Fundraising Across Generations:

Digging a little deeper into Gen Y.

As our mature donors — those born before 1945 — exit the giving scene, the imperative to attract new and younger donors has never been more important. Two critical questions arise as we work to engage the next generations of donors today:

– How will we optimize bringing on younger donors without compromising current revenue from our current donors?
– What generational age cohorts are the most strategic and economically viable to pursue?

As we consider these questions, let’s look first at the evolving traits and current realities of the youngest giving generation, Gen Y, which is also known as the Millennials. In future blogs, we will look at the other generational cohorts.

1. Gen Y is big — almost as large as the Baby Boomers, the largest generation in the U.S. today. While the typical Gen Y donor gives far less in total annual contributions than the typical Boomer donor today, the difference is primarily driven by the number of charities supported, rather than by differences in gift size. The typical Gen Y donor gives to fewer charities (3.6 charities with average cumulative giving of $161 to the top charity) than the typical Boomer donor (5.2 charities with average cumulative giving of $211 to the top charity). (This data is from 2010.) Non-profits that have “cracked the code” in attracting Gen Y donors can be quite profitable, especially when donor lifetime potential and responsiveness to lower-cost online communications is factored in.

2. For Gen Y, giving on a charity’s website is greater than giving through the channel of direct mail. It is the only generation where this is the case. For Gen X, giving on a website is almost equal to giving by direct mail. For Boomers, giving by direct mail is prevalent. Additionally, Gen Y is effectively giving via mobile/text and social networks, as is Gen X. When asked the question, “If you were stranded on a desert island and had to choose one and only one communication channel, what channel would you choose?” all generations answered, “the Internet.”

3. If you’re the typical Christian non-profit organization, it will be challenging to locate Millennials within a faith-inspired context. The vast majority of Millennials have no connection with a church because they find the institutional church “unreal” and irrelevant to the complexities that define their lives. Today, nearly 60 percent of Millennials who grow up in church drop out and never return. They see the church as being “shallow, rigid, repressive, and anti-science.” They value input primarily from their peers. It will take Gen Y more time to fully trust an organization prior to giving their resources. Building social capital with Gen Y will be a bigger challenge than building social capital with Boomers.

4. Charitable giving usually comes out of an individual’s disposable income. Today, Boomers control half of all disposable income in our nation. Gen Y, on the other hand, faces financial hurdles that deter them from being as generous as they would like to be — including whopping student debts. Just over two-thirds of the Class of 2010 graduated with an average debt of $25K in college loans, and 25 percent of graduates are currently behind in payments. Many Millennials today are finding it challenging to pay for basic things. In 2010, only 55.3 percent of all Americans between the ages of 18 and 29 were employed. That was the lowest level that we have seen since World War II. Of men between 25 and 34 who typically should be in their prime earning years, almost one out of every five of them is still living with mom and dad.

5. Today, Millennial wage earners that do have jobs are not making much money. Many are considered “underemployed.” The number of the “working poor” in America is rapidly increasing, and this is especially true among young adults. Since the year 2000, incomes for U.S. households led by someone between the ages of 25 and 34 have fallen by about 12 percent after you adjust for inflation.

6. Following college graduation, people generally enter a period of acquiring., Sociologists refer to this period as the materialistic life stage. While today’s Boomers are entering a “post-material life stage” and freeing up their resources for things like giving, Gen Y, despite all their current debt, is entering into this materialistic life stage while facing whopping housing prices, whopping childcare fees, etc. These are hurdles the Boomers generally didn’t face. One reason today’s Boomers control 80 percent of all financial resources is that they had an easier road financially than today’s Millennials. And, we see many Boomers today answering a desire to give back to the society that enriched them. It will be a long time before Millennials are in the same cash position and the same “giving back” life phase that Boomers are in today.

7. Researchers, like Jean Twenge, author of the 2007 book, Generation Me, point to an increasing narcissism among this generation compared to Boomers when they were the same age as today Millennials. These researchers raise serious questions about the predictions that this generation will be highly civic-minded and generous with time and money. Twenge points to Gen Y’s sense of entitlement, narcissism and rejection of social conventions. And for all the self-confidence of Gen Y, researchers point to a cynicism in Gen Y that most things are beyond their control. “So, why bother?” Why bother to work hard at finding a job; it just comes down to being in the right place at the right time. Why bother to give to charity; my little donations will influence nothing. In Twenge’s recent study, published in the Journal of Personality and Social Psychology, she found that today’s high school seniors and college freshmen actually make far less effort to help the environment than Baby Boomers did at that age. “There was a lot more questioning of materialism in the 1970s. Now, it’s just like, ‘Let’s all live like the Kardashians,'” Twenge wrote. Said Time Magazine columnist Joel Stein, “[Gen Y] won’t do anything that actually involves sacrifice … [they] do stuff not to save the planet as much as look as if they are saving the planet … and they are so underemployed, they can’t afford to be faux green.”

8. Before the recent Great Recession that redefined economic opportunities for Gen Y, donors who are Millennials gave an average total of $557 while Baby Boomer donors gave an average of $2,614. Boomers gave 4.7 times as much as Millennials. This same pre-recession study showed that Millennial wage earners averaged $28,234 annually, while Boomer wage earners averaged $89,800.

9. A sense of financial security is correlated with higher giving. As mentioned earlier, Boomers control 80 percent of all financial assets in the U.S. The average wealth of Millennials is $18,287 (after a deduction for student loans), while the average wealth for Boomers is more than $342,300 (not including home equity).

10. Based on data from the Center on Philanthropy, Millennials are not yet giving in proportion to their share of the population. Nor is Gen X. Boomers’ giving is nearly exactly that generation’s share of the nation’s total household income and wealth. Millennials represent nearly 10 percent of households in the U.S., but collectively they account for a very low percentage of the nation’s household income and wealth. In 2006, when considered as part of the overall giving picture in the U.S., monetary donations from Gen Y accounted for just 1.6 percent of total giving.

11. Extensive focus group research is demonstrating that Gen Y may become the greatest giving generation ever. When asked the question, “Do you plan to give more to charity next year?” more Gen Y answer, “Yes,” than any other generation. It is not too early to be engaging Gen Y as long as your organization can optimize and sustain a multigenerational donor engagement approach, stewarding younger donors across their lifetimes. The significant value today certainly lies with the Boomers. But Gen Y is already giving and everything points to their commitment to giving growing with time.

Stay tuned for a look at the evolving traits and current realities of the Baby Boomers.