Many millennials are at an age where they’ve accumulated enough wealth or disposable income to start donating to causes near and dear to their hearts.
However, research has shown that this cohort approaches philanthropy differently than their parents. Rather than donating to arts and culture organizations or large hospitals and schools, millennials are more inclined to support charities that focus on social justice issues, the environment and climate, or the marginalization of people.
“They’re interested in the human condition,” says Danielle Robinson, Director of Philanthropic Advisory Services with BMO Private Wealth. Millennials are watching world events or social issues unfold in real time on social media, which is partly why many want to get involved at a more grassroots level. “Millennials use their social networks and channels to talk about the issues they care about. They’re much more active in an advocacy type of way.”
But as much as people may want to start donating, a lot of millennials don’t know how to take the first steps on their philanthropic journey. Here’s how you can get started.
Step 1: Start with what you care about
Begin by examining the issues you care about to determine where you want to donate your money. “Philanthropy is personal and values based,” Robinson explains. “Giving is often linked to your own personal set of circumstances, what’s impacted you, what you see within your own community, and what you’re discussing at your dinner table or within your personal and professional networks.”
Spend time researching different organizations and determine how you can most effectively give, whether that’s money or your time. Robinson points out that many people’s first act of giving is through crowdfunding campaigns, such as ones on GoFundMe. While you won’t get a tax receipt going this route, it’s a perfectly fine way to get familiar with supporting an issue you care about. “Some people aren’t even concerned about the tax receipt – they just want to participate and that’s not a bad way to start getting involved,” she says.
Step 2: Give what you can
There will come a point in your giving journey where you’ll want to work charity into your household budget. When you’re starting off, just give something. The transition from episodic giving to philanthropic grantmaking happens over time. “You give what you can at the start. It’s not about the amount; it’s about participating,” Robinson explains.
As you learn more about some of the causes you support, choose one to two and consider giving monthly rather than once per year. This offers a steady and predictable source of funding to charities and it helps to create a consistent giving routine, within a monthly budget, that is manageable. “Giving $100 a month can be more manageable than $1,200 at one time,” she notes. “Build that philanthropic habit, and as you have more disposable income, you can grow those donations.”
Step 3: Consider other ways to get involved
Giving doesn’t just have to be monetary. Many millennials also want to become more active in an organization they care about, which can include volunteering or joining a board to provide thought leadership that influences organizational governance. “Providing your time and talent to a charity can be a powerful, insightful, and a rewarding way to be involved in something that is important to you,” Robinson says. “Taking a hands-on approach provides an opportunity to learn about the impact that donations to the organization are truly making – seeing is believing.”
Step 4: Determine the impact of your giving
While prior generations were fine with letting an organization determine how to best use donated funds, millennials prefer seeing how their donations are being spent and the positive impact those funds have on a cause.
It’s not always easy to see a direct impact on giving, but start this process by figuring out what you will measure, says Robinson. “What does impact look like to you?” she asks. For instance, if you support a food bank, is it because you care about food security? And if so, what would improving that issue look like?
“What is it you want to understand from that food bank?” she says. “Is it the amount of people that are coming in? How much food they receive? Being able to understand some of those metrics up front and then communicating that with the charities so they have a sense of how they can report back to you is really important.”
Step 5: Creating a philanthropic legacy
Once you become more familiar with giving – whether it’s getting into the habit of making regular gifts or having a better sense of where to donate to – you can start to develop a larger legacy giving plan. As your wealth increases, you might consider making bigger, multi-year gifts, creating a donor-advised fund to help facilitate ongoing donations, or even establishing a private foundation that accepts grant applications for specific projects that may be important to you and your family.
If you may be coming into money at some point or have found yourself in a situation where you have more than you had expected, you might consider having a more holistic wealth plan prepared that considers philanthropy and broader estate planning issues.
Discussing your giving options with a financial advisor is a good way to get the ball rolling. “It’s important to work with a professional,” she says. “Look at a total wealth plan and make philanthropy a piece of that plan.”
