Newly Wealthy Donors are The Future of Donations

Israel’s massive unicorn boom and the accelerated growth of the high-tech sector are leading to a large number of newly wealthy individuals each year. These are successful young professionals who make a quick exit or a successful IPO and overnight become millionaires or even billionaires. Concomitant with the dramatic rise in the number of newly wealthy Israelis is an increase in their contributions to social goals, and the question arises of which channels to use to direct the great wealth that has come their way. Fascinating research conducted recently by the Center for the Study of Civil Society and Philanthropy in Israel at Hebrew University lists the main reasons that new donors are the next hot thing in the world of donations. 

They align their business and social agenda

According to the research data, we can attribute key personality characteristics of Generation Y to the new donors: they are individualists, assertive, rational, multi-faceted and motivated by self-actualization. They mostly come from the fields of high-tech, real estate and capital markets, some are successful entrepreneurs, partners in venture capital funds or have inherited substantial family wealth. They draw inspiration from leaders in the world of business and technology who are leading global social change with the motto “Give while you live,” figures such as Elon Musk who donated Tesla shares valued at a whopping 5.7 billion dollars to charity, or Mackenzie Scott, the third richest woman in the world, who has made major international donations. 

What the new donors have in common is that they aspire to align their social and business agendas. It is important to them to be personally involved in the project they donate to, to promote it and make it more efficient, and to know what is happening with their money and how it is being utilized by nonprofits and philanthropic entities at every stage. 

Moreover, the researchers have found that these new donors, as well as longtime donors who are entrepreneurs or serve in senior management positions, tend to adopt “business” and goal-directed behaviors characteristic of the younger generation. 

They see their donation as a measurable financial investment

Until about a decade ago, “classical” philanthropy was perceived as something idealistic-altruistic that rested on an ethical obligation to make the world a better place. However, our world has advanced rapidly and changed beyond recognition, and with it the motivations for donation. Research finds the new donors consider donations as an economic investment with defined planning and objectives. They bring values and practices from the business sector with them to the world of philanthropy, and do not hesitate to use concepts such as resource planning, strategic processes, effectiveness, products, leveraging investments and more. It is important to them to set objectives and milestones that track the progress of the philanthropic organization and to measure the impact of their donations on the goals they want to advance. 

Currently, smart management of donations enables donors to integrate social involvement with the investment world and to implement venture capital techniques in the field of philanthropy. It is possible to manage donation funds in an investment house, to accumulate returns over the years, to increase the money in the fund and accordingly increase the impact and involvement with worthy goals. 

They harness innovative technology for philanthropy

Research examining the mechanisms serving new donors has shown that they prefer to use advanced tools and models to manage and channel donations. One such innovative model is the DAF – donor-advised fund. These funds enable donors to contribute strategically while separating between the date when funds are donated and the date when they are distributed, while donors enjoy tax credits on the full sum transferred to the DAF and are in control of their social donations at any given moment. 

As stated, new donors are usually business people for whom it is important to be involved in what happens to their money. Therefore, they prefer to use smart digital interfaces that concentrate all activities in one place – beginning with choosing nonprofit organizations, viewing transparency metrics and nonprofit management data, following up on donations, accessing up to date fund balances, grants that have been paid, investment fund performance and more. 

Naturally the internet and social media play an important role in philanthropy today, and many donors use social networks as change agents and promote the agendas they are involved with and support to new potential donors. 

Now that you have read and understood the research, if you also see yourself as a new donor and are interested in enjoying the advantages of a DAF – leave your details here and a JGive Platinum representative will contact you as soon as possible.

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