The Big Idea: Controlling the Purse Strings
The hot topic in the field of philanthropy this year has been the imminent transfer of financial power from men to women—a trend that will accelerate as the wealth creators of the baby boomer generation die and as women continue to gain ground as high earners themselves. How they choose to spend their newfound cache stands to unleash some of the most profound changes to philanthropy in decades.
By 2030, American women are expected to control most of the $30 trillion in financial assets held by baby boomers, a level approaching that of the annual GDP of the United States, according to a McKinsey report. By 2035, women will have inherited 70 percent of this unprecedented intergenerational wealth transfer, according to a report by Citibank, largely because women tend to be younger than their husbands and to live longer.
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But these days, women aren’t just inheriting their money. Wealth creation is now much more equally distributed. A recent study by Altrata, a data-analysis company, found that more than half of female ultra-high-net-worth Americans are self-made. Globally, 70 percent of millennial women take the lead in financial decision-making, according to Citibank.
“As wealth creators in their own right and inheritors of family wealth, [women] are and will become the decision-makers of the future; we are already seeing this trend in the sector,” says Karen Kardos, head of philanthropic advisory at Citi Private Bank.
So what does this mean for philanthropy? Altrata found that 61 percent of women who have inherited their wealth cite philanthropy as their top interest, compared to only 35 percent of their male counterparts. For 49 percent of men, philanthropy takes second place to sports.
In terms of approach, female donors appear more likely to follow billionaire MacKenzie Scott’s example and pursue trust-based giving, says Kardos, whereby donations are offered to nonprofits to disburse as each organization sees fit, rather than with restrictions. “While not a new philanthropic approach, it focuses on trust to help empower communities to lead, thereby relinquishing the power philanthropists can wield,” she explains.
Women are also more content to wait for results, according to Dianne Chipps Bailey, a Bank of America managing director with a focus on philanthropic strategy, who says that 80 percent of women place a high priority on the lasting impact of a donation, compared to 69 percent of men. Women also prefer to spread their largesse across a wider range of causes. According to Citibank, “While [women] give more in total, the size of their individual gifts is on average smaller. Some think this dilutes the influence of women donors.” This effect is offset, however, by women’s apparent preference for collective giving, via funding circles such as the Women’s Donor Network. Women “tend to be more collaborative to generate greater impact,” says Kardos.
To the guiding principles of trust collaboration, and patience, we could add solidarity. Nonprofits that strive to improve the lives of women and girls received less than 2 percent of overall U.S. charitable giving in 2019—a typical annual amount, according to the Women’s Philanthropy Institute. Ending the chronic underfunding of women’s organizations could emerge as the most revolutionary effect of a future female-dominated philanthropy.
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