The pandemic has pushed philanthropists into new directions, changing both their priorities and how they define philanthropy, according to a study by Fidelity Charitable released today.
More donors now see hunger as one of the major problems facing society, said the report, “The Future of Philanthropy: The Evolution from Charitable Giving to Charitable Living,” which included a total of 4,000 people who gave at least $1,000 to charity last year. Forty percent of donors ranked hunger as one of the top three challenges facing the world, up from 34% before the pandemic.
Access to basic health services came in second among donors’ biggest priorities, with 31% ranking it in the top three. That was unchanged from 2020. And 16% of donors ranked racial discrimination as the third of the top three challenges facing the world, up from 9% in 2020.
“The shifts we are seeing are more pronounced than any I have ever seen," said Amy Pirozzolo, head of donor engagement for Fidelity Charitable, who spoke during today's webinar about the report. "Younger generations are more impact-oriented than older ones.”
Nageeb Sumar, vice president of philanthropic strategy for Fidelity Charitable, added, “Younger people feel a philanthropist is anyone who gives of his time or himself, rather than just money. Also, they feel sharing their values with others and advocating for a cause is as important as giving to a cause.”
“Charitable giving is quickly becoming charitable living, impacting not just the nonprofit sector but the way we work, play and invest more broadly,” said Pamela Norley, president of Fidelity Charitable. “There is an entirely new mindset among younger generations shaping what it means to give back. Three-in-four millennials consider themselves philanthropists, regardless of how much they give, compared to only one-in-three boomers.”
The report explained, “Rather than simply giving money to charities, donors increasingly prioritize social good in everyday decision-making.”
For example, half of all donors surveyed have purchased products from a socially responsible business; one-fifth have engaged in impact investing and have considered social or environmental implications when making investment decisions; and 70% said it is important to work for a company engaged in corporate social responsibility.
“Giving is increasingly integrated into our everyday decisions, and effective philanthropy is more accessible than ever to average donors, with ways to engage at our fingertips 24/7,” the report said. “Social good is becoming a key factor in how donors make financial choices.”
Younger donors are even more adamant about these actions, Fidelity Charitable said. Two-thirds of millennials have purchased products from a socially responsible business, while 43% have made an impact investment, and 87% said it is important to work for a company engaged in corporate social responsibility.
The pandemic pushed more people to use technology to give money, but it was a trend that already was in place. “As our lives became increasingly virtual due to the Covid-19 crisis, donors turned to digital tools to engage in philanthropy," the report said. "Nearly six-in-ten donors donated on a charity’s website in 2020, and 18 percent said they did this more often.”
Although donors continued to give regularly, and several reports have shown philanthropy grew during the pandemic, the Fidelity Charitable survey showed that many donors are only lukewarm about the possibility of solving society’s problems. Fifty-seven percent said they were only somewhat optimistic and one-fifth said they are not at all optimistic. However, the report showed that younger donors have more confidence in the impact of philanthropy. More than 40% of millennials said they are very optimistic, compared to only 15% of baby boomers, and 22% among Gen X.
The shifts in the way people give and the causes they consider important have “tremendous implications for nonprofits that depend on the more than $450 billion donated to charity each year,” Fidelity Charitable said. The changes also have “the potential to shape American society much more broadly.”
“To be successful, nonprofits need to recognize that donors want to be more involved in their causes and they want to bring their networks of friends to the cause with them,” Pirozzolo said. “This will have a profound impact on how advisors start the philanthropic conversation. They should start with the client’s values and then see how those values can be fulfilled through philanthropy, rather than starting with who the client wants to give to.”