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The Kids Are Alright, but They Aren’t a Cash Cow

by | Apr 16, 2018 | Avalon Insights, Best Practices, Nonprofit Fundraising

I love the sea change happening among the younger generation right now. It’s exhilarating to see Marjory Stoneman Douglas students speaking truth to power—demanding “Change, or we’ll vote you out!” I believe these kids might just loosen the NRA’s stranglehold on Washington once and for all.

So it’s tempting to think record-breaking nationwide school walk-outs and marches will translate to fundraising. But while I believe in these kids’ ability to change the political landscape, I’m not convinced they’ll start making significant charitable donations anytime soon. They just don’t have the disposable income—yet.

Political Impact

Born starting in the mid-90s, Centennials—the youngest and most diverse generation alive today, sometimes referred to as Gen Z—are beginning to turn 20. According to research from generational experts at Kantar Consulting, this 86-million-strong generation has come of age amid uncertainty, disruption, and some of the fastest social change in American history, driven by digital technology on a global scale. Their formative experiences have created a resilient, grounded, and purpose-driven group with a focus on building skills and forming connections that will help them achieve success and make progress in an uncertain world.

In their research, Kantar Consulting describes Centennials as wanting to rewrite the rules of the game as they pursue a purposeful life, with meaningful work. They live by the motto: “You do you” (versus the Millennials’ motto of “YOLO” or “you only live once”).

This pursuit of meaning extends to the voting booth. Ashlee Stephenson of WPA Intelligence and Josh Ulibarri from Lake Research Partners presented a fascinating talk recently as part of the AFP Thought Leaders Affinity Group program highlighting the changing demographics of US voters. The New American Majority (NAM) and Rising American Electorate (RAE) groups, made up of Millennials, people of color, and unmarried women (of any age), represent a tremendous progressive voting bloc and tend to vote Democratic. The 133 million people in this group represent 59% of eligible voters, but only 53% of actual voters. And only 1 in 3 people in the RAE group is registered to vote! Combined with the approximately 4 million Centennial Americans who will turn 18 this year, that’s enough to sway election results in congressional districts from coast to coast.

To me, this suggests it’s all about voter registration. So, while we can’t expect the younger generations to start making donations yet, we can expect them to organize their peers and push for sweeping political change come November. At this moment in our country’s history, these kids have the floor. We hear their calls for wholesale change in Washington, and they’re ready to lead the way.

Spending to Engage Centennials and Millennials

It’s exciting to contemplate the potential of engaging and activating Centennials and Millennials in philanthropy. But any money you spend chasing young, unproven donors will cut into the resources you have to market to your older donors, who are proven givers.

One approach might be to spend 10-20% of your budget on innovation and devote the rest to tried-and-true fundraising investments. But what form will that innovation take? If you market to younger supporters, when will you see the return, if ever?

Lately, I’ve been discussing these points with Craig Wood, founder and CEO of The Collaboratory. He wants nonprofits to engage Centennials and Millennials in a more active and authentic manner now, on the premise that it will lead them to open their wallets down the road: “Centennials and Millennials want to make a difference and they know they can. Both generations will be attracted to organizations and efforts that demonstrate a genuine and lasting commitment to the causes that are most important to them. Those organizations that can build meaningful, authentic connections to today’s younger generations will be positioned for significant fundraising growth as discretionary income and philanthropic donations increase for these groups.”

I appreciate Craig’s suggestion that nonprofits invest in Centennials and Millennials today—but the big question is, how do you pay for it? Since nonprofits need every fundraising dollar to work hard for them, how do you justify investing in something that might not yield returns for many years?

The simple truth is that fundraising data consistently show that people typically don’t donate money to nonprofit causes until they are older. This is understandable, given that young folks are new to the issues, hands-on, energetic, and often lacking in funds. According to Blackbaud’s Next Generation of American Giving report, 60% of Millennials give an average of $481 per year. A nearly identical percentage of Gen Xers give an average of $732 per year. The fact that 72% of Boomers give an average of $1,212 per year and 88% of mature Americans give an average of $1,367 per year suggests that philanthropy increases with age

Our younger generations are all about standing on the right side of history—challenging others to take a stand and holding politicians accountable. Centennials are making history, and they are poised to cause a tidal wave of political change before they are halfway through their twenties. Let’s appreciate that for what it is—inspiring, encouraging, and brave—and be clear about what it is not: a cash cow. Until Centennials and Millennials have more discretionary income, I can’t recommend investing significant fundraising dollars in targeting them. Instead, I will encourage their political activism and spirit and seek to engage them so that, when they have means to give, we are ready to solicit them.

Nonprofits should recommit to fundraising best practices, then use gains to leverage the moment. Keep building on the proven work you already do to maximize participation from Xers and Boomers, and perhaps ask them to invest in initiatives targeting and encouraging younger people to get involved.

Consistent support from older generations will enable a long-tail strategy of cultivating tomorrow’s donors, both by developing a strong, recognizable brand that walks the walk on the issues, and by engaging young people in meaningful ways appropriate to their life stage, financial means, and political energy.

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