The world isn’t paying enough attention to inheritors. And vice versa.
By the Generation Pledge team (Natalie Rathner and Sunnie Huang)
Imagine you had a superpower that would allow you to identify every future successful entrepreneur in Silicon Valley. Now imagine what would be possible if you used this power as an investor for humanity, being able to train these entrepreneurs to use their extraordinary future power for social impact.
The bad news is that no one has this power.
The good news is a truism that most of the world is completely unaware of: every single dollar that is privately owned, and that will remain privately owned, will eventually be inherited by an inheritor. We know who inheritors are, so we can identify today who the greatest wealth holders of tomorrow will be.
Inheritors are the greatest beneficiaries of the world’s inequities and hold one of the most powerful keys to transforming them. However, there is no global framework around training inheritors to use multigenerational wealth for good. That’s why we created one.
Who we are
Generation Pledge is a global community of inheritors from ultra-high-net-wealth families who commit to doing the most good with their resources. Pledgers commit to donating at least 10% of their total inheritance to effective causes within the first 5 years of inheriting. They also commit to mobilising their polycapital, that is their financial, social, career, and political capital to generate the greatest impact, before and after inheriting.
Since starting in 2018, we have built a community of 73 committed pledgers from 22 countries, raising an estimated US$1.5 billion in pledged donations. There are an estimated 500,000 inheritors in ultra-high-net-wealth families. We aim to inspire 1% of them to take the Generation Pledge by 2035, unlocking billions for social impact.
We think that the world needs to pay more attention to inheritors because the next 50 years will see the largest wealth transfer in history, with predictions ranging between US$30-70 trillion. This is accompanied by an unfathomable amount of social, political, and career capital. This mix of polycapital is required to solve our world's greatest challenges, to reduce suffering, increase flourishing and reduce existential, social and environmental risks.
We have found that similar to how ultra-high-net-wealth families amass financial capital over generations, the same can be true for other types of capital as well, like social and political capital. Yet this non-financial capital remains largely untapped for impact by inheritors. While financial capital might not be available for inheritors until some time in the future, these other types of capital can be deployed now. We work with inheritors to convert this tremendous amount of wealth and power into positive social impact.
We also understand that inequity cannot be solved by focusing only on the bottom of the pyramid. In addition to helping those experiencing extreme poverty or preventable suffering, we also need to address the multigenerational wealth structures at the top of the pyramid. This is a big and daunting task. We often say that as a generation of inheritors, just wanting to make a difference isn’t enough. There are a bunch of norms and expectations within the ultra-high-net-wealth space that need to be unpicked and gently challenged. We need to be able to address the problem of the top of the pyramid. To do this requires inheritors to have a Diamond Spine - a willingness and ability to ask themselves and be asked questions that would normally be backbreaking. For example, can you care about addressing inequity with your philanthropy, while at the same time care about preserving the family’s wealth with your financial advisors? We need to acknowledge that these two priorities are in direct opposition. Asking these questions is essential if we are to shift the norms from preservation of wealth to preservation of life. They are also easier to ask before the inheritor has become the wealth owner, at which point the norms and expectations become even harder to overcome.
This brings us to another important reason why orienting inheritors towards impact is important: the endowment effect. This is a common cognitive bias that results in a tendency to value the things that we own more than the things that we don’t. Have you felt that your most prized possessions are worth more than you paid for them? That’s the endowment effect. What this means for inheritors is that once they are the wealth owners, it could become more difficult for someone to part with portions of their wealth. We support inheritors to make their commitments to impact now, before they inherit, to bypass this bias. We think this could be key to unlocking more private capital for positive change.
Patience for change
You might be thinking that focusing on inheritors before they inherit won’t make a difference to the challenges we face today. You might feel like as a sector, today’s challenges are the most important challenges to focus on. These arguments are some of the main reasons why inheritors have been neglected by the impact industry. Aside from some of our partners including NEXUS and CSP, who offer programming to inspire and educate next-gens, the bulk of the sector focuses on today’s wealth owners. To those arguments, we acknowledge that different veins of impact take different periods of time to germinate. Some impact requires action and results now, and some require a patient approach.
Working to change the culture of multigenerational wealth will take time and patience. But the work is crucial. We like to imagine how the world would be different if Generation Pledge had existed 30 years ago. How would our current wealth owners interact with impact differently? How much suffering could be prevented? How would the threat of climate change look different? How would our world’s response to Covid-19 have been different?
If we look to a possible future, we see two paths of multigenerational wealth. One is where the culture of wealth preservation and growth stays the same. Another is where we change it and families use their incredible abundance to shift and build systems that create a better planet for all. Yes, it could take time to make this change. It could even take one full generation to make this happen, but imagine if all it took was one generation?
Natalie is passionate about bringing out the best in others in order to create positive change in the world. Natalie joined Generation Pledge after spending six years working to nurture a culture of better philanthropy and social innovation as the Director of Philanthropic Programs for the Australian Jewish Funders. Natalie has founded multiple projects focused on next-generation engagement, philanthropic leadership and social entrepreneurship and has experience facilitating community building and leadership development for change-makers from around the world.
Sunnie joined Generation Pledge after spending seven years working as a multimedia journalist. She began her career as a Toronto-based reporter for Canada's public broadcaster, covering local, national and international news. After moving to London, she joined The Economist as a writer and editor to develop the newspaper's digital strategy. Sunnie holds degrees in journalism and environmental economics. She is passionate about building digital tools to help the impact community share knowledge and increase reach.