Episode 258: Cultivating Multigenerational Family Donors
Welcome to another edition of Around with Randall, your weekly podcast for making your nonprofit more effective for your community. And here is your host, the CEO and founder of Hallett Philanthropy, Randall Hallett.
I so appreciate you taking a few moments of your day to join me. Randall, in this edition of A round with Randall. What we see in the philanthropic landscape, if we look at it more longitudinally over time, is this enormous transfer of wealth. And that's what we want to talk a little bit about today. How do we look at this more holistically around families and about this idea of multi-generational opportunities or donors, particularly those that are silent people who are building up assets and looking at philanthropy as a mechanism for themselves, for their family members, for the next generations.
But don't seek the attention that sometimes some others do. How do we handle this? How do we build a longer series of connections with multiple layers of a family, and in doing so, ensuring hopefully funding from a family or state put it in a foundation or a DAF. And we'll talk about that here in a few moments. How we continue that relationship much more than just today.
What we know is from the kind of theoretical, philosophical why this is an issue is the first and foremost data coming out of Cirelli, coming out of Merrill Lynch about the transfer of wealth. The numbers are over the next 20 to 25 years, somewhere between $84 trillion. And I'm going to guess about $95 trillion with what the markets have done here in the last year.
That is going to be transferred. It's going to be required particularly so because of the changes that we've seen over the last, let's say, ten years or maybe a little less probably eight. Regarding tax deductibility. Anybody who tells you that tax deductibility is a driving reason people are thinking about philanthropy doesn't understand the tax code because now with the July 4th changes that came through the congressional bill, that the president signed, the exemptions up to $15 million per person or 30 million for a couple.
So getting away from most people's concerns, which drives us to where we're going to end up, why people set up philanthropic, long term opportunities for their family. But there's an immense transfer of wealth coming. The people that I've had the privilege of working with, and have done this kind of as my specialty for 30 years to short of 30 years, is I hear a consistent theme amongst all of them, that they're not going to leave it all to their children.
I hear that from my mother, and I heard it from my father. I've heard it from others in the Omaha community that I've had the privilege of serving. And when I work with clients, they sometimes call me in and ask waking options with this plan giving scenario. There's a consistency amongst people who have done very well that they're just not going to leave it all to their kids, that they want their kids to go out and make their own lives.
They're going to leave them some, but not enough. Enough maybe to the children's perspective. It goes back to what Warren Buffett said in 1986. I'm going to leave my children enough so they can do most things or anything, but not enough where they can do nothing. Paraphrase. Not a direct quote. So what we know is, is that people with resources are going to have to make this enormous transfer, probably with the markets continue to grow.
It could be as much as $100 trillion, or maybe 1,012% of it is identified as being philanthropic. Now, we know they don't want to pay taxes, and they know they don't want to leave it to their children. All of it. Which means probably the percentage that is going to be philanthropically driven is going to could be upwards of 20, 30, 40%, which means we're talking about 20, 30, $40 trillion.
That's going to be philanthropically tagged in the next 20 or 25 years. The other thing about these groups, of which we're going to highlight on and off these silent families, is, is that they are not the ones who stick their hands up. They don't attend galas. They don't post their gifts online. They're not at the top of donor lists.
And yet we know that there is this huge group of silent donors, business owners who have started companies. People have inherited money in the past. People who have who have enormous salaries that they are really respected in the community, but they're not highlighting the work that they do. And if we don't try to figure out how to build a multigenerational touch to this, then what we know is we're never going to get to them.
The other data point that we need to pay attention to is the growth in the private foundations, as well as the growth in donor advised funds. Fortunately, at least the way I look at it, I'm a part of the Giving Institute was asked is it's a membership organization where you were asked to be and you don't really apply, although there's a small application.
And in doing so you get access to data, plus working with some of the brightest minds in the business, partnering with IUPUI or now the old school philanthropy regarding the philanthropic numbers. So I see these on the front side. And what I know is, is that as a part of this process and gathering the data, that when we look at the growth of private foundations, some of those, most of those are family or individual foundations.
In 2019, the total amount of those foundations was $73 billion. In 2024. It's 109, almost $110 billion. There's enormous growth. Part of that's the market. Part of that's more people creating their own foundations. But the bigger growth is in donor advised funds. And we've talked about this in various ways on this podcast, you probably heard in other places.
The numbers are staggering. In 2019, there were $148 billion in donor advised funds. In four years, it went to 252 to short of $1 billion. So these are dollars that are being placed in exponential numbers into the kind of vehicles that are going to require philanthropic gifts. And the growth is staggering, which goes back to our premise about this transfer of wealth and people not leaving it all to their kids.
How do we then build these relationships so that these dollars, that donor device funds can be used all at one time? If someone has a fund, but they tend not to be? How do we build the relationships with the multigenerational families around continuing support of these enormous dollars as is, and continuing to grow to support our nonprofits? And here's where we get into start moving towards the tactical.
The key here is the philosophy of continuity that you have to build multi-level relationships. And today what I want to talk about is five different tactics that you can use to do this so that you still are dealing with the matriarch and patriarch, but you get into the next generation, and even then the next generation, connecting them to your organization and doing so with some thought, with a plan, with strategy, not just throwing things at a wall.
And by doing so, you connect them to the mission, recognize them appropriately, and invite them to be a part of the story that your organization generates by its work. So now let's jump into the actual tactical things, the five things. The first is, is that we don't what I would call map this very well. We use our CRMs probably not as effectively as we should, but we use them for the concept of donor records.
And what we're really talking about is family mapping as a system. And that's not in the CRM. Yes. There's relationship tabs. Yes, I understand that. But that doesn't get us into the conversation about what's going on in the family. So Syrians build that build their their process around tracking transactions. Family trees are about showing the relationship and what's going on.
So the first thing is, is finding and figuring out those families. Can you list them? Do you have a special place where you keep these? Number two. Can you qualify them? Meaning who's doing what? Donors. Volunteers attending events. What are we doing to steward them? It's just an identification process. And then the third part of the first one about this mapping is to look at it from the standpoint of transfer points.
We tend to see moments when people either begin to age out of the leadership stop. They're giving. That's a signal that there's a transfer of not just wealth power. And we need to know generically when those things might occur. I've noticed in my parents and in my in-laws that somewhere between 75 and 80, that all four of them mother in law, father in law, mom and dad began to pull back a little bit.
The world began to get a little faster. And when you do some research, it's very typical that somewhere in that age range, the world begins to shift a little bit. Some of that's health related for those who have health challenges that age, some of the some of it's driven by technology. I think about my parents and now my mom, where literally it's like, I don't want to deal with this.
It doesn't mean that they're less smart, doesn't mean that they are not competent. Probably they're wiser than we give them credit for. And we, me, generation X, should listen to them. But they start handing things off. They don't want to deal with it quite as much. And this is this beginning of the transfer point. But the key here is, is that it doesn't just happen in that moment.
We'll talk about this in several items to come. Is that many matriarchs and patriarchs are trying to teach their next generation what philanthropy might be. This mapping tool then really creates the chance to understand connections. And let me just say from a mapping perspective, don't forget the in-laws, the married into the family, the non blood relations. I can speak for me.
I love what I do and I work, I think awfully hard to try to do this and have certain philosophies regarding philanthropy, but I concentrate very heavily on my business and on my kids sports and things that I have limited bandwidth. Just time. If you were to ignore my wife in this, as we began to transfer in our family of what we might be able to do philanthropically, then you're missing out on a key component.
And so the mapping piece is also to figure out where's the power structure. And time in the next generations. So don't just think it's blood. Look at it as trust about engagement, about the idea of when and how things might transfer and who's kind of stepping up into some of those holes that families see when parents get older, unfortunately, pass even grandparents from the grandchild's perspective.
Map them differently. That's number one. Number two is really around the idea of engaging, as we talked about the time frame well before that transition period actually occurs. That if you wait till that transfer point happens, you've missed the moment that it happens much, much, much earlier. And your ability to engage on this effort is critical. So let me give you some examples.
I've worked with families and this is the exact discussion. I have more high profile families, but nevertheless the same process where probably at about age 65, the matriarch and patriarch and one, two, three, three examples I can think of off the top of my head between 6 and 65. They made the money, the matriarch and patriarch, and they know they've going to have to do something with it.
And they start bringing their kids in to conversations, which begs the question of what does this communication outreach look like? If we can identify it doesn't happen in that transfer moment or that power transfer, but actually much earlier. And this is about creating invitations, not obligations. If you are a 35, 40, 45 year old person and you are a part of that family, you're trying to figure out your own existence.
Where do you fit in? Mom and dad have done very well. What is it you do? Do you have your own world where you're doing your own thing and you're being pulled in? Or maybe part of your role is to shepherd the dollars that have happened before to make sure that they're used wisely. There's movement here with a group of people between the ages, let's say of 30 and 50 or 30 and 45.
And the one thing they don't want to be told us what to do. And that's why it can't be about obligation. At least from the philanthropy nonprofit perspective, it's about invitation. How do we get them to engage and see why mom and dad, grandma and granddad have been so involved? And so this is about telling them where to give.
But why what you do is so important. So it might be a series of things, but it's also generational. And you can't do the same thing for everybody. So let's start from like that group that's 30 to 50. The behind the scenes tours or the impact immersion days where you invite them in and say, come spend a day and see what we do and how we do it.
Your mom and dad have been incredibly generous. You're very you are a part of that family. We are appreciative to all of you. We'd love for you. We're not asking you for anything other than a chance to see what happens on a regular basis. Interesting question. But if you try that with a teen or college age student, they haven't got the time nor the interest.
But you can do things for a generation, skipping i.e. let's say matriarch and patriarch in their 70s, the grandchildren. What about having teen service projects that they could lead? Most teenagers, as part of their high school, even to college existence, are required to do some type of community service. Why not offer it to them? Why not give them an opportunity to do something that they're required to do with you?
Or why don't you create an internship for a college aged family member? Pater unpaid. And it could be aligned with their interests. From a business perspective, we all have that. How do you create that connection? And then even into those adult. Well, we were talking about 30 to 50 that those, those impacted by in the senior church.
That's where they start serving on committees. Or you tie maybe a matching gift opportunity to their family giving as a whole. Research shows that millennials and generation Zs are cause driven, which means that's why you want those internships, those service projects, because you're tying it to what their values are older, 30s, 45. As you get closer, they are more tri tied to outcome oriented and engagement.
Build a idea of how to engage people. Map it based upon their age. And don't wait till those transition moments. You got to do it much earlier. So number two is engage next generation at appropriate points. Number three is to honor the legacy both publicly and privately. This takes a little bit of work because some family members might like some publicity.
There may be some other family members that say never. And so what we're finding is, is that older generations, when we talk about the matriarch and patriarchs, those may be in the control or passing that control are really seeing their legacy and the honor of being involved. Stewardship based upon plaques endowing naming things of that nature. Younger the younger you go, the more it's tied to values about storytelling, maybe using digital ways to do that.
How about video tributes and social media highlights? But that's assuming that people want that recognition. So you make it in a situation where you recognize one generation of a family, but not others because they choose not to, or maybe in the same generation, a brother wants the recognition, but the sister doesn't. All of this is to say is, is that you need to find ways of recognizing them, and you can always recognize them from a global or what I would say a family perspective across the whole, across the board.
You can do the Jones family has the hospital, the university, whatever. Since 1978. Today, their grandchildren are helping us launch a new something. You begin to tie all of the all of the heritage together publicly, without recognizing maybe the individuals. You want to create individual touch points. This idea of handwritten notes, particularly those to those that are over probably 50 or 60.
Those are really important. And yet, invitations to small gatherings and legacy of type events are more important. The younger ones. The key here is to figure out what is appropriate in terms of recognition and stewardship for not only generations, but for individuals and not feel as if you're forcing everyone to be doing the same thing. But you're concentrating.
You're recognizing the collective story of generosity throughout the family. So number three, honoring that particular process of stewardship and recognition. Number four is personalizing communication by generation. And we talked about this just a minute ago. We know that silent Greatest Generation people before born before 1946 basically, as well as the boomers like handwritten personal calls, recognition plan, giving information.
They want something that's tangible. And yet we see the move in my generation, generation X, to trends to concise emails. The idea of specific information and then a very quick transition into the Millennials and Generation Z where it's short form storytelling videos, digital, social, peer validation. We have to structure this differently, because what's happening with a millennial who's a grandchild is how they perceive it is totally different than what grandma, who might be in the silent or at the beginning of the boomer generations might perceive.
The key here is, is that you craft the messaging in various ways. And what tends to happen is we only take care of the people at the top. Whoever has the power, whoever's making the decisions. So, we perceive and we miss all the other opportunities, which is why we're talking about this, to look at this multi-generational link, building out personalized communication.
The last is if you're very sophisticated, you can become a convener of this opportunity. I can't tell you how many matriarchs, patriarchs in the last 20, 25 years that I've done this at a higher level with, you know, billion dollar family wealth, estate discussions up to or having the conversation the matriarch and the patriarch is, how do we get our grandchildren to be involved with this?
How do we get our children to be more involved? And what I missed in my career was this opportunity to be a facilitator of these conversations, to be a convener. You can do things. You can bring in pros who can talk about how money is used. You can become that confidant in giving suggestions, which we've talked about in one through four of different things to do when they say, well, I would love my grandchildren to be involved.
You know, we could set up a specialized intern ship that might allow them to feel like they're involved or they're in high school. We'd love to do something where they could lead a volunteer effort to feel like they're doing something because they have any money, and we don't want them to do that. We want them to feel it, touch it.
Be that you can host these facilitated opportunities. You can create workshops. You can do webinars and reading of, of different material about the transfer of wealth. You can encourage the participation. The goal here is to become the trusted partner. And in the 3 or 4 examples where I was really in depth with particular families, I became that trusted partner.
I became someone that people could look at and say, he's not in it for himself, obviously not in it for his organization. He's in it for us. The greatest joy I got in this profession two things. Number one is teaching what I'm doing today in my classroom. But number two, which I think is even more important, is I got to be a facilitator, convener of families, trying to figure out what they wanted to do.
It was about them. Now, did they leave philanthropic support and gifts to the organization? I represented? Two in part one, I was kind of more maybe a tad bit wiser. Yes, but that's not wasn't the purpose.
And if I really was doing my job, they learned to trust me more sometimes than some other advisors they had because I was really putting them first. How do you help them answer their questions? That they're trying to figure out how to do this as a family. Five different things that end with the ultimate trust about figuring out how to help families, in particular, ones that are silent or trying to figure this out.
Who don't have a built in infrastructure.
To become legacy. And I don't mean plain giving legacy giving over generations. You become the nonprofit becomes part of the family-giving story, cementing that relationship that endures. Leadership change, generational change. These transitions because we've done the work multigenerational. So, the family feels as if what we do is a part of who they are. And if you do it in the right way, you will keep these family generations giving and supporting your organization in time in a more morning.
And that's pretty cool. When it's done well. Don't forget to check out the blogs at Hallett Philanthropy two per week. So, things I see read, think about just things to get you to kind of go, that's different. Interesting 90s it takes you to read, you can RSS feed right to you. That's how it's lean to be backslash blogs.
And if you'd like to reach out, you can reach out to me at podcast at Hallett philanthropy.com. Our world needs philanthropy. And frankly, if you're listening to this, I think you need philanthropy, because philanthropy isn't about money. It's about making our world a better place. Love of humankind. Love of mankind. And at the end of the day, what we do in philanthropy, what we do in nonprofit work, is we fill a hole between free enterprise and government.
Free enterprise doesn't want to do it. Government is not that efficient. And we're taking care of a lot of people, a lot of things that are chaotic and not understanding and being left behind. They are the people who are wondering and things that are wondering what happened. My all-time favorite saying were, people who make things happen and, one way or another, people sometimes venture into the conversation of being someone who watches things happen.
They can either go one direction or the other up, or down. The great thing about who we are, people who make things happen, is that it's a way to spend a career being a difference maker. Small, big. Medium. Today. Tomorrow. Every day. The end of each day. Each 24-hour period. I put my head on my pillow.
I hope you feel the same and think maybe I made a small difference today. That's being a difference maker. That's being someone who makes things happen. Pretty cool way to spend every day professionally and personally, in changing your community and the people that you love their lives in a positive manner. I'll look forward to seeing you the next time right back here on the next edition of Round with Randall.
Don't forget, make it a great day.