Philanthropy's $12 Trillion Shift: Navigating the Wealth Transfer from Boomers to Millennials

By Alexis Miller. Edited by Bruxa.

An unprecedented shift in wealth is grabbing the attention of the philanthropic sector, sparking discussions and making us brace for a transformative change. This development, known as the "great wealth transfer," is expected to see over $84 trillion in generational wealth transition from baby boomers to Generation X and millennials by 2045.

According to Candid, an estimated $12 trillion of this sum will be directed towards philanthropic causes. Why? This emerging, younger generation of heirs exhibit distinct perspectives on money and power, and they aren’t afraid to take different approaches to risk tolerance, retirement planning, and asset diversification than their parents. This demographic shift signals a transformative era for philanthropy, where new financial ideologies may redefine wealth management and redistribution.

Bank of America’s Private Bank Study of Wealthy Americans found that while 68 percent of older respondents rely on investments in traditional stocks and bonds, 80 percent of younger investors believe alternatives such as private equity, commodities, and real estate are better investments, with 47 percent also investing in cryptocurrency. Younger respondents also reported an aversion to simple charitable check writing and are two to three times more likely to use donor-advised funds (30 percent), charitable trusts (51 percent), or a family foundation (14 percent) than older respondents, suggesting a greater financial sophistication among adult children than their parents recognize.

A breakdown of "wealthy individuals".
A breakdown of "wealthy individuals".

The generational differences don’t just end with the donated asset type or philanthropic vehicle, but rather extend to the impact this younger donor class is looking to have on the world. This demographic of donor seeks active engagement, aspiring not only to witness the impact of their support but to experience it deeply and personally. They want their philanthropic investments to mirror their values, and are more open to immerse themselves in the causes they care about.

The generational wealth transfer is more than an exchange of assets - it is a change in the mindset and persona of the modern donor. This modern donor is also someone who has grown up embracing technology and approaches the world in a digitally native way.

At Endaoment, we are strategically crafting our services with this monumental wealth transfer in mind. Our strategy is centered on a deep understanding of and alignment with the values that resonate with our donor base. The next generation of donors is in search of innovative and unconventional solutions, and connection. A key aspect of our approach at Endaoment is our ethically-aligned fee structure, which prioritizes the active distribution of funds from our Donor-Advised Funds (DAFs) rather than merely accumulating charitable assets. This emphasis aligns with the proactive ethos of our donors; keep money moving.

While not every Endaoment donor is immersed in the crypto space or fully versed in blockchain technology, our platform's unique feature of providing a publicly accessible "receipt" for each transaction stands out for its transparency. This feature is one example that resonates strongly with our donors and supports their ethos.

While the adoption of new software and platform architecture by traditional institutions isn't a necessity, it is imperative for the entire philanthropic sector to acknowledge and adapt to this generational shift.

Engaging the new generation requires a distinct approach, one that diverges from the ideologies of their parents and grandparents.

There is a growing preference for non-traditional approaches in today's landscape. It is crucial to embrace a spirit of collaboration in the Philanthropic Sector to effectively cater to the needs of the upcoming generation. This approach is key to strategically managing the forthcoming $12 trillion inflow, which will significantly reshape the future of the nonprofit sector as we currently know it.

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