Future Wealth and the New Giving Landscape

If you work in the nonprofit realm, you've by now heard of the Great Wealth Transfer, in which, over the next 20 years, younger generations will inherit north of $80 trillion from their Baby Boomer forebears. This will have profound effects on the charitable sector and societies as a whole, but even as that's occurring, what some analysts call the Great Horizontal Wealth Transfer will also take place. This parallel phenomenon will shift wealth into the hands of women, as men pass along about $9 trillion to their surviving spouses.

This process represents an acceleration of what is sometimes called the feminization of wealth—a financial shift that has been ongoing for some time due to many factors, such as women becoming the majority of college students, starting more businesses, marrying later, maintaining control over their money after marriage, and buying more homes. Partly due to this trend, there are nearly double the number of women millionaires today as compared to 2016. The Switzerland-based investment bank UBS Global reports that 45% of its clients are now women, an enormous increase compared to a few decades ago.

Research shows that gender impacts giving, though there are more similarities between women and men than differences. Gender matters, but geography does too. A recent JBWere report suggests that Australian women will inherit an outsize share of the Great Horizontal Wealth Transfer. Australian giving behaviors are distinct from those in the U.S. or England. Other findings overlap or contradict in what is a far-from-homogeneous area of study. Even the amount of wealth believed to be on the precipice of shifting varies according to which source one checks.

But broadly speaking, women prefer causes in the realm of social services more than men do. According to the Women's Philanthropy Institute, wealthy women in top bracket households who make giving decisions are more likely to select groups and programs targeting youth, family, and health, while men outdistance women in giving to religion and education (though other studies suggest that women give generously to educational institutions with which they are personally involved). A different study by Collage Group suggests that children and animal well-being are causes women prefer more than men do.

In addition to making choices that can be viewed as more immediately impactful on social need, women are more generous givers numerically. While men give the lion's share of cash to charity because of their control of greater resources, inequitably high pay compared to women, and other factors, about 73% of charitable donors globally are women. Various studies find that single women—whether never-married, divorced, or widowed—give more often than single men. Top bracket single women give more to the arts and the environment.

The upshot of these and many other facts is that money in women's hands does a lot of good. So what will this mean during and after the Great Horizontal Wealth Transfer? It's not possible to definitively state that the phenomenon will be transformative, as some analysts have already decided. There may be too many interlinked factors—economy, culture, politics, and more. However, certain trends seem assured. The investment platform Ellevest conducted a survey that suggests a shift occurs when women receive a large influx of capital. According to the data, investing becomes important, as it does for everyone, but for women of millennial age and younger, investing for impact (putting capital into schemes that benefit society or the environment while also generating profit) becomes a primary goal.

Another long-observed trend in studies of philanthropy is that women are more empathetic, altruistic, and generous, which means that women will give not just more often but in higher amounts than men when the means exist. Additionally, women are more responsive to calls for donations than men, a difference we can expect to hold true into the future. Women are more likely to give collectively, which matters greatly not only because collective giving is the fastest growing form of philanthropy in the U.S., but also because such groups are overwhelmingly led by women, with 60% completely of female composition.

Women invest in women much more than men do, so it's a sure bet that women-centered nonprofits and foundations will reap a sizable share of giving derived from the Great Horizontal Wealth Transfer windfall. But there's a caveat. In the United States, the 11th Circuit U.S. Court of Appeals recently granted a preliminary injunction against Fearless Fund, an Atlanta venture capital firm that supports Black women business owners. The background has been discussed by GrantStation's Kevin Peters, but the crux of the decision is that in many circumstances the Fund cannot specifically prioritize Black women because it's discriminatory to White women.

This is, of course, yet another front in the war to eliminate equality programs in the U.S. and attack diversity in general. But the decision, assuming it stands—which it has a very good chance of doing—opens the door to a possible future where the same restrictions could apply to programs that prioritize women. Certain types would have to be open to men in order to stay on the right side of the courts. It may seem outlandish, but nothing is beyond the pale in today's regressive political environment, where freedoms generations of women assumed were permanent are back in play.

This is just one reason why observers who predict a tsunami of change from the Great Horizontal Wealth Transfer are possibly jumping the gun. There's no doubt the $9 trillion shift to women has the potential to greatly impact philanthropy, especially the finances of organizations that help women, children, and people of color, as well as the approach such organizations adopt to secure donations. Mega-donor MacKenzie Scott, who has given away $16.5 billion and counting since 2019, stands as a perfect example of what great wealth can do at the direction of women. But circumstances don't remain static. It's difficult to predict tomorrow's reality. Current climate trends could by themselves cause global need to easily overwhelm charitable giving.

Here's what's 100% true. With 73% of donors globally already women, and women already more likely to give their time and expertise as frontline volunteers, an increase of women's financial resources would bring them closer to one day achieving the giving trifecta, making them the most active, sought after, and powerful donors in history. It sounds like a good future if we can all somehow get there. But there will always be fierce legislative, judicial, economic, and social headwinds when it comes to bringing more equity to the world. There always has been. In the end, women can't pull the planet out of trouble by themselves, nor should they. The change needs to come from everyone.