Much has been said about the coming wealth transfer to millennials, and how it will impact conventional practices of philanthropy. It’s certainly worth watching. Investment News projects that $30 trillion in assets will move from baby boomers to millennials and Gen Xers in the coming decades, the largest intergenerational transfer of wealth in history.
Elizabeth and Kevin Phillips found themselves on the leading edge of that seismic shift when they assumed leadership of Kevin’s family business and foundation just after college, while still newly married and starting a family. The couple moved to Greensboro, North Carolina, when Kevin’s grandfather, Kermit, passed away. Kevin stepped into the business, while Elizabeth ran the recently endowed foundation.
Elizabeth wasn’t new to philanthropy. By the time she was 16, she’d served on a nonprofit board. By 23, the number of boards had increased to seven. And by 26, she’d helped to start and scale Akola, a globally inspired jewelry brand that’s manufactured entirely by women in East Africa, work that provides living wages and critical support services to women living in extreme poverty.
But she was new to the inner workings of foundations and came in with a fresh perspective, asking some basic questions: Why did 95 percent of the foundation’s assets exist separately from its mission and values? What was the logic behind making small grants across thematic interests and geographies? And what was the smartest way to make their resources a game-changer for social impact?
The Phillips wiped the slate clean, embraced a learning spirit, and adopted a mindset of catalytic capital. They’d use their platform to put systems in place to remove obstacles to achieving outcomes, and help attract other funders.
The couples’ first major decision was place-based. The Phillips decided to honor Kermit’s legacy by focusing on Greensboro and Guilford County. They saw opportunities to add unique value in their own backyard. The Gate City’s population is growing, and post-recession revitalization is underway.
More important was the human connection. When Elizabeth started a self-guided listening tour, civic and non-profit leaders—and fellow philanthropists—embraced her, and involved her in considering Greensboro’s future. That process raised as many questions as it answered, and ultimately helped the Phillips Foundation identify a dozen larger, high-impact “generational” grants of between $500,000 and $5 million—amounts that rocketed above its historical average.
Those commitments, and their approach to making them, model five emerging trends for millennial philanthropy:
A laser-focus on impact. Millennials have often been described as the impact generation, and want to be more strategic with their giving. The Phillips realized early on that the traditional family-driven approach to grantmaking didn’t resonate, and wouldn’t allow them to make the kind of needs-driven impact they sought.
Aligning values and investments. Upon taking the helm, Elizabeth was struck by the fact that 95 percent of the foundation’s $60 million endowment was invested solely for the purpose of generating returns, without regard for social impact or values alignment. She and her husband didn’t see the two things as mutually exclusive, a view widely shared by their peers. U.S. Trust’s 2018 “Insights on Wealth and Worth” survey found that 87 percent of millennials consider ESG factors essential to their investment decisions. The couple decided to change course dramatically and set a goal of total portfolio activation, not knowing it would raise eyebrows with trustees, partners and financial advisors. They asked themselves a simple question about each investment: Do we really want to profit from this? Skeptics came around after Elizabeth found the right advisors, and launched a successful pilot for proof of concept. Now, the foundation is 94 percent values-aligned, while maintaining market rate returns of 8 to 10 percent. Dual CIOs, a chief investment officer and chief impact officer, review each commitment.
Causes and cross-sector solutions. Millennials champion causes, rather than single institutions, and take a broad view of how to move the needle in the areas they care about. They grew up in an interconnected world, and are likely to believe all sectors have a role to play in problem-solving. The Phillipses have engaged multiple partners in achieving impact in Greensboro. One investment supported the construction of a performing arts center. Another targeted nontraditional students in a local magnet school. And an investment in a public-private initiative decreased county-level homelessness by 98 percent in only three years.
Using new giving methods. A Fidelity Charitable Future of Philanthropy study found that today’s donors are more open to using new giving methods. Elizabeth and Kevin feel that moving the dial means being nimble and willing to evolve. The Phillips Foundation employs impact investing strategies like Mission Related Investments (MRIs) and Program-related Investments (PRIs) in its total portfolio activation. The foundation even invested “idle cash” in minority-owned businesses through a community financial development institution called Self-Help.
Embracing intellectual capital. Millennial donors value learning and opportunities to discuss best practices. Elizabeth and Kevin continue to model the student-like approach that helped inform their initial decisions. The Phillips Foundation made convening part of its programming, creating its Impact Investing Think Tank (IITT) with the mission of “unleashing more capital for good.” The program includes a speaker series, seminars, workshops and an online hub of curated information that philanthropists on the capital side of the equation need—the kind of ready resources Elizabeth was missing at the get-go—like a comprehensive glossary of terminology.
In fact, if what’s happening in Greensboro is any indication of the future, intellectual capital may be the operative words. Eight years after they began, Elizabeth is struck by all they’ve learned during their journey from sources including a Stanford Social Innovation Review article that introduced her to Lester Salamon’s book New Frontiers of Philanthropy, and a memorable conversation she had with a local community foundation leader with “a great heart” who explained how her investment could eradicate homelessness.
“We really have to credit everyone who shared their knowledge with us,” Elizabeth said. “And we hope to pay it all forward.”