require an entirely different and bespoke stewardship program with higher levels of interaction, immediacy, and detailed reporting—how many advancement shops are currently structured to deliver such a stewarding experience?

Finding, building, and retaining the right talent

The demographic shift isn’t just impacting donors, it’s impacting advancement teams as Boomers rapidly retire. Competition for talent is getting stiffer, which makes succession planning a critical task. Where is the next generation of talent going to come from?

Increasingly, nonprofits may want to think about building from within by putting more resources into mentorship and coaching, in addition to skills training programs—especially for developing leaders.?For example, I was brought in by University of Oklahoma to coach two senior gift officers, one focused on soliciting high-end gifts, the other on people management. Both officers are still with the institution and their careers are flourishing.

Normally, senior gift officers would not qualify for personal coaching; that would be reserved for leadership roles at the VP level and above. But investing in people early in their careers, with a clear vision for a career path at the institution, can do a lot to keep them on board—rather than seeing them jump to another organization for a slight bump in salary and higher title. Training and retaining are two sides of the same coin, and if you can do it with individualized attention, it benefits both the staff member and the organization.

Leaders also need to think about how we can be less dogmatic in a world that looks very different. For example, are the same old metrics still adequate for capturing the essential functions of fundraising work in a world where engagement, cultivation, and stewardship may all look very different than they once did?

The good thing about philanthropy is that we have clear and unambiguous goals for how much money we need to raise. Our challenge will be to remain focused on those core goals while de-emphasizing stylistic differences in how the work gets done day-to-day—respecting the need to meet new generations of donors where they are, and engage in ways that suit them better. If that means you have to change the way you manage because this new generation of talent brings different expectations and methods of succeeding, that is our job as managers: as long as the target outcome is still being achieved.

Finally, AI is the wild card. No one knows how AI is going to change what is a highly people-focused, relationship-driven, trust-based business. On that subject, one of the biggest dangers in this business is lack of sincerity. Overly automating relationships that thrive on personal connection risks breaking them.

Demographics is a Rubik’s Cube for advancement leaders

For advancement leaders, the impact of shifting demographics is as fascinating as it is challenging. For each individual nonprofit, it presents potentially unique demands, requiring unique solutions.

Our mandate should be to seize the opportunity that demographic shifts are presenting. There is a lot of money yet to be raised with an older generation of donors, as well as wonderful opportunities to grow relationships with the major gift donors of the future, which may even start out with giving time rather than money.

On the staff side, we have the opportunity and obligation to curate meaningful careers by paying more individualized attention to training, coaching, and mentorship. And we should not be afraid to rethink traditional approaches to measuring productivity in a changing world. These are a few potential ways to take on the challenge of a growing talent shortage in advancement.

As always, we’re curious to know how these issues are affecting you, and what solutions you are finding work best for your team, your organization, and your donors.

Contributing author:

Tom Herbert, Senior Consultant, Aspen Leadership Group

NEXT UP on December 3rd: A Q&A panel discussion on demographics challenges—how senior advancement professionals are building, structuring and leading their teams in a time of diverse and accelerating demographic shifts.

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