Younger donors have led a trend toward greater issues-based giving in recent years. Photo: David Brickner/shutterstock

Here at Inside Philanthropy, we pay a lot of attention to ongoing shifts in the sector. One big change is that as the country grows more diverse, marching toward a non-white majority in 2050, the face of American philanthropy will also change. Another shift is that younger donors—particularly entrepreneurs, as well as celebrities and athletes—are starting to give away money in their 20s, 30s and 40s, rather than waiting until their business careers sunset. The priorities of this cohort will differ in many ways from those of older generations.

In order to get a handle on these changes and their implications, we’ve tracked the giving of figures like Laura and John Arnold, who started with philanthropy early and are continuing at a steady clip. We’ve also compiled lists of top Indian-American philanthropists and top African-American givers.

Fortunately, efforts are being made to expand the scope of data collection to better understand this rising cohort of younger and more diverse donors. Consider Bank of America’s Study of Philanthropy, a long-running project that started in the mid-aughts. For more than a decade, the study has operated as a partnership between the Indiana University Lilly Family School of Philanthropy and Bank of America. According to Una Osili, associate dean for research and international programs at the Lilly School, the project initially focused on assembling more information about affluent households than existed as a national sample at the time.

Over the years, the project has built on its initial work to look more closely at Black and Latino households, LGBTQ households, younger donors and female donors.

“These are populations that in the past were not as widely studied. It allows us to now understand not just what high-net-worth philanthropy looks like, but also how it’s changing,” Osili told me.

The 2021 Bank of America Study of Philanthropy is based on a survey of 1,626 affluent U.S. households regarding their giving in 2020. One key finding is that average giving to charities by affluent Americans increased by 48% compared to levels in 2017, rising from $29,269 to $43,195. The results also highlight the rising importance of issues-based philanthropy, among younger donors in particular. And even in the midst of the pandemic, nearly 90% of affluent households gave to charities in 2020, comparable to past years.

To expand on these and other insights from the study, I connected with Osili to find out more.

All about the numbers

Armed with a bachelor’s degree in economics from Harvard University and a master’s and Ph.D. from Northwestern University, Osili’s more than two decades of experience cut across the public and private sectors. She worked at the Federal Reserve Bank of Chicago for eight years and has been involved with Indiana University for 22 years.

According to Osili, the Bank of America study is typically conducted every two years, but was delayed an extra year until 2021, to account for the impact of the pandemic and for a historic period in which calls for social justice reached a fever pitch. Note that this is the first time the survey asked questions about race and social justice.

Nearly a quarter of high-net-worth donors said they gave in response to these calls for racial justice, Osili told me. “I think 10% cited that this was one of their top three issues in terms of areas of giving,” she said. “And we also had a sizable group that said this was an area they wanted to learn more about. While it’s hard to really say this is a trend… it is very encouraging to see that high-net-worth donors overall are paying attention and responding.”

The rising importance of issues-based philanthropy should also be seen within the context of an expanding pool of younger donors. In 2017, 31% of donors over 38 and 44% of donors under 38 gave to specific issues like social justice, climate change, hunger or homelessness. In 2020, that breakdown rose to 41% and 55%, respectively.

“We’ve been quite intentional about connecting with this younger group of donors,” Osili said. “For many reasons, this is an important group. What we’re finding is that younger people are getting more involved at younger ages—whereas in the past, the model was, you make your money first, and then you start to think about giving. Many of these donors are starting at earlier ages to make commitments to causes that they care about, and to give significant gifts.”

In terms of how this data might be applied by fundraisers, she said these findings make it all the more important for nonprofits to use digital tools to connect with potential funders. Before the pandemic, events and face-to-face interaction may have often predominated, but current conditions require organizations to think outside of the box to make that emotional appeal.

Closing the donors of color data gap

Not long ago, I wrote a piece titled “In Search of the Black Environmental Donor,” reflecting, in part, my frustration about how cold the trail was. To be sure, many people of color have long led environmental justice work on the ground. But the list was relatively thin in terms of names on the major individual donor side. In my conversation with Osili, I was eager to find out how to ramp up the data there, as well.

She agreed. This year, the Lilly Family School of Philanthropy is launching a study specifically focused on giving to climate and climate mitigation. She says that a key imperative for donors of color is linking the environment to other causes.

A study Osili was involved in, released in August and titled “Everyday Donors of Color: Diverse Philanthropy During Times of Change,” found that donors of color are, in fact, leading in giving to racial justice causes. “I think the idea is that racial justice is not one category. It can be education. It can be healthcare. So sharing those disproportionate impacts on communities of color can be one way of connecting,” Osili said.

Overall, she said younger donors are really interested in data. “They want to understand who’s giving to what. And sharing that information can inspire others,” Osili said. She also gave high marks to MacKenzie Scott’s approach, including her willingness to give large, unrestricted gifts and to adopt more flexible forms of funding.

Younger donors are also helping drive the rise in impact investing. The Bank of America study found that participation in sustainable and/or impact investing nearly doubled since 2017. Additionally, 59% of those donors said that their sustainable investing was undertaken in addition to their existing giving. And just 5% of donors said that impact investing was in lieu of all other charitable giving.

This is one of the reasons Osili believes younger donors, and donors of color, are primed to make an even bigger impact in philanthropy in the coming years.

“One of the points I have made is that donors of color tend to be younger, just because of their age profiles, anyway. And when you look at the use of technology, of impact investing, of digital tools, diverse donors actually have very high rates of this, and of giving using social media,” Osili said.