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Follow along with Justin as he becomes crypto-literate. This blog is part 5 of 6 in this crypto education series.
The future of philanthropy is not in cash.
Obviously, donors still have cash to give, and some will choose to. But, increasingly, potential philanthropists will be more comfortable with digital transactions than they are using cash.
And that makes sense, right? Most of us have already adopted online shopping, mobile payments and paperless deposits. Now that the blockchain and cryptocurrencies have appeared on the scene, it seems they are the natural next steps in society's technological advancement.
This shift toward digital transactions was only accelerated by the COVID crisis, as many individuals and businesses quickly adopted and implemented touchless transactions.
In this blog, I'm going to be taking a look at the surge in digital property and payments, and the profile of this new generation of philanthropists.
The surge of digitalization: finance, property and payments
To gain some perspective on how much money is traveling around the word digitally every day, here are a few numbers to wrap your mind around:
- Honor of Kings: This is the top grossing mobile app game, exceeding $10 billion––yes, billion with a B––dollars in revenue. These all come through in-app microtransactions where users buy weapons, in-game currency, and other cosmetic items.
- Venmo: This is a mobile peer-to-peer payment application that eclipsed 50 million active accounts in 2019 (a majority of users under the age of 34). By 2020 they were processing nearly $160 billion in transactions.
- Twitch.tv: This is a video game streaming platform similar to Youtube. In 2020 alone, it raised $83 million dollars for charity through donations, and that number doesn't even include the amount donated directly to twitch streamers by their loyal viewers.
These are just three examples of mainstream ways of sending, purchasing, and receiving digital currencies or assets. And these numbers are proof that the millennial generation is defined by its appreciation for digital assets and its trust in digital transactions.
Leaders of nonprofits need to understand the incredible amount of value being sent online, and begin to create pathways so that digital gifts can make it to their nonprofits.
Leaders of nonprofits need to understand the incredible amount of value being sent online, and begin to create pathways so that digital gifts can make it to their nonprofits.
Qualities of this generation of philanthropists
1. Anti-institutional
Millennials are notoriously skeptical of large institutions and governing bodies. Because of this sentiment, millennials are encouraged by most forms of decentralization, collaboration or freedom.
When a digital, decentralized, transparent, and collaborative way to exchange value became available through crypto, they quickly embraced it.
Whether a nonprofit organization aligns with the same ideals as millennials and Gen Zers, there are aspects of every organization––like donation mechanisms––that can cater to their needs and ideals without compromising its values.
2. Motivated by cause
Forbes ran an article a while back on how to motivate millennials. In it, David Villa states that "above money, above fame, they (millennials) want a sense of purpose and accomplishment."
"...above money, above fame, they (millennials) want a sense of purpose and accomplishment."
- David Villa
CEO of IPD Agency
Because of this, millennials and Gen Zers are looking for opportunities to participate in "world changing" causes, whether through actual hands-on volunteerism, or through their generous giving.
3. Generous
It may run contrary to the stereotype, but millennials and Gen Zers are actually among the most generous and philanthropic generations to date.
One study revealed that 74% of millennials and 66% of Gen Zers contributed financially to an individual or an organization during the COVID pandemic in 2020, which was more than the Baby Boomers or Gen X.
Gen Z specifically is growing up to be an extremely generous generation:
- 57% of Gen Zers and millennials will save their money rather than spend it
- 32% of Gen Z donate their own money
- 26% of youth ages 16-19 volunteer on a regular basis
- Another 50% are looking for a an opportunity to volunteer
- 10% want to start their own nonprofit organization
These numbers suggest that, as this generation grows up and their wealth increases, so too will their willingness to give. By providing options for digital giving, nonprofits will be making it easier for future generations to act out in generosity.
4. Wealthy
A Coldwell Banker report recently estimated that the millennial generation stands to inherit around $68 trillion from their Baby Boomer parents by 2030. That's a staggering amount of wealth that is about to transfer to millennials, but it doesn't mean millennials aren't creating their own wealth.
As this graph by WealthEngine shows, most wealthy millennials are self-made. That's because there has never been another time like this in history, where a young person can create massive amounts of wealth relatively quickly. Whereas baby boomers capitalized on a steady supply of safe, well-paid jobs, millennials have leveraged new technology and burgeoning markets to create impressive amounts of wealth very early in their lives.
Conclusion
Millennials and Gen Zers are more comfortable with digital property and payments than any generation before them, to the extent that they're actively seeking to replace cash transactions. They're also, sweepingly anti-institution, highly motivated to support "world changing" causes, and more generous and wealthy than any recent generations. The sum of these factors paint a promising future for nonprofits that provide pathways for digital gifts to make it to their organization.
