Millennials believe social entrepreneurship makes a sustainable difference around the world now, using social media to collaborate with peers and find supporters, says new research.
How the next generation of philanthropists is shaping the future of philanthropy, while balancing the weight of family legacies through new tools, technologies and strategies, was the focus of the 2017 BNP Paribas Philanthropy Report written by the Economist Intelligence Unit.
Millennial attitudes continue to be of huge interest to the global family business community. Wealth-X estimated more than 14,000 ultra-high net worth individuals were likely to pass on $3.9 trillion to the next generation in the next decade, equal to the value of the 10 largest companies in the world, in its report Changing Philanthropy: Trend Shifts in Ultra-Wealthy Giving.
The findings chimed with The Global Family Office Report 2016 by Campden Wealth, in association with UBS, which declared impact investing had “come of age”. Millennials were driving 61% of family offices' activity, or expected activity, in impact investing.
The BNP Paribas Philanthropy Report was based on desk research, in-depth interviews of Millennial philanthropists and philanthropy experts.
The five main characteristics of the Millennial philanthropist mindset:
1. Belief in social entrepreneurship: Millennials believe that supporting entrepreneurship and for-profit organisations (as opposed to a traditional non-profit) can be a more sustainable option to achieve their philanthropic ambitions. Their emerging sectors for social entrepreneurship are FinTechs, EdTechs, Renewable Energy and Food & Agriculture.
2. A global approach: Millennials are more global both in their causes and geographies than Baby Boomers. The younger generation wants to replicate successes across many places whereas the older one is focused on a single region.
3. A desire for now: Millennials do not want to wait before giving back as they know that they can make a change today.
4. A different use of social media: Millennials use digital channels differently from Baby Boomers, not only to promote their causes, but also to find grantees, donors, talents and to educate themselves.
5. A collaborative culture: Millennials believe they can be more effective if connected with peers through international or local networks, looking for co-investments, co-funding, new ideas and best practices.
“Over the past few years, we've seen our clients increasingly seek positive impact on society,” Sofia Merlo, co-chief executive of BNP Paribas Wealth Management, said.
“Millennials especially are pushing the boundaries of traditional philanthropy with a stronger collaborative spirit and a greater use of impact investing or social entrepreneurship and co-funding opportunities.”
Vincent Lecomte, co-chief executive of BNP Paribas Wealth Management, said learning the next move of young high net worth individuals, their values, and their objectives, were “crucial ambitions” in their goal to transform the experience they offered them as the next generation of clients.
“This new experience we are co-constructing with our clients and FinTechs is a unique blend of disrupting services, communities like the NextGen Club App and our NextGen Experience educational program.”
The report found Millennials did not feel they have to be necessarily tied to their family legacy. They were striking a balance between the seemingly opposing forces of their legacy and of innovation. While some preferred to do it on their own, by setting up independent structures and looking for performance indicators, others stayed aligned with their family and parents' goals but injected modern practices.
“What makes a family so different from anything else is the support within. Koon Ho Yan (32), founder of EasyKnit Foundation in Hong Kong, said.
“We review [the philanthropic decision] together and decide whether or not we want to go forward.”
In pursuit of impact, Millennials adopted a specific approach to their investments, the report continued. They did not hesitate to break away from previous generations, using impact investing, impact evaluation or hybrid solutions. Millennials blurred the lines between their investment initiatives and philanthropic activities, contrary to their elders.
Stéphanie Cordes (27), vice-chairwoman of the Cordes Foundation in the United States, said: “When I joined the foundation, 40% of the portfolio was in impact investment. But I began to question why all our investments weren't Impact Investments.”
Being a result-driven cohort, young philanthropists used digital technologies to capture and monitor key performance indicators that measured impact. Some examples of these technologies were highlighted in the report, including the European Foundation Center Data Map which provided key data on how to run a foundation in 80 different countries, or the IRIS Metrics, designed to measure the social, environmental and financial performance of an investment.
“We've changed our organisational structure to ensure a more professional management of the foundation, and we measure our performance,” Lavinia Jacobs (36), board chairwoman of the Jacobs Foundation in Switzerland, said.
“We attach great importance to providing clear and transparent information about our strategic goals and performance to our most important stakeholders and the public at large.”