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Fact
Despite media reports to the contrary, the United States' economic position in the world is likely to sustain itself over the next several decades. By 2050, the U.S. population between the ages of 15 to 64, the most economically active segment of the population, will grow by 42%. Conversely, the same segment in China will decline by 10% and in the European Union it will decline by 25%.
-Derived from “America on the Rise.” Forbes. 2010
Quote
"Recommend virtue to your children. It alone, not money, can make them happy. I speak from experience."
- Ludwig van Beethoven
Inside
What the Next Decade Holds for Philanthropy
With population growth of 30 to 50 million individuals in the United States alone, philanthropy over the next ten years will become increasingly important as community needs will likely outpace available resources. Population growth, demographic shifts, and technological influences on society will continue to shape philanthropy in the next decade. In particular, several trends will be key drivers to success for philanthropic organizations.
Perhaps the single biggest influence on philanthropy in the next ten years will be that of the aging United States population. The percentage of people age 65 and older will grow from 13% to 16% of total population, and will reach 20% by 2040, according to the US Census Bureau. From this population, an estimated $41 trillion is expected to transfer hands now through the year 2052.* Inherited wealth in hand, this generation will have the capacity to make large charitable contributions. The Baby Boomers will also have free time as they retire en masse. Philanthropic organizations must be prepared to engage Baby Boomers as both volunteers and donors.
Baby Boomers also pose significant challenges from a resource standpoint. Health care and social service needs are expected to skyrocket in the next decade. Philanthropic activity from Baby Boomers will likely be critical as in many respects the generation must be self-sustaining, given a significantly smaller population behind the Boomers who will have the capacity to make gifts.
Philanthropy will also be influenced heavily by the steady growth in the Hispanic population. According to the US Census Bureau, Hispanic individuals will make up nearly 20% of the population by 2020. “Experts say the next few years are crucial to making Hispanics an ally in charitable efforts, a task that the nonprofit world has largely failed to do.”** Traditionally, charitable organizations have focused on serving this demographic, but as their wealth increases, a diversified message will be required to generate giving from this largely untapped group.
As technological innovation reshaped the philanthropic landscape in the previous decade, competition for new donors in the next will reside in the palm of each prospect’s hand, literally. Innovation is expected to continue diversifying media channels, including advanced social networking, direct communication, and electronic interaction, while consolidating hardware required to access these channels. Increasingly, entire lives will be managed from personal devices, and the organizations who establish visibility on those devices will be better prepared to build relationships that lead to multi-year gifts.
As philanthropy moves further toward a one-to-one transaction, institutional giving may continue to suffer. The continued transition of the United States to a service economy will further weaken structures designed to funnel giving to single organizations. Job growth will be spurred through small and medium size businesses, as large corporations will continue to account for a smaller percentage of the total workforce. As a result, charitable organizations will be required to deliver clear, visible messages across a variety of networks to reach new donors, as opposed to targeting single corporations for the bulk of funding.
Finally, technology will enable and require charities to demonstrate higher accountability and transparency. Real time reporting on the impact of giving will move from a benefit to a necessity. Interactive displays of beneficiary information and money disbursements will become more common as performance-driven giving will continue to increase. Many of the trends outlined above have already started to influence philanthropy, but few organizations have fully engaged in them. To survive, these organizations must be prepared to adapt their strategies. Waller Financial is committed to assisting its clients in maximizing their charitable contributions. For more information on the firm’s commitment to philanthropy, visit waller.com.
* Havens, J. and Schervish, P.Why the $41 Trillion Wealth Transfer Estimate is Stall Valid: A review of
Challenges and Questions. (January 6, 2003). The Journal of Gift Planning. Vol. 7, No. 1, pp.11-15, 47-50.
**Hispanics and New Immigrants Grow in Number. (January 14, 2010). The Chronicle of Philanthropy.