By Dwayne Ashley, CEO and Founder, BPC
The upcoming mass intergenerational wealth transfer is a phenomenon that’s expected to have a significant impact on the philanthropic landscape. As African American Baby Boomers (AABABs) and the BIPOC first generation of wealth prepare to pass on their assets, a unique opportunity arises for philanthropic consulting. At BPC, we recognize our role as philanthropic consultants in servicing our clients to facilitate the transition of wealth in a way that aligns with the values and traditions of our communities.
The Shift in Charitable Giving Landscape
Over the past two decades, charitable giving has been significantly decreased across all racial and ethnic groups in the U.S. According to a study by the Lilly Family School of Philanthropy. Religious giving rates dropped between 15 and 25 percentage points across all groups from 2000 to 2018. Secular giving also saw a decrease, ranging from 6 percentage points for Asian American households to 24 percentage points for American Indian households.
Economic and Non-Economic Factors
The decline is partially attributed to economic factors, such as recessions, which have differential impacts on giving rates across racial and ethnic groups. For instance, giving rates by American Indians decreased by 11 percentage points pre-recession, but the decline lessened to 7 percentage points post-recession.
Declines in giving rates are also linked to non-economic factors like a decrease in interpersonal trust. For example, the level of trust among Hispanic Americans dropped more significantly than other groups.
The Role of Philanthropic Consultants
As these trends unfold, philanthropic consultants play a crucial role in helping diverse communities navigate the dynamics of charitable giving. They provide tailored strategies for engaging donors of color and fostering trust in their organizations.
The Great Wealth Transfer
We are on the cusp of the biggest intergenerational wealth transfer in history. As Baby Boomers age, it’s estimated that $68 trillion will change hands over the next 25 years. This shift presents a golden opportunity for philanthropic consulting, particularly within communities of color.
African American Baby Boomers (AABABs)
AABABs are a significant part of this wealth transfer, due to their size and increasing wealth. Their participation in philanthropy has the potential to reshape the charitable giving landscape.
BIPOC First Generation of Wealth
Similarly, the BIPOC first generation of wealth is contributing to this shift. As more people of color accumulate wealth, they are poised to make significant philanthropic contributions.
Cultivating Philanthropic Engagement
Philanthropic consultants have a critical role in fostering engagement with these communities. Their work involves understanding the diverse practices and long-term giving trends of donors of color and aligning with the values and preferences of these communities.
Understanding Diversity in Giving
Philanthropy doesn’t conform to a one-size-fits-all approach. Consultants must understand the formal and informal channels through which communities of color practice generosity. This includes unique practices like funding collaboratives, giving circles, and partnerships with culturally relevant institutions and organizations.
Trust is a key factor in developing strong relationships with donors. As the study by the Lilly Family School of Philanthropy indicates, declines in giving rates are partly due to a decrease in interpersonal trust[^1^]. Philanthropic consultants can play a key role in rebuilding this trust.
The Future of Philanthropic Consulting
With the great wealth transfer on the horizon, the future of philanthropic consulting lies in its ability to adapt and cater to the needs and preferences of diverse communities. As we move forward, there’s a need for a more inclusive and equitable approach to philanthropy. This involves understanding cultural nuances, fostering trust, and aligning strategies with the values of diverse communities.
In conclusion, as AABABs and the BIPOC first generation of wealth prepare for the great wealth transfer, philanthropic consultants have a unique opportunity to shape the future of charitable giving. By fostering engagement, understanding diversity in giving, and building trust, they can help these communities make a lasting impact through their philanthropic contributions.