Women give more, differently, sparked by recent upheaval

Tiny Hollins University had a huge announcement last December: An anonymous alumna donated $75 million to create an endowment that would immediately start underwriting scholarships. The Roanoke, Virginia, women's college believes the outsized gift is the largest ever to a women’s college, and all the more dramatic given that undergraduate student enrollment hovers around 700.

Expect more such news as women flex their philanthropic muscles in new directions. New and ongoing research indicates that women have intensified their charitable intent and giving in the wake of the public health and racial and gender justice events in the past two years. The implications for financial advisers: It's essential to integrate women clients' charitable priorities into their financial plans at every phase of life, even if giving occasionally pauses clients' asset growth.

Millennial women, who are just entering the generational stage where they have enough to make substantial gifts, approach giving differently than prior generations, said Jeannie Infante Sager, director for the Women’s Philanthropy Institute, which is part of the Lilly Family School of Philanthropy at Indiana University.

“They’re willing to budget out of current dollars to include philanthropy among all their levers,” she said. “That’s different from how baby boomers think. Boomers think you can only give out of wealth.”

A report released in May by UBS pinpoints how women in each working generation — baby boomer, Gen X and millennial — are sharpening their philanthropic intent. Women overwhelmingly feel propelled by the wrenching events of the past two years, from the pandemic to an acute awareness of racial, gender and social justice, with 82% of survey respondents saying they are more in tune with what is most important to them and 68% responding that they intend to channel their financial resources accordingly.

Meanwhile, about 42% of high-net-worth families say that the events of the past two years are motivating them to expand their giving intent and levels, according to a March study by BNY Mellon. Women comprised 31% of respondents to that study, which did not break out giving and goals by gender.

Overall, the BNY Mellon study’s findings reinforced those of UBS and Indiana University. Currently, BNY Mellon found, Gen X households are most in gear, with 79% having already crafted a giving strategy; millennials are close behind, at 74%, but baby boomers lag significantly, with only 39% matching their generous urges with actual plans. About 34% of all respondents intend to increase their giving in the next two years.

The UBS report found that married women in heterogenous relationships still tend to let their husbands take the lead in investing, even though they take a much more active role in their families’ giving.

Tellingly, UBS found that women who either take the lead or equally share in investing also are more likely to be more assertive in aligning their investments with their priorities, with 66% responding that they hold ESG investments and 54% that they hold stakes in venture capital vehicles that reflect their values. By way of contrast, 40% of women who do not take a lead role in household financial management hold ESG investments, and 31% hold stakes in venture capital that reflects their values.

The UBS study throws generational differences in sharp contrast. Baby boomer women remain committed to big-picture problems, such as poverty, while millennial women gravitate to causes that feel personal, such as their alma mater and addiction.

The findings of the UBS study ring true to Sager, who oversees ongoing research about women and philanthropy. As women assert themselves as investors as well as donors, they strongly prefer to integrate purpose-driven investments into their portfolios while maintaining charitable priorities. Men, though, tend to substitute purpose-driven investments for charity, Sager noted.

The UBS study reinforces ongoing Indiana University findings that boomers stick with big philanthropic organizations that address big, systemic problems. Many boomers were introduced to community philanthropy through United Way at their first jobs, and that format, with its preselected slate of options, still shapes their expectations.

Millennials, though, “like to curate their own philanthropy,” said Sager. “They’ll identify a cause and go find an organization that’s about that cause.” One reason why alma maters have captured a top spot in millennials’ giving priorities is that the schools ask, early and often, said Sager.

STRATEGY SUPPORTS VALUES

Advisers might take cues from the trends to engage all women — those who are on their own and those who have partners — on the point of using financial means to further their own deeply held convictions, said Carey Shuffman, head of the women’s segment at UBS Global Wealth Management.

“The report provides multiple entry points to engage with women about the concept of purpose about wealth impact and spending decisions,” she said. “Advisers can say, ‘You’re saying that you’re feeling a stronger sense of purpose, but you’re not sure how to bring that into the context of your portfolio,' to speak to how that shows how to invest in ESG.”

Advisers were integral to the charitable giving for 63% of the respondents in the BNY Mellon research — which calls out a potential hidden conflict, said Sager. With younger donors committed to giving earlier, advisers need to review any potential collision with their own business goals of managing ever-increasing AUM, she pointed out. That’s especially important for women, who overwhelmingly expect to give consistently, as soon as they can, as long as they can.

“Women’s financial goals are never just about them,” Sager said. “Those clients will stay with you longer if you have those conversations about giving,” even, she added, if the subsequent donations slow the growth of that client’s total assets.

“If they want to donate instead of keep the money with you, you should advise them in the right timing and amounts to do that, and later, you’ll reap the benefits of the client being satisfied,” said Robin Davis, an adviser with Stuart Financial. “Be less worried about building the AUM and more about doing the right thing, lifelong, for your client.”

Conversations centered around purpose are more likely to carry through to strategy and specific plans, Shuffman said, instead of being sidetracked by technical explanations of market trends and tools.

“There’s a misperception that many potential investors think you have to be an expert to be meaningfully involved in your own finances, but you don’t have to follow the markets closely to know what you want to accomplish in your life, and what’s most important to you, and your legacy,” she said. “You don’t have to have a technical conversation to answer those questions.”

[More: The power of philanthropy shifts to women, and advisers are taking notice]