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‘Next-Gen’ Donors – How the Profile of Donors is Shifting

The current group of new donors comes from the Generation X and Millennials who are introducing disruptive new technology and strategies for philanthropy in the same way that they have introduced the new technology and companies that have made them trillions. Around $60 trillion to be precise.

The Profile of a ‘Next Gen’ Donor

Always looking for new ways to improve old systems and for innovative solutions to systemic issues, the profile of a ‘next-gen’ donor is much the same. The new power-donors are the CEOs of some of the most disruptive and innovative companies on the planet and they are using their massive monetary value to transform and innovate philanthropy by tackling some of the largest and longest-standing social challenges facing the world.
Not content to just give locally, though that is still a significant trend when it comes to donations in education in the US, the current crop of philanthropists are showing that they want to focus on evidence-based programs while introducing new experimental foundations and projects that are driven by metrics and results. This change in the profile of donors could signal the next-gen trend in the impact of large-scale giving.
The profile of a ‘next-gen’ donor is also markedly different from other traditional types of philanthropists in that they are extremely hands-on and involved in shaping the foundations and programs to which they donate. Some pundits are hailing this the ‘Impact Revolution’ in philanthropy and it will shape the profile of donors and donations for future generations. Though the profile of issue areas has not shifted for the ‘next-gen’ donors (education and basic needs still top the list across all generations) the way that donations are given is completely different. The emerging trend of charities pursuing profitability has had several detractors and critics, but it is part and parcel of the way that ‘next-gen’ donors are able to align their charitable giving with their personal values.

The Golden Age of Giving – Who is Changing the World of Philanthropy?

One of the most impactful ‘next-gen’ philanthropists are Mark Zuckerberg and Priscilla Chan <> with the development of the Chan Zuckerberg Initiative, not as a traditionally styled foundation, but as a charitable LLC. This simple innovation allows them to invest in businesses that are socially active as well as political ventures in addition to being able to make donations to traditional charitable programs and projects. Alexander Soros, while following in his father’s footsteps on the board of the Open Society Foundations, has made sure that his own philanthropy is focused on seeing the direct impact of investments in social programs on a large scale. Lukas Walton, Dustin Moskovitz, Huiyan Yang and Nathan Blecharczyk from AirBnB are just a few of the ‘next-gen’ donors that are changing the way that philanthropy operates, and their efforts will shape the course of philanthropy for future generations.
They’re determined to make an impact and address issues on a global scale and see that change in their own lifetimes.

What is ‘Evidence-Based’ Philanthropy?

Evidence-based philanthropy means that donations are made to programs and projects based on the evidence of their effectiveness. It is commonly used by large scale donors to evaluate where their funds will be beat utilized, and by policymakers and politicians to evaluate what type of programs should be implemented on both national and state level. What evidence really matters? This is a question that is hard to answer.

Observation Philanthropy?

Evidence literally means, ‘observation’, so the success of an evidence-based program could be observed by the people who implement a program at a grass root level. It could also be the observed results of randomized controlled studies that either verify or negate the success and therefore the chance of funding for programs. There are three types of evidence that can be assessed when deciding about which programs are effective:

  1.  Field Experience: This is the ‘hands-on’, practical knowledge and experience of program leaders and the people who are involved in the implementation of programs. They have the most evidence of ‘how’ to implement programs to ensure the highest levels of success.
  2. Research/Scientific Evidence: This type of evidence includes the results of randomized controlled trials (RCTs) as well as data analysis and statistics to provide evidence to show cause and effect.
  3. Informed Opinion: This is usually the opinion of stakeholders and policymakers who can provide context for scientific evidence and field experience.Each evidentiary area needs to be taken in context.

For example, an RCT may definitively prove that using a bed net helps in the prevention of malaria, but it may be the caseworker ‘on-the-ground’ that is able to show that people are using the provided bed nets for fishing nets. In this case, the evidence needs to be evaluated carefully before making any decision about the success or failure or a program. All the information and observations gathered must be examined in context and simultaneously when reporting on the relative benefits or not.

Evidence Based Philanthropy Finding Reliable Data – Bloomberg Philanthropies

Many philanthropists will only donate to evidence-based programs, but many are now taking policymakers and governmental organizations to task about their lack of initiative in understanding what works and what doesn’t. Mike Bloomberg was particularly scathing of the lack of understanding by politicians of what is happening on-the-ground. In the Blomberg Philanthropies annual report, he noted than many policymakers and politicians are bogged down by a mass of data and refuse to recognize reliable data through the quagmire. Bloomberg also announced a $42 million investment in the ‘What Works Cities’ program which is the USA’s most extensive effort yet to enhance and build on city data to help evaluate and define challenges and opportunities in key areas such as homelessness, health and educations.

This work builds on the 2017 Bloomberg Philanthropies launch of the $200 million Bloomberg American Cities Initiative which gives city councils and mayors the tools to better evaluate programs based on holistic reliable data. In 2017, Bloomberg Philanthropies invested over $702 million in 480 cities in over 120 countries around the world.

Be Smart about How You Approach Your Donors

Once your organization is ready to approach a donor, it is important to communicate your objectives clearly. It is vital that you tell your donors as comprehensively as possible what you can offer them that other foundations can’t. A letter requesting $1 million for a nebulous promise to alleviate poverty won’t cut it. Donors can afford to be picky about where they invest their money, and they’re looking to build long and meaningful partnerships that will have a real impact.

While donors realize that lofty ideas may not come to fruition, the passion with which these ideas are communicated may win their hearts. With fundraising for charity, it is the combination between one’s intent to help and serve society, the passion to make a difference and a knowledgeable approach that resonates with donors. This requires a laser focus on being as enthusiastic and professional as possible.

Organizations seeking funds for worthwhile causes must convince their donors that they bring partnership, value and unique resources to the table. This requires a careful mix of tactical smarts and strategic know-how.

How Should an Organization Communicate with a Potential Donor?

When a donor receives a request for funds, he/she will seek to verify the credibility of the organization that submitted the request. To this end, it is essential to provide easy access to third party information about the organization and publish the name of the charitable trust, its date of establishment, it’s credentials, and the names and positions of the management team members. This is the most effective way to build credibility with donors. Relay all this basic information in a paragraph. A quick history of your organization’s achievements will move mountains with donors, but too much information will put mountains in front of you. In addition, it is a well-known fact that charitable foundations prefer offering grants to registered charities. The reason for this is simple: registered charities are known to aid charitable causes.

Be Open and Provide Solid Information

You may find that your organization requires donor money to purchase IT equipment. However, you may want to communicate that in a way that extols the virtues of your organization and why that equipment is necessary for your charitable work. Your donors need to be aware of why you need funds for a certain venue, office space, equipment, vehicles, and the like. Sometimes, it is a good idea to provide evidence of how these ‘assets’ will assist your organization. These could either be qualitative or quantitative.

When it comes to your particular approach to resolving social, environmental, educational or other issues, explain your unique added value: how are you different? In other words, in what way can you make a difference to the issues that plague society? All of this should be communicated in a clear, credible, and concise manner.

Why Are You the Best Person for the Job?

It may not seem obvious at first, but every time you approach a donor you are selling yourself. You need to convince the donor that your charitable organization is the best one for the job at hand. Your approach, insights, passion, and determination to solve pressing problems must resonate at the highest level. Even if yours is a new charitable organization, you should detail the experience of your team members and their ability to get things done. Throughout it all, be sure to be as meticulous as possible when it comes to costs. Donors don’t like to throw money away; they want to know that their hard-earned dollars are being put to good use. Be prepared to show as much as needed to make your case.

No Hand Outs – Just a Helping Hand

If you’re looking to do something worthwhile with your charitable donation and want to make sure that you’re helping people help themselves, then microfinance organizations are a great way to ensure that your donation can be used more than once, to help several different people.

Microfinance and What It Means for the Giver

Just like the name implies, microfinance is a very small loan that is made to an individual, or group, that is looking for finance to improve their business and their lives. Many of the businesses are run by women and are centered around crafts, sewing, food, farming and markets stalls. The burgeoning entrepreneurs looking for finance are unable to get help from traditional financial institutions, or are living in remote areas. While loans for entrepreneurs is not a new concept, the philanthropic nature of nonprofit microfinance loans to entrepreneurs in developing countries, means that people who have great business ideas are able to work towards a better future. They are able put those ideas into practice with your help!
Microfinance and microlending is a controlled giving environment. Your donation is paid back to you over time, and when it is, you are able to use the same sum to help another person. One donation is able to be used multiple times to help alleviate poverty and make real change in communities both locally and internationally. Using your donation to provide a microfinance loan provides a person with the ability to create opportunity for themselves and within their community.

Lend With Care – Making a Difference, Making your Donation Count

Lend With Care is an organization run by Care International UK. The organization works in 10 countries and people can make a donation starting from £15. An entrepreneur with an idea is able to approach a microfinance organization in the country, the details of the request are uploaded to Lend With Care, and then donors can choose which person or business that they would like to donate to. Lend With Care has a section for each loan request with the history of each person and what they intend to do with the loan.

Kiva – Helping Entrepreneurs Improve Their World

Kiva is a US-based nonprofit micro-finance lender founded in 2005 and based in San Francisco. For as little as $25, a Kiva microloan could help an individual with a great idea to provide for their families, create a future and to realize their dreams.
Both Kiva and Lend With Care offer the option to make a difference by becoming long-term supporters of the organization and to help expand the reach of the organizations into new territories and regions of the world.

5 Predicted Trends in Philanthropy for 2016

Billionaires pledging to give away their fortunes within their lifetimes. The rise in crowd-funded charities. The use of social media, and ‘viral’ content to raise money for charities and trusts. 2015 was a year for giving back and giving big in a myriad of different ways.

 

What can we expect in 2016 from the world of philanthropy, foundations, charitable organizations and trusts?

1. The Giving Pledge will attract more billionaires than ever before. This initiative was primarily aimed at US billionaires, but in 2015 saw an increase in signees to the pledge from Eastern Europe and even Russia. In 2016, we predict that some of the more philanthropic of the great Russian oligarchs will sign the pledge and donate their wealth to charity.
2016 trends
2. The leadership structures of foundations and charitable organizations will move into the hands of younger entrepreneurs. This may also cause a shake-up in the overall structure of many organizations. The decision to form a corporation, instead of a foundation, was taken by Mark Zuckerberg and Priscilla Chan when they formed the Chan Zuckerberg Initiative after the birth of their first child. Other young leaders may start to follow suit, to ensure greater, and more direct control over the distribution of funds to those who need it most.

3. Smaller non-profit organizations and community groups will be able to harness the knowledge and resources of the larger foundations: More foundations are helping smaller groups realize their goals and sustain work at a grass roots level.

4. Charities and foundations will seek to promote their programs and create more opportunities for giving by offering better tax incentives, better structures for giving and more significant reasons for people to give big.

5. On the subject of tax – foundations and charitable organizations need to take a good look at their own financial structures in 2016. The first quarter of the year is tax season in many countries around the world, and although it has never been easier to give, it has also never been harder to stay abreast of all the tax laws and regulations governing the receipt of funds and the dispersal thereof.

2016 promises even more opportunity for foundations to raise money and attract donors. Staying ahead of the curve and on top of regulations will ensure success.