Inside Philanthropy: With a generation of new donors inheriting trillions, how can nonprofits boost arts giving?

by Mike Scutari

The world of philanthropy will be heavily shaped in coming years by the greatest intergenerational wealth transfer in history, with tens of trillions of dollars passed down in the next half-century. Estimates vary about how much of this wealth will find its way to charity, but one report last year estimated that transfers to Gen-Xers and millennials over the next decade alone could yield more than $2o billion a year in new grants to nonprofits.

Where will all that cash go?

A big fear among leaders of arts nonprofits is that their sector will get short shrift from younger donors who tend to gravitate instead to urgent issues like global poverty and climate change. That fear is not unfounded, and we’ve frequently reported that the latest crop of tech donors is disinterested in the arts. We’ve also reported on young heirs who think the same way, rejecting their parents’ habits of giving in favor of grantmaking they see as having more impact. Social justice causes are in; the symphony is out.

All this explains why business advisory firm M+D, with support from the Knight Foundation, launched the Art Funders Forum in 2018 in an effort to increase private support for arts and culture with an emphasis on engaging emerging philanthropists. Knight’s Victoria Rogers laid out the foundation’s thinking in a piece on Medium, noting that “the generations inheriting great wealth are being shaped by our moment in history, and their giving habits will be different as a result.”

“Catch this Generation”

According to Giving USA 2018, private support for the arts rose to $20 billion last year—a mere fraction of the $410 billion in annual charitable giving. Meanwhile, according to research from Grantmakers in the Arts, total public arts funding when adjusted for inflation decreased by 12.8 percent over the past 20 years. In real dollars, state arts agency appropriations decreased by 25 percent, local funding contracted by 9 percent, and federal funds have remained virtually flat. These unhappy trends, in tandem with anecdotal evidence about the giving preferences of younger donors, underscore the importance of the Art Funders Forum’s work.

M+D co-founder Sean McManus told me recently that, like many others, he began seriously thinking about a world without federal support for the arts when Donald Trump proposed abolishing the NEA. Would private donors step up to the fill the gap? And if not, why not? Obviously, the NEA is still with us, but McManus’ concerns remain valid, given long-term decline in public support for the arts and demographic shifts in who’s giving. How can arts organizations, to quote McManus, “catch this generation and provide them with a platform to think hard about the future of cultural philanthropy?”

The Intersection of Art and Social Justice

One of the Art Funders Forum’s first action items was to survey 476 arts and culture professionals to determine their challenges, uncover trends, and explore how best to engage this new generation of donors. The forum is also seeking to understand the thinking of these donors, a topic that’s drawing more attention across the philanthrosphere.

As we noted in a piece looking at the Surdna Foundation’s work to support the next generation of progressive philanthropists, many heirs have a very different view of market-based capitalism than their parents. Some have been forged in the crucible of the Great Recession. Others, having attended liberal private schools and elite colleges, are more attuned to issues like rising inequality than their predecessors. And millennial heirs, like younger people in general, are more likely to hold progressive views on race and sexuality. 

Add it all up, and this new generation is more likely to be skeptical of the economic status quo and more willing to use their newfound wealth to challenge existing systems. How does this philosophical shift translate—if at all—to the world of arts giving?

According to McManus, would-be arts donors are younger, more socially focused, and more amenable to an immersive arts experiences than their parents, many of whom were perfectly content to stare at a painting from a safe distance or politely attend a black-tie dinner. This demographic views giving as “more process-driven than transactional,” in contrast with an older donor class. “This is the e-commerce generation,” he said. “The arts experience has to be nuanced, exciting and original.”

In particular, the “social justice issue is huge,” he said. “It’s one thing to experience traditional works of art, but what are institutions doing to drive social change?” The idea that the arts can be used as a means to drive meaningful social change is arguably the hottest topic in all of arts philanthropy. And while institutional funders have taken the lead on this front, individual donors are slowly but surely getting on board.

Building Out a Live Event Platform

So how can arts organizations do a better job at making the case for the arts to emerging philanthropists?

First, this generation, having grown up on technology, expects organizations to use technology to connect with visitors. Second, organizations need to leverage technology effectively to raise money. (“The dinner gala won’t cut it anymore,” McManus said.) Third, respondents need to do a better job at “telling stories about what it means to lift up a community through the arts, the number of lives saved, and the democratic institutions that are being preserved.” Fourth, organizations need to do a better job at measuring impact; fifth, they need to pay greater attention to underserved communities.

The good news is that arts organizations, with funder assistance, have made substantial progress on each of these fronts. Bloomberg Philanthropies and Knight have led the way in visitor-facing technology in the museum space. Arts organizations are raising more money than ever before with tech-savvy and creative fundraising campaigns. And arts proponents are more effectively making the case for the social impact of the arts and in engaging historically underrepresented demographics.

The bad news? These gains are scattered, and knowledge about emerging best practices is often not reaching the organizations that need it most. Nonprofit arts professionals lack a one-stop clearinghouse where they can look under the figurative hood of organizations that have addressed the challenges that McManus spotlights. But not for long. Using the research as a roadmap, the forum’s next order of business is to build out a new platform designed to drive knowledge sharing, collaboration and ideas that will increase private support for the arts.

The forum encourages arts organizations to get on board for this critical next phase. “By working together,” Knight’s Rogers wrote in her Medium piece, “we can turbocharge arts giving, create new pipelines for private investment, and have a more direct and positive impact on society for decades to come.”