Irrespective of whether self-made or inherited, the next generation of wealth owners is looking to change the world for the better, as philanthropists, social entrepreneurs or impact investors.
Indeed, their efforts could be one of the biggest catalysts for change in the global economy over the next decades. This new generation of wealth owners – self-made or inherited – is more empowered than previous generations, they are more tech-savvy and entrepreneurial and they are more connected to like-minded individuals from around the world, giving them collective power to change the world for the better.
Through the creation of new wealth or through its transfer from previous generations, the next generation of wealth owners will have unprecedented levels of assets to make a difference. Wealth is being made afresh by a new generation of tech-savvy entrepreneurs led by individuals in their twenties and thirties, or so-called millennials.
They have an entrepreneurial and problem-solving mentality and want to make a difference today instead of saving their money for the future. Mark Zuckerberg and his wife Priscilla Chan are perhaps the greatest personifications of this trend. On December 1, 2015, they pledged to use 99 percent of their shares in Facebook to improve the state of the world.
This new self-made wealth among next-generation entrepreneurs like Zuckerberg is happening at the same time as an immense transfer of wealth from retiring baby boomers to millennials. According to a recent report by Wealth X, we are witnessing the biggest wealth transfer in history, with an estimated $16 trillion of ultra high net worth (UHNW) wealth being transferred to the next generation over the next 30 years, creating a new breed of UHNW individuals.
While most of these inheritors of wealth haven’t (yet) actively contributed to creating the wealth they control, these next-generation wealth owners still have a similar mindset to self-made wealth owners when it comes to entrepreneurial thinking and acting, taking on responsibility and helping to make the world a better and more equal place.
Unlike their parents who oftentimes took a more traditional approach towards philanthropy, they want to make a difference during their lifetime and not just through a legacy foundation that outlives them and has to be operated by the future generations. In general, the next generation philanthropists want to be hands-on and therefore oftentimes seek for smaller and agile charities or organizations. They are also most comfortable with projects whose impact is supported by data and can be clearly measured.
We are at a unique moment in time when it comes to tackling today’s societal and environmental challenges. Never before has there been a time where a nexus of next generation wealth owners and their attitudes towards making societal changes has been greater.
On the one side we have the next generation wealth inheritors and on the other side the self-made wealth owners who are devoting their wealth oftentimes concentrated in new mega-foundations.
That suggests that something big could come out of these confluences of forces - and even make the world a better place. However, it is imperative that we put in place adequate structures and support mechanisms to ensure that this collective energy is captured and leveraged for the greater good of society.
Peter Vogel is professor of family business and entrepreneurship and the Debiopharm chair for family philanthropy at IMD Business School in Switzerland