"The nonprofit sector is critical to our dream of changing the world," said Dan Pallotta, founder and President of the Charity Defense Council, in a June 2013 TED Talk. "Yet there is no greater injustice than the double standard that exists between the for-profit and nonprofit sectors. One gets to feast on marketing, risk-taking, capital and financial incentive, the other is sentenced to begging.”
Months after his TED Talk, GuideStar, Charity Navigator, and the Better Business Bureau Wise Giving Alliance all announced they were “denouncing the ‘overhead ratio’ as a valid indicator of nonprofit performance.” Pallotta says that while this is a great step forward, there is still a great deal of work to do in changing public perception of how charities should operate.
Many Millennials agree, and increasingly, when they look to engage in philanthropic efforts, they are looking for impact, not charity. Their concerns, as Pallotta had hoped, is less about how much money goes to "overhead" and how much change they are able to create with the money. According to the 2013 Millennial Impact Report, "Millennials are consistent in their desire to see how dollars translate into people helped. They want their contributions, no matter the type or amount, to help achieve tangible results for a cause. Yes, members of this generation are more likely to give smaller amounts to multiple organizations than to focus their giving on any one recipient. But the stronger their relationship with an organization, the more likely they are to give larger gifts over time."
One of the consequences of this shift, however, is that Millennials are less impressed by large bureaucratic organizations, and more inclined toward an entrepreneurial approach to doing good. "The American Red Cross has a lot of brand equity," Wendy Harman, Director of Information Management and Situational Awareness at the American Red Cross, said in a June 9th panel with the Council on Foundations. "But even we run into that idea of 'I don’t want to do this as part of that huge bureaucratic institution. I want to make these impacts after a disaster or in my community on my own.'"
A 2012 study by The Boston Consulting group found that "Millennials believe that working for causes is an integral part of life, and they are drawn to big issues. Instead of making one-off charitable donations in cash or in kind, they’re more likely to integrate their causes into daily life...Millennials, more than non-Millennials, prefer to actively engage in a cause campaign by encouraging others to support it (30 percent versus 22 percent) or by participating in fundraising events (27 percent versus 16 percent)."
Furthermore, the study found, Millennials are more likely to be influenced by peer recommendations and actions than by corporate spokespeople or advertisements. Informal corporations or impersonal brands will have far less influence than personal connections leveraged by social media.
Learn more about the impacts Millennials are making on philanthropy and models for doing good at Philanthropy +SocialGood on October 15th!
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Small Actions, Big Impact: Millennials Bring Entrepreneurship to Philanthropy [Video]
October 6, 2014
"The nonprofit sector is critical to our dream of changing the world," said Dan Pallotta, founder and President of the Charity Defense Council, in a June 2013 TED Talk. "Yet there is no greater injustice than the double standard that exists between the for-profit and nonprofit sectors. One gets to feast on marketing, risk-taking, capital and financial incentive, the other is sentenced to begging.”
Months after his TED Talk, GuideStar, Charity Navigator, and the Better Business Bureau Wise Giving Alliance all announced they were “denouncing the ‘overhead ratio’ as a valid indicator of nonprofit performance.” Pallotta says that while this is a great step forward, there is still a great deal of work to do in changing public perception of how charities should operate.
Many Millennials agree, and increasingly, when they look to engage in philanthropic efforts, they are looking for impact, not charity. Their concerns, as Pallotta had hoped, is less about how much money goes to "overhead" and how much change they are able to create with the money. According to the 2013 Millennial Impact Report, "Millennials are consistent in their desire to see how dollars translate into people helped. They want their contributions, no matter the type or amount, to help achieve tangible results for a cause. Yes, members of this generation are more likely to give smaller amounts to multiple organizations than to focus their giving on any one recipient. But the stronger their relationship with an organization, the more likely they are to give larger gifts over time."
One of the consequences of this shift, however, is that Millennials are less impressed by large bureaucratic organizations, and more inclined toward an entrepreneurial approach to doing good. "The American Red Cross has a lot of brand equity," Wendy Harman, Director of Information Management and Situational Awareness at the American Red Cross, said in a June 9th panel with the Council on Foundations. "But even we run into that idea of 'I don’t want to do this as part of that huge bureaucratic institution. I want to make these impacts after a disaster or in my community on my own.'"
A 2012 study by The Boston Consulting group found that "Millennials believe that working for causes is an integral part of life, and they are drawn to big issues. Instead of making one-off charitable donations in cash or in kind, they’re more likely to integrate their causes into daily life...Millennials, more than non-Millennials, prefer to actively engage in a cause campaign by encouraging others to support it (30 percent versus 22 percent) or by participating in fundraising events (27 percent versus 16 percent)."
Furthermore, the study found, Millennials are more likely to be influenced by peer recommendations and actions than by corporate spokespeople or advertisements. Informal corporations or impersonal brands will have far less influence than personal connections leveraged by social media.
Learn more about the impacts Millennials are making on philanthropy and models for doing good at Philanthropy +SocialGood on October 15th!
