Empowering the Next Generation of Philanthropists

Be Open to Change

Young philanthropists’ fresh perspective on the current socioeconomic and environmental backdrop brings with it a heightened sense of urgency. Millennials and Gen Z have endured a great deal of economic turbulence, observed an increasingly divisive political landscape and are concerned about the future of the planet. According to a 2021 global study, 45% of young people aged 16 to 25 reported the effect of climate anxiety on their daily lives, and many more feel relentless pressure to fix the planet–and fast.² Gen Z activists in particular rely on their mastery of digital spaces to address this urgency.

The advent of remote organizing, crowdfunding and social media movements has transformed youth activism from grassroots to "glocal."³ Platforms like X (formerly Twitter), Instagram and TikTok are at the epicenter of local and global exchanges, where viral videos amass millions of views and mobilize like-minded peers. Next-generation philanthropists multiply the impact of their donations through crowdfunding sites–rather than giving anonymously, social causes become an intrinsic expression of personal values and identity. Hashtag movements ignite transnational calls to action that democratize activism and create communities that are eager to make an immediate impact.

Help Foster Meaningful Relationships

With 82% active in philanthropy, NextGens understand that wealth is a privilege.⁴ For this reason, they look to give back and believe in fostering collaboration and forming partnerships with nonprofit organizations that are closest to the problems they want to address. Philanthropists of preceding generations, by contrast, have been comfortable taking the lead role in determining solutions to alleviate societal ills and doling out capital accordingly. But the new generation tends to adopt a more trust-based philanthropy approach. They see nonprofits as the true experts in problem-solving for their communities and entrust their leadership to allocate resources where they are needed most.

In this new model, the voices of organizations "doing the work" are magnified. Effective collaboration also means joining forces with other funders to amplify impact. NextGens have abandoned the individualistic and siloed philanthropy of yesteryear–they understand that co-funding with their peers means co-validating the work of the organizations they support.

Aligning Investments with Philanthropic Goals  

The new generation’s determination to make a difference extends beyond their philanthropic work to their investment portfolios, aligning their capital with the stewardship of their mission-related work. Why invest in a company whose projects cause soil pollution when your mission is to support the growth of regenerative agriculture collectives? By rejecting the compartmentalization of capital, next-generation philanthropists are able to more effectively identify when their financial investments are at risk of undermining their social purpose. 

There is also a willingness to embrace nontraditional forms of investing that integrate financial and philanthropic approaches. More than 40% of millennials report engaging in impact investing,⁵ seeking out investments that help achieve certain social and environmental benefits while generating financial returns.

Passing the Torch

Parents and other older relatives might question how to best engage with next-generation philanthropists. When Millennials and Gen Z inherit preexisting philanthropic and investment portfolios, it is important that their parents are willing to acknowledge, collaborate and adjust to changes intended to maximize positive outcomes.

Regardless of where these young people are in their giving journey, adults in their lives can serve as sounding boards, support systems, advisors and guides, while also providing them with the autonomy and agency to make their own impact on the world.

Be sure to listen when you are working with a burgeoning philanthropist. Have an open dialogue and welcome an evolving conversation and new approaches. Share your experiences and interests without imposing your own giving priorities. These kinds of conversations often serve as learning exercises; common threads between generations may emerge and a shared history can be better appreciated.

Be open to supporting the NextGen in their innovative approaches to societal challenges and the idea of moving beyond checkbook philanthropy. Look for volunteer opportunities as a family; understand that advocacy might be an attractive alternative or complement to your current work as a family; and embrace new practices, such as trust-based philanthropy.

While the next generation’s philanthropy may have a different look and feel than the generations before, their families can and should empower this new group of changemakers as they look to innovative methods to use their wealth to make an impact on the world.

Gaining a significant wealth at a young age can present a unique set of challenges and opportunities. Your Morgan Stanley Private Wealth Advisor can help prepare the next generation from both an emotional and wealth-management perspective to help take advantage of new financial opportunities and acquire leadership roles.