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Changing Impact Philanthropy: Gender and Generation

impact investing

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The founder of Ektta, and co-founder of SoPact, Hetal holds a deep passion for establishing enduring impact management practices in social sector to have a built in learning and accountability.

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Posted on 2017-11-12

Philanthropy is undergoing a revolution.

It used to be that wealthy donors were happy sending an annual check, trusting in charitable organizations to use funds effectively. Now they want to be more involved and more targeted in their giving. Many of them use family office services. Family offices are private wealth management advisory firms that serve ultra-high net worth families.

Increased wealth: Over the past 30 years, the wealth within the Forbes top 400 has increased from $125 billion to $2.29 trillion today. According to The Forbes, there are ~2,208 billionaires, collectively worth $9.1 trillion. Among them are 259 newcomers who made their fortunes in everything from wedding dresses to children’s toys to electric cars. Now what is the impact of these new wealth owners on the impact investment space? And, who is driving the change? 

There are two main currents Generation and Gender. 

GenerationYounger wealth holders are more socially and environmentally conscious. According to the 2014 Deloitte Millennial survey, nearly 30% of Millennials believe the number one priority of business should be to improve society. They believed business can do more to address society’s challenges of resource scarcity (56%), climate change (55%) and income inequality (49%). Nearly 40% of GenX/Y millionaires give more than $30,000 annually to charity versus 6% of the baby boomers. 

It is estimated that 98% of the time when the next generation inherits wealth, he or she switches advisers.  • Among the ultra-high-net-worth individuals, a growing percentage are women. by 2030 roughly two-thirds of private wealth in the US will be held by women. Attitude towards investing among female advisers: Female advisers report to be more interested than their male counterparts in using sustainable investing funds by a margin of 59% to 34%.  

This is certainly a welcome change. The families who give together through Donor Advised Funds want to target those funds making an effort to have measurable impact. They are becoming 'high impact philanthropists.' How might Donor Advised Funds engage these high impact philanthropist?

Engaged Philanthropy via Impact Communication

Donor Advised Funds help families or individual donors decide target areas by asking strategic questions like:

  • what is your charitable mission?
  • what resources (money, time, skills, assets etc.) are you contributing?
  • do you want to align or structure your giving toward a particular outcome?
Social impact measurement and communication on behalf of donors is a tool to drive engagement with philanthropists, encouraging recurring donations. This practice is a nurturing one - when donors see tangible changes brought about by their participation, it increases their desire for continued charitable giving. Think of it as planting a seed and nurturing it to grow into a great tree that keeps on giving. 

Social impact measurement and communication for Impact Philanthropists

Role of Donor Advised Funds

Donor Advised Funds hold the potential for strategically planned impact on local communities. This impact is the product of thoughtful financial advice, alignment with donors' missions, leveraging resources such as Guidestarand targeted giving practices.

But if someone were to ask your Donor Advised Fund, what is your impact? or how can you get more donors engaged in the process? - would your answer be able to go beyond general output analysis?

A general output analysis simply looks at things like the number of activities performed or perhaps the number of beneficiaries interacted with during a program. For example, let's say an intervention provides better access to drinking water for a local community through an innovative water filter solution. Number of filters delivered last year would be an output of activities. But it does not describe impact.

Impact in this example could be indicated by tracking rate at which water-borne disease was reduced, comparing against baseline or benchmark data to demonstrate such progress. 

How can Donor Advised Funds show deeper impact demonstration? They need to better manage processes they use to acquire impact data so that it can be leveraged to communicate impact has been and will continue to be created. Ideally, stakeholders at every level should be able to access, understand, and learn from those data. In sort, the leveraging of technology can help in impact assessment and communication.

Impact management tools like Impact Cloud can do just that, enabling users to: 

  • design a custom impact framework

  • collect the data for selected metrics from donation recipients

  • analyze visualized data charts for quick insights and quick sharing

  • develop impact demonstration reports

By effectively sharing impact data with high impact philanthropists, funds can improve their engagement, driving recurring donations. Not only that, but as major participants in funneling funding within communities, impact tracking and engaged philanthropists can collaborate towards building better communities. Because in the end, building better communities (in other words, creating an enduring impact) is what players in this sector aim to be doing. 

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