The future of traditional charities is grim, unless they change their ways
Charities as we know them are facing an immediate, existential threat. They truly are among the last of the dinosaurs, blissfully munching on their Jurassic grass, even while the meteor is heading their way at 120,000mph.
This may sound like ridiculous when looking at the numbers showing all-time high in charitable giving. But hear me out.
Private Donations – The Bloodline of Good Charities
The best Charities out there rely on private donations to do their work. Although many receive institutional funding as well (from governments, mostly) they prefer private donations because the latter are much less onerous and basically “unrestricted”. This means that that, unlike typical institutional funding, private donations can be spent freely and fast, allowing the charity to innovate and/ or react quickly. This is super important for good charity work.
Most private donations come from four main sources:
- Individuals who pay regularly (annually/ yearly) a set amount;
- Individuals who do one-off pledges (at events, etc);
- Allocations made in wills of deceased;
- Grants made by high net worth individuals or families;
Charities are Running on Fumes
Now here is a hard, cold fact: all these 4 models are a Bommers’ things. Younger generations are simply not into any of these models. They seem crusty, detached, devoid of any engagement and, frankly, a bit weird.
Because of this, the revenue projection of the typical charity in 2019 looks a bit like this:
This means that while the numbers are looking good now for charities, there isn’t much in the pipeline. Generous, regularly paying Boomers are dying out and the Charities are left facing an uncertain future. as their bread and butter models are simply irrelevant to the new generation.
It’d be easy to blame this on the millennials – just another good thing that the pesky, selfish kids are destroying. But the truth is, the younger generation are just as generous (if not more generous) than their seniors. Additionally, they are more purpose driven, better informed, better educated in the complexities of aid, more knowledgeable of global affairs and keenly aware of the urgency of preserving and protecting the environment (more on the post-millenials).
The Big Opportunity
Generosity is a constant across generations. It must be. But then, where is the young charity money going if it is not going to the friendly neighborhood charity? And more importantly, what can smart. future-looking charities do to become interesting to the younger generations?
I will provide the answers to these questions in part 2 of this series.