Tech moguls, actors and older investors may be the iconic faces of philanthropy, but more millennials are joining the giving scene and putting a different spin on it.

According to a 2018 report on next-generation giving from Blackbaud, a developer of software for philanthropic organizations, millennials donated just 14% of total charitable-giving dollars over the prior year. Even so, their donations added up to a not-too-shabby $20.1 billion. Nearly 51% of the United States’ 67.1 million millennials are self-reported donors.

Millennials give substantially more than members of earlier generations, although they’re somewhat less likely to make any donation at all, concluded Princeton University researchers Peter Koczanski and Harvey S. Rosen in a study published in May that controlled for differences in age, income, wealth and other variables.

Most millennials won’t be throwing big money to charity anytime soon. Some are still on their parents’ phone plans. They may be paying off student loans, buying houses and funding college savings for their kids. But philanthropy professionals are taking the time to get to know this generation and encourage financial advisors to do the same.

It’s really important to understand millennial donors because “they’re going to increasingly be exercising influence and giving at higher levels,” says David Callahan, founder and editor of the media site Inside Philanthropy. Millennials are generating their own wealth, and they’re also starting to come into significant assets through “the massive intergenerational wealth transfer that’s estimated to run into the trillions of dollars,” Callahan adds.

Millennials also want more help navigating the philanthropic world. According to a multigenerational study of entrepreneurs that was released in May by public charity Fidelity Charitable, 84% of the millennial cohort (as opposed to half of the baby boomers) have discussed philanthropy with their advisors. But 78% of millennial business owners say they wish they had more guidance to make smarter giving decisions.

The study also found that millennial entrepreneurs are more highly engaged and committed to philanthropy. More than four-fifths (81%) say giving is a very important activity in their lives, compared with 57% of Gen Xers and 48% of baby boomers. The millennials’ median annual donation was $13,654 in 2017—more than twice that of Gen X and boomer entrepreneurs.

Karla D’Alleva Valas, head of fund-raising and distribution at Fidelity Charitable, thinks the findings have implications for millennials in general. Although young entrepreneurs who started a business in a garage or dorm room and have already sold it are “in a different part of their journey,” she says, “millennials are increasingly contemplating philanthropy, and they’re increasingly incorporating giving into their lives.”

Millennials tend to approach philanthropy differently than previous generations of givers. They’re less likely, says Callahan, to be interested in supporting the type of legacy institutions their parents may have faithfully donated to, such as local museums and the symphony, and more likely to be attuned to issues of social justice, climate change and other societal challenges.

They want “to give their money in a way that has greater impact to issues that they’re worried about in the world,” he says. Another difference is many younger givers “are more likely to see business as a tool that can help improve the world,” he says, “and not have such a stark division in their mind” between philanthropy and business. Millennials may look to invest some of their money in for-profit entities that can impact issues they care about, he says—such as renewable energy companies and for-profit social enterprises that provide affordable housing.

It is possible millennials’ interest in impact investing could cut into their philanthropic giving, says Callahan. “On the other hand, it’s not necessarily a zero-sum game,” he says, because investors making an impact through for-profit social investments may have otherwise parked those dollars in traditional investment vehicles in the capital markets.

Finding That Sweet Spot

Millennials “are probably on pace to become the most philanthropic generation,” says Kim Laughton, president of public charity Schwab Charitable. “They’re already very engaged.”

But while many millennials participate in workplace fund-raisers and they’re the generation most involved in crowdfunding campaigns (according to the Blackbaud study), they often lack a long-term, tax-efficient strategy for charitable giving. Laughton thinks donor-advised funds could be a good option for millennials, who tend to be tech-savvy and very oriented toward value and low costs. These funds allow account owners to set aside cash and non-cash assets and invest them, for tax-free growth, until they grant to specific charities.

“Donor-advised funds in general sort of meet that sweet spot of low cost, simple, easy to operate,” she says. Account owners can use mobile phones to move contributions from an investment account to a charitable account and make grants. Schwab Charitable, a leading donor-advised fund sponsor, has a $5,000 minimum initial investment.

Beyond cash, givers can also put things like securities into donor-advised funds—including publicly traded stock, IPO stock and restricted stock, says Laughton—options that are popular among millennial account owners. Such donations help donors avoid the capital gains taxes they’d incur if they sold the securities. Cryptocurrency contributions were popular a year and a half ago, and she expects to see that again if the currencies continue to rebound.

In fiscal 2018, Schwab Charitable’s millennial account owners made average grants of $3,000 and granted about six times—for a total average annual grant of $18,000. Although millennials represent a small share of account owners, says Laughton, “I’m seeing the power of this generation really drive how we think about things.”

Schwab Charitable had millennials in mind when it added its socially responsible investing pool managed by Pax World. Its large-cap equity pool is run by Parnassus Investments, a socially responsible asset manager.

Advisors who wish to help millennials meet their philanthropic goals should be “recognizing that this move towards impact investing is real,” says Laughton. “If you’re not talking to them, the other advisors will be.”

Valas of Fidelity Charitable, the nation’s largest donor-advised fund sponsor, says having charitable-giving conversations with millennials (or anyone) can lead to more enriching conversations and be a differentiator for advisors.

Many advisors may not be having these talks with their millennial clients, perhaps because they think the clients are too young, not ready or not mature enough, says Valas. She disagrees. She also notes that those millennials who work for public companies and receive some compensation in equities would benefit from tax-advantaged strategies.

The percentage of millennials serving as primary account owners in Fidelity Charitable’s donor-advised group rose to 14% in 2018 from 6% in 2014. Valas attributes this to the heightened awareness about strategic giving after the U.S. tax reform, and also to strong markets, to the addition of impact investing pools and to millennials’ maturation. The minimum initial investment for a giving account at Fidelity is $5,000.

A Family Affair

Ann Gill, chief philanthropic officer at Vanguard Charitable, another leading donor-advised fund sponsor, agrees it’s time for financial advisors to get the charitable-giving conversation going—even though she points out that most millennials won’t enter their peak giving period for 20 or more years. She sees these conversations as a great way for advisors to start talking to the next generation. The discussions allow advisors to educate and deepen relationships with both clients and their children, go beyond financial planning and attract new prospects, she says.

Advisors can make a deeper, more emotional connection with a client by asking, “How do you pass along values to your children?” she says.

Vanguard Charitable’s millennial account owners focus their grants on human services, religion and the environment, says Gill. But even if they share values with family members, she says, “millennials have much more of a global focus and are interested in having a more tangible impact beyond their immediate community.”

For example, parents and grandparents who value education may traditionally grant to their alma maters, she says, but millennials may be more interested in giving to underprivileged communities and primary schools overseas. Millennials are also looking for outcomes and measurements, says Gill. To make it easier for donors to search for and learn about specific nonprofits, Vanguard Charitable includes on its website a research tool from GuideStar, a leading data source on nonprofits.

“Studies show that 70% to 90% of inheritors of wealth switch financial advisors rather quickly,” adds Ken Nopar, senior philanthropic officer for the American Endowment Foundation, an independent donor-advised fund provider. He suggests asking clients’ adult children about their interests and if they’re involved in any nonprofits. Some “may not be as astute or interested in performance of funds,” he says, “but nearly all millennials have volunteered in some capacity.”

Nopar sees a lot of parents enabling their children to make grants out of a family donor-advised fund. On the flip side, some millennials are “going upstream to get parents involved,” he says.

They may be educating their parents about how donating appreciated securities to a fund is much more tax efficient than writing checks to charities. It’s also easier to keep track of their donations because they just receive one tax receipt from the donor-advised fund sponsor and they can view past grants online, he says.

Millennials working for start-ups often fund their donor-advised funds with company stock “that’s gone through the roof,” he says. They can also donate appreciated stock with a very low cost basis that they received from a grandparent, he says.

The American Endowment Foundation has helped families donate real estate, life insurance and other assets they no longer want or need. Parents often plan to donate IRAs when they die to reduce the tax bite, says Nopar. A CPA should weigh in on all tax strategies being considered, he adds.

Greater Opportunities

Jenna Mulhall-Brereton, chief philanthropic services officer at National Philanthropic Trust, another leading donor-advised fund sponsor, has noticed millennials are starting to give actively while still building their businesses and raising their families.

For this generation, “everything is a lot less siloed in life than it was certainly for baby boomers and even for Generation X givers,” she says. “Millennials sort of blur the lines” along a continuum that includes socially responsible investing, impact investing and using purchasing power to effect change.

According to the “2018 U.S. Trust Insights on Wealth and Worth” survey, 77% of wealthy millennials own impact investments or are interested in impacting investing, Mulhall-Brereton notes.  With a $25,000 minimum, National Philanthropic Trust’s fund skews more toward baby boomers, she says. Other entities, she notes, are developing online tools with low barriers to entry. For a $20 minimum, “Millie,” an app built by and for millennials, gives users access to a donor-advised fund through the nonprofit Infinity Benefit Foundation.

Millennials also think differently because they’re “digital natives,” says Mulhall-Brereton. Their access to information gives them greater awareness of charitable needs, they’re using social media to mobilize their peers around issues, and they’re discovering, she says, “there are greater opportunities for social impact at all levels of wealth.”