The $124 trillion Great Wealth Transfer is underway as baby boomers pass on their fortunes to younger generations, but nonprofits face challenges adapting to this shift in wealth, according to fortune.com. Steve Isom, COO and CFO of nonprofit software company Bloomerang, said many nonprofits feel paralyzed in engaging millennials and Gen Z donors, who show less interest in traditional philanthropic giving.
Isom explained that older generations currently provide the majority of philanthropic dollars, but nonprofits have historically built deep relationships with wealthy baby boomers, the so-called "pillars of the community." These connections have been critical to fundraising success. However, younger generations are less connected to these community institutions, leading to a decline in engagement and donations from heirs of the original donors, he said.
This shift matters because nonprofits rely heavily on sustained donor relationships to fund their operations. The Great Wealth Transfer, while increasing the amount of wealth available, may disrupt established giving patterns. The challenge for nonprofits is to develop new strategies to engage younger donors who have different values and philanthropic priorities than their predecessors. This dynamic could reshape the nonprofit funding landscape significantly.
Steve Isom highlighted that some nonprofits are already feeling the impact, with donor involvement waning as the original baby boomer donors age out. The transfer of wealth is record-setting, but nonprofits must innovate to connect with the next generation of donors to maintain their funding streams, according to fortune.com.