Article published in Fundraising and Philanthropy on 21 November, 2023
Action on Poverty’s Meghal Shah shares three key insights into how the shifting values of millennials will impact their philanthropy
As a millennial myself, we are set to account for 75% of the Australian workforce by 2025. Our influence is growing and our values are shifting gears, which govern big and small choices across all spheres of our lives.
Bain & Company’s 30 Elements of Value hierarchy pyramid shows key drivers of consumer value aligned to Maslow’s hierarchy of needs framework. A report from Cake and Arrow found that millennials place greater value on elements that are higher up the pyramid than the previous generations. The way this generation derives value is evident from the choices we make in all aspects of our lives.
I believe there are three areas where millennial choices are likely to shape the future of the not-for-profit (NFP) landscape and ensure sustainable impact is achieved:
- Purpose-driven business models to future proof success
Most millennials do not buy into the idea that the sole purpose of a business is to drive profit. Rather, the imperative for millennials is that business is conducted in a socially responsible way. The current generation is developing business models that drive profit while simultaneously engaging in activities that are not profit-driven. This way of conducting business has led to the rise of social enterprises as an organisational category that blends the best of NFP and for-profit strengths to allow consumers to access value higher up on Bain & Company’s 30 Elements of Value.
Millennials tend to favour socially responsible businesses, even if the purchase is functional in nature, such as toilet paper from the Australian company Who Gives A Crap. Australia has more than 500 certified social enterprises and more than 150 large corporates have signed up to procure products from these organisations – a trend likely to continue an upward trajectory.
However, although most of these social enterprises are great at generating revenue through the provision of products and services, they lack the expertise to drive social impact. This is where partnering with a specialist NFP, such as Action on Poverty (AOP), becomes critical to the mission of a social enterprise. Collaborations between NFPs and social enterprises are based on complementary value sets. NFPs receptive to strategic partnerships with social enterprises have a higher likelihood of collectively supporting more people and driving lasting social impact.
Passionate about issues, not brand value
The Millennial Impact Report, a “series of studies to gain insights into how and why millennials are motivated to engage with the philanthropic causes they care about”, found that they are passionate about issues, not institutions. According to the report, 63% of millennials donate to three or more charities annually and their philanthropy is mostly influenced by their values and peers.
The network effect in this generation’s philanthropy is likely to be more pronounced than in prior generations and their giving weighs more heavily on the impact of an organisation’s work rather than on its brand value. Millennial philanthropy is not just about donating funds to a good cause, the generation also takes into consideration how much volunteering their time and personal brand is able to influence social change.
NFPs that allow millennials to use their networks, time and money to amplify their impact on social causes are likely to nurture an enduring support base.
At AOP, we are committed to forging and investing in partnerships with people and organisations that are equally committed to creating a philanthropic legacy. We believe the shifting values of current and future generations are conducive to innovative, creative and agile partnerships, which are underpinned by a greater sense of purpose. An example is our partnership with The University of Sydney which is driving the commercialisation of AOP. In 2022, AOP partnered with the university’s MBA program to allow their MBA students to put together a ‘Go To Market Strategy’ for a new product or service to achieve AOP’s mission using all they have learnt in their MBA. Another example is our collaboration with Tokens for Humanity to drive innovation in fundraising. Tokens for Humanity is developing bespoke technology to pilot new and more transparent ways of measuring AOP’s impact in the field and they are building a new technology platform to help more changemakers in Australia take Action on Poverty. In both partnerships, millennials are the primary cohort volunteering their time, skills, and pro bono funding to achieve lasting social impact.
Careers of purpose
Lastly, the millennial generation does not view their job as a means to an end, but as a crucial aspect of their lives from which they derive greater meaning. An ideal career is one that gives them a greater sense of purpose. Traditionally, NFPs have been good at addressing what the world needs, but not in a manner that allows financial rewards that are on par with the private sector. New models in the sector around outcome-based funding and variable remuneration models that factor in the value and impact they generate, would go a long way to making the NFP sector more appealing to millennials as they set out to make their mark and contribute to a legacy that is shaping the world for the better.
The key benefit of these models is allowing donors and grant makers to more efficiently allocate their resources by rewarding organisations that achieve demonstrable social outcomes. The conversation can then shift from how the model is providing the most social value and away from which organisations have the lowest overheads. This shift is much needed to attract the brightest minds to our sector, so they don’t have to make a choice between doing well for themselves and doing well for others. If you are interested, UTS offers a free two-hour online course to learn more about outcomes-based funding.
Into the future
Now is the time for not only NFPs but for-profit companies to embrace the millennial change that is well and truly upon us and organise for the future. This generation has tremendous potential to contribute to and shape the NFP sector of the future. The extent of their impact will largely depend on the ability of leaders to convert this potential into social impact – the pinnacle of the Elements of Value pyramid.