What do Starbucks and demographic trends have to do with fundraising? On most days probably nothing, but a few years ago I was sitting in Starbucks reading an article about how demographic trends are affecting the financial world. The business world loves this kind of data because population size dictates consumerism. As CEO of a nonprofit, however, I wondered if anyone was relating these population trends to the nonprofit sphere.
I was surprised to find how little was being written on this issue. In Charity Shock: Ten Critical Trends Revolutionizing the Fundraising World (CreateSpace, April 2018), I address these issues – although this article covers just a few of the trends.
A Population Overview
The two oldest generations in America are the War Generations and the Boomers. There are more than 45 million Americans who are age 65 or older (2016 fact sheet--Population Reference Bureau). That number will grow as 50 million more Boomers move into retirement. These generations represent the bulk of American charitable giving.
Generation X, right below the Boomer generation, is much smaller and will face the burden of carrying the Boomers on Social Security. Further, although the Millennials are a larger population base than Generation X, they are also known as “the nones.” On population surveys, a third of them mark religious affiliation as “none,” and they are less inclined to regularly attend church. Since church attendance is one of the biggest single predictors of regular giving, this shift suggests that we are heading for a decline in regular monthly givers.
The Great Wealth Transfer
While regular monthly givers may be on the decline, there’s a great wealth transfer ahead. As the current older populations retire and sell their businesses, America will undergo arguably the biggest wealth transfer of all time. A February 2013 article from The Nonprofit Times states that by the year 2050, an estimated $40 trillion dollars will pass from one generation to the next. Some have estimated that this wealth transfer will be as high as $59 trillion, with nearly $27 trillion going to charity.
“My view of the future of fundraising changed at a Starbucks while reading about demographic trends.”
Additionally, the Boston Foundation tells us that over 95 percent of America’s wealth is in noncash, or complex, assets. An obvious question comes to mind: Why do nonprofits ask only for cash if so much wealth is in non-cash complex assets? Traditional fundraising tactics completely ignore the majority of potential donations. Complex assets, like real estate and closely held businesses, will be the giving form of the future.
Connecting with Giving Influencers
According to a March 10, 2015 article by CNBC’s Robert Frank, “More Millionaires than Ever are Living in the U.S.,” in 2014 the U.S. gained nearly 500,000 new millionaires—raising the overall millionaire total to 10 million. In the past 20 years, millionaires have doubled. This increased wealth has led to the need for more financial advisors. In general, philanthropy is going the direction of financial advisors and giving influencers. Giving influencers include financial advisors, wealth managers, community foundation leaders—anyone who has a place of influence over charitable assets.
These giving influencers carry weight because of the sheer pace of life. Faced with less time and more nonprofits than ever, people are looking for help from giving influencers to make decisions. Wise ministry leaders will seek to build relationships with these influencers.
A Final Word: Embrace Change
My view of the future of fundraising changed at a Starbucks while reading about demographic trends. We are in the midst of one of the greatest wealth transfers in the history of the world, yet we will soon see the number of individual givers decline. There’s an urgency to our times.
As leaders, our challenge is to embrace the future, embrace change and not accept the status quo. While we cannot control what has changed, we can control our strategic response to the change. As we look at the demographic trends, the increase of complex asset gifts, and the rise of giving influencers, let’s meet these changes head on. Unprecedented opportunity lies ahead for fundraisers, but it requires a strategic look to the future.
Bill High is CEO of The Signatry: A Global Christian Foundation. His latest book Charity Shock: Ten Critical Trends Revolutionizing the Fundraising World, coauthored with iDonate CEO Ray Gary, explores changes in the fundraising world and how nonprofits can stay ahead of the game. You can learn more at billhigh.com.