Cashed-up Boomers & cause-motivated Millennials: Navigating the shifts in generational giving habits
The latest data shows the cost of living crisis is having an impact and dragging down charity donations with a 5% year-on-year decline for the past quarter (CommBank IQ, 2023). But it’s what’s hiding within the data that gives charities an indication of how to adjust strategy to manage this tricky period.
Spending has continued to deteriorate for younger age groups under 40 years old in Australia year-on-year. Those aged 40-70, have increased their spending year-on-year however they’re still spending less than inflation. But it’s over 70 year olds whose spending has increased higher than inflation — due to strong savings, less mortgages and the windfall caused from higher saving interest rates.
The fundraising implications are clear.
Charities need a dual fundraising approach to match donors’ actual giving capacity.
Focus on growing donation value today from Baby Boomers with the highest propensity to give
Baby Boomers and Builders have a higher capacity to give right now; they're outspending inflation, showing a capability and willingness to increase their spending year-on-year. If you want to achieve your fundraising targets this year, focus on growing giving from this cohort.
We recommend a strategy that doubles down on generating larger gifts from this cohort to offset the overall decline in donations.
Harness Data to Reach the Right Audience: Apply demographic filters to identify affluent, traditional donors on your database. You can also use the RFM (recency, frequency, monetary) approach if you don’t already leverage AI tools to identify those with the propensity to give. Use more sophisticated audience targeting tools like look-a-like or Experian to identify new audiences you can target via digital advertising, beyond the platform targeting options.
Craft Personalised Appeals for Affluent Donors: Traditional donors are strongly motivated by a sense of duty to help in times of need; they want to make a difference. Lay out a case for support that clearly articulates the need and impact of a higher-value donation at this time. Don’t be afraid to lean into an emergency appeal tone or positioning, detailing that extraordinary times call for extraordinary support(ers).
Also focus on engaging Gen X & Millennials with the intention of building for tomorrow
While focusing more heavily on Traditional donors will help meet your fundraising target this year, it’s also important to have an eye on the future.
While Millennial donors’ ability to donate is constrained right now, they have a very strong desire to give more to charity (ntegrity, 2023) and their capacity to give over future years will continue to grow. Younger donors are becoming significantly wealthier – $3.5 trillion is expected to be transferred between generations over the next two decades.
So while we might not see this motivation translate into high value donations today, building today will pay dividends well into the future.
We recommend acquiring and nurturing a relationship with these younger donors as they build their giving habits, connect with causes they care about, and learn about organisations whose mission is in line with their own values and priorities.
Lower your barrier to entry: Lower the bar of your donation ask and expectation for a positive ROI. Ask for smaller gifts with tangible and compelling impact - across cash and regular giving. For example, we created a new campaign with the Salvos targeting this cohort called “100,000 meals” which asks for a $10 donation to fund one meal for those who need it. It helps if you consider this a cost-neutral or investment for future ROI. Look to lifetime value as a measure for success, rather than achieving a positive ROI in year one.
Lead Generation with a Purpose: Donating may not be an option for many Millennials and Gen Z supporters right now. So instead focus on lead generation. Advocacy is a powerful tool to engage younger donors who want to take action in a meaningful way.
Foster a Lasting Relationship: Once acquired, engage these NextGen supporters through regular emails, compelling content, bite-sized impact updates and relevant, timely and modest donation asks. You’re laying the foundation for a long-term connection.
Cultivate a Dynamic Online Presence: This generation is not just tech-savvy; they’re conducting digital due diligence like never before. Your online platform should be more than a donation hub; it should be a comprehensive, informative, and engaging resource that showcases the impact, transparency, and financial stewardship of your organisation.
Why you must have a dual approach for your today and tomorrow
A dual strategy is required to recognise these economic and generational dynamics. Focusing only on Boomers is a major missed opportunity to build for the future and focusing on NextGen probably won't get you to your target...
It’s important to both leverage the current financial strength of the Boomers to drive immediate revenue, while also engaging and nurturing younger generations, who are the future of giving.