Learning from a New Generation of Donors

This article was originally published on November 5th, 2019 at The Center For Effective Philanthropy’s website. Read original.

A new generation of donors is asking some critical questions before making a gift — but possibly not the questions you might be imagining.

At the Learning by Giving Foundation, we have a front-row seat to watching 700 of our country’s emerging leaders direct philanthropic resources every year. The Foundation funds 40 accredited college courses on experiential philanthropy annually. These classes provide the opportunity for students to spend a semester learning about challenges in their local community and the role that philanthropy and the nonprofit sector play in helping to identify and implement solutions. At the end of the semester, the students — not their professor or foundation staff — organize themselves to arrive at a collective decision on how to allocate at least $10,000 to a local nonprofit.

Research tells us that the average donor does less than two hours of due diligence and research before deciding where to give. Alternatively, every one of our students does an average of 45-60 hours of research and due diligence before they come to the table to make their decision. Through this process, we have the privilege of hearing the critical questions that this new and diverse generation of donors is asking themselves and their peers before making a philanthropic gift. Across Learning by Giving courses, we’ve seen several key questions emerge as trends in students’ decision-making, including:

1. How does the organization integrate the perspective of their constituents into their decision-making processes? Does the organization’s leadership reflect those with lived experience in their respective work? Students are increasingly looking for ways in which nonprofit organizations are talking openly with constituents about their work — and regularly integrating the feedback they hear into their strategy and program models.  Students are also looking to see whether or not there are alumni of programs serving on the organizations’ boards and advisory councils. We’ve seen that not only are students comfortable with nonprofits changing their strategy when it is done to adapt to constituents’ feedback, but that they are even more willing to direct resources to these types of organizations.
2. How does the organization collaborate with other nonprofits in the community? Are there ways that funding can promote more collaboration to better serve constituents? A Learning by Giving class is merely an introduction to the robust and complex nonprofit sector that serves our country. Once students’ eyes are opened to the sector, they often look for ways that their funds can support increased collaboration among organizations with the same mission, or, in cases of certain social services, “continuum of care” models that help ensure constituents have access to different programs at different points in their journey. Young donors are not only asking questions about collaboration, but they are also willing to use their funds to support nonprofits hoping to do more to partner and collaborate with other local organizations.
3. What are the infrastructure and staffing needs of the organization? Can funding support these areas in a way that would increase efficiency? If what we’ve seen is any indication, the skepticism around nonprofit overhead that was once commonplace may be quickly becoming a thing of the past. A new generation of donors embraces the idea that nonprofits need talented staff, reasonable office space, and access to decent infrastructure and technology to effectively deliver on their mission and retain talented people.  For students, overhead ratios have not been meaningful influences on their decisions about what organizations to fund.
4. How can we use our circle of influence to encourage businesses to do more for the community? Young adults are less likely to view “social good” as limited to nonprofits and philanthropy — they are increasingly asking how the businesses they frequent reflect their values. For example, students at Providence College recently pressed the school to change the Dunkin’ Donuts coffee shop on campus to one that served fair-trade coffee. When they lost that argument with the administration, they didn’t give up. They then pushed to allocate a portion of the Dunkin’ Donuts’ proceeds to the pool of funds given out to the community each year by Learning by Giving students, ensuring that more money would be given back to local nonprofits in Providence. The college agreed. This is just one example of the many ways we are seeing our country’s emerging leaders integrate social justice values into every part of their life.

If what we are seeing in the classroom is any indication of what kinds of philanthropists might be emerging, we are hopeful that a new, strategic, and progressive group of givers is on the horizon.

To learn more about our work, please visit learningbygivingfoundation.org. If you’d like access to many of the resources offered in our college classrooms, please consider joining our LearnGive Network.