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The New Generation’s Impact on the Nonprofit Industry

As millennials age and mature in their careers, they are more likely to donate to nonprofits.

Millennials, the generation defined by the U.S. Census as those born between 1982 and 2000, represent nearly one-quarter of the U.S. population. At an estimated count of 83.1 million, this age group outnumbers any previous generation, including baby boomers. Due to both the size of the millennial population and their unique personality characteristics, this group is especially attractive for nonprofits hoping to engage with new donors. However, marketing to millennials comes with specific challenges.

According to a study by Blackbaud Inc., a nonprofit fundraising company, millennials, also known as Generation Y, only account for 11 percent of the total average annual giving to nonprofits. The average annual gift is also fairly modest – $481, as compared to $1,212 for boomers.

However, while millennial nonprofit donations are not yet significant, this is likely to change as members of the generation mature and progress in their careers. As boomers and older generations age, the burden of funding will fall to this younger age group, and given the enormity of their population, this represents significant potential for nonprofits.

What makes millennials different
According to the 2014 Millennial Impact Project, it's important for nonprofits to recognize that even if millennials are not yet a significant funding source, their behavior is already evidence of their interest in nonprofit sponsorship. Despite being fairly nascent in their careers and burdened with a high debt-to-income ratio, 87 percent of millennials gave financially to a nonprofit in 2013. The generation is characterized as being socially conscious and having a desire to "do good," the report found.

"For millennials over age 30, 91 percent donate to a nonprofit."

Additionally, the Millennial Impact Project found as millennials age they are more likely to donate, especially if their employer has a program in place for nonprofit giving. For younger millennials, ages 25 to 30, only 15 percent donated to a nonprofit in 2013. However, for millennials over 30, 91 percent donated in 2013.

The manner in which millennials give is different from previous generations. The Blackbaud report found millennials prefer to donate online and share their giving preferences through social media. They are more likely to take advantage of mobile giving opportunities than previous generations, but are less responsive to mail or phone solicitation.

Millennials appreciate transparency
As Blackbaud found, more than half of millennials – 57 percent – said they want to see the impact of their donation. For this reason, unrestricted donations are less popular with millennials. Instead, nonprofits should aim to clearly demonstrate a specific use for the funds they receive and support both the need and fund allocation with readily available evidence.

There's a second benefit to this strategy: Millennials love to share how and why they donate. Blackbaud's study revealed social media has not yet become a direct source of donations for nonprofits, but it is a popular tool for stewardship. Millennials use Twitter, Facebook and other social media outlets to share what nonprofits they support and why. Providing clear and demonstrable evidence of the impact of giving provides millennials with specific information to share with their peers, and drives increased donation.

"More than half of millennials said they want to see the impact of their donation."

Millennials value engagement
For this younger generation, philanthropy is not simply about monetary giving. The Millennial Impact Report found this age group treats its time and its money as equally valuable assets. For this reason, millennials are interested in forming relationships with the nonprofits they support. This age group is active in volunteering and enjoys serving as social media ambassadors for organizations and causes to which they feel a connection.

These behaviors represent an opportunity for nonprofits. As the age group grows into maturity and increases its fiscal giving, nonprofits should focus on engagement and retention of these young donors through events and volunteering opportunities. By maintaining ongoing interactions with millennials, nonprofits stand to benefit from increased social media exposure, volunteer manpower and, as the generation ages, additional monetary support.