The ongoing "Great Wealth Transfer" - estimated to shift $84 trillion over the next two decades - is a historic moment that will redefine the global financial landscape. As baby boomers pass down their fortunes to Gen X, millennials, and Gen Z, a significant shift in attitudes, investment strategies, and philanthropic priorities is emerging.
This transition is marked by generational differences in wealth perspectives, types of investment and vehicles, donation strategies, short-term and long-term views as to the future. Faced with these differences, the potential for philanthropy to bridge the gap between legacy and innovation is stronger than ever.
Three Key Areas of Conflict for your Wealth Management Strategy with Philanthropy
The generational wealth transfer is not without its problems, often stemming from differing views on financial responsibility, investment strategies, philanthropy, and the ability to communicate effectively between generations. Here are three key areas of potential conflict for your wealth management strategy with philanthropy, and the reasons behind them:
Control and Decision-Making: Many older generation wealth holders struggle to relinquish control of family wealth. They worry that younger family members lack the experience or discipline to manage significant assets responsibly. Studies show that nearly 50% of wealthy families do not have an updated estate plan, and 70% of family wealth is lost by the second generation, increasing to 90% by the third (PWM, 2024). This lack clear communication and preparedness fuels concerns about mismanagement.
Investment Philosophies: Baby boomers tend to favor conservative, long-term investment strategies, whereas younger investors prefer high-risk, high-reward opportunities, including alternative investments like cryptocurrency and sustainable business ventures. USA survey data reveals that 38% of next-gen wealth holders actively disagree with their parents’ stance on cryptocurrency (Ogier 2023) while over 60% believe their family businesses should lead in sustainability efforts. (PwC Global Gen Survey)
Philanthropic Priorities: While philanthropy is valued across generations, the approach can differ. The older generation often supports traditional charities and endowments, focusing on legacy giving. In contrast, younger generations favor direct, measurable impact through social entrepreneurship, venture philanthropy, and impact investing. The next generation sees philanthropy as an extension of their broader financial strategy, not a separate endeavor. (Knight Frank, 2024).
How Using Philanthropy as a Unifying Strategy can Help Shift the Dynamic
Despite these differences, philanthropy can be a powerful tool to align family values and bridge generational divides. Structuring a family’s wealth transfer with a philanthropic lens can provide a collaborative framework that respects legacy while embracing innovation.
With careful attention to how those values are communicated, philanthropy can help engage families in thoughtful conversations, bring generations closer together and create a safe space for “taboo” conversations about wealth.
Here are four philanthropic strategies you can implement to bridge the gap:
Creating a Family Foundation
A family foundation or fonds de dotation offers a structured approach to giving, aligning generational values by defining shared philanthropic goals. Older generations can establish a legacy of giving, while younger members can inject innovation and fresh perspectives into foundation activities. By involving heirs in grant-making decisions, families ensure continuity while fostering responsibility and engagement. (PWM, 2024)
Impact Investing and Grantmaking Strategies
Impact investing—allocating capital to ventures that generate measurable social and/or
environmental benefits alongside financial returns—is a growing trend among younger wealth holders. Families can structure philanthropic investments into mission-driven businesses or
funds that align with their shared values, satisfying both generations’ financial and
philanthropic objectives. According to Bank of America’s study, three-quarters of investors
under 43 already hold sustainable investments, reflecting this shift (ML, 2023),
3. Establishing Next-Gen Philanthropy Committees
To involve younger family members in financial decision-making, families can create next-gen committees within their philanthropic entities. These committees can be responsible for managing discretionary charitable funds, researching new giving opportunities, and
presenting funding proposals to the broader family. This approach helps younger members
develop financial acumen and fosters generational collaboration. (Ogier, 2023)
Encouraging Social Entrepreneurship
Rather than focusing solely on donations, many younger wealth holders prefer hands-on
involvement in social enterprises. Families can allocate resources to establish social
entrepreneurship incubators, where next-gen members can explore philanthropic ventures that
align with the family’s values. This allows them to channel their wealth into sustainable, long-
term impact initiatives rather than one-time donations.(Forbes, 2023)
Aligning Generational Perspectives Through Philanthropy
The generational shift in wealth ownership is not merely a financial transition; it is a transformation in values, priorities, and investment strategies. By leveraging philanthropy as a tool for collaboration, families can foster better intergenerational relations and connections while ensuring that their wealth serves both personal and societal goals.
Establishing a family foundation, engaging in impact investing, and promoting next-gen leadership in philanthropy are all actions you can take to help create a cohesive and purpose-driven legacy that aligns with both traditional and modern approaches to wealth stewardship.
As wealth continues to evolve, embracing these strategies will not only help bridge generational divides but can be the key to redefining the role that wealth can play in shaping a more sustainable and equitable future.
Sounds good, doesn’t it?
Putting it all in place isn’t always an easy task
With our bespoke coaching and philanthropy consulting services, KV Philanthropy Consulting can help provide the right environment to start the conversation. We will accompany you and your family through some of the tougher discussions, and can also help set up the infrastructure to get your charitable giving and foundation or fonds de dotation strategies up and running.
If you’d like to know more, or are wondering if this is for you, please don’t hesitate to reach out for a free consultation.
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