Giving Circles

Giving circles are of great importance within society, as they advance the status of philanthropic causes and create flexibility in giving, thereby widening the demographic span of those who wish to donate.

Definition

Giving circles are assemblages of people who “pool” their monetary and intangible resources, such as time and talent, together in order to address a common cause (Forum of Regional Associations of Grantmakers). Often referred to as “investment clubs”, or “social investment clubs”, and “sponsored by charitable organizations”, these groups, which vary in formality as well as “structure, size, and charitable focus”, often come together to create grants, “explore charitable options”, and come to conclusions regarding areas of particular interest (Forum of Regional Associations of Grantmakers; Giving New Hampshire).

According to the U. S. Securities and Exchange Commission, “An investment club is a group of people who pool their money to make investments. Investment clubs are usually organized as partnerships. Each member actively participates in investment decisions. After the members study different investments, the group decides to buy or sell based on a majority vote of the members. Club meetings focus on education and each member actively participates in investment decisions” (U.S. Securities and Exchange Commission).

Historic Roots

The existence of giving circles is a phenomenon that has become increasingly more popular in recent years, along with the growth of venture philanthropy, donor-advised funds, and other new “trends” geared towards raising charitable funds (About). As stated in the above definition, giving circles are simply “groups of people”, or essentially “networks,” that combine their resources in order to support a common charitable cause (Caumont 2005; Forum of Regional Associations of Grantmakers; Giving New Hampshire). The structures of giving circles span a wide spectrum. According to the Giving New Hampshire web site, they can be “very informal, nothing more than a group of friends with a bank account who meet in each others’ homes to discuss and decide on where funds will go” (Giving New Hampshire). This same source also demonstrates the opposing standpoint by stating that giving circles may also “have hundreds of members and governing boards, and may use a community foundation to manage their financial aspects” (Giving New Hampshire). The organization also notes that, “Members will often commit to participation in a Giving Circle for a number of years at an established dollar level” (Giving New Hampshire). According to Sonya Baker-Hallett of IndyStar.com, while giving circles are all different, “they all share a common focus on the power of giving together” (Baker-Hallett 2005).

While both the discussion and the creation of giving circles are becoming increasingly more popular within the United States, their existence is not entirely new (Baker-Hallett 2005). The concepts embedded within such structures of giving, such as giving on the behalves of individuals, have been in existence for years (Forum of Regional Associations of Grantmakers). Furthermore, while a sizable number of articles and sources discuss the topic of giving circles, few, if any, appear to pinpoint a specific period of time at which it gained recognition. Perhaps the most accessible statement in which any estimate on the topic’s existence is made can be found on the Forum of Regional Associations of Grantmakers’ web site, which states, “Throughout history, passionate individuals have joined together to make life better in their communities” (Forum of Regional Associations of Grantmakers). Supporting the notion that information regarding giving circles has in essence been “muffled” until recent years, Sonya Baker-Hallett of IndyStar.com quotes Jessica Bearman, “research and deputy director” of New Ventures in Philanthropy, which recently created a detailed report regarding giving circles, as stating, "The influence of giving circles has been spreading for years, but until now there has been little research to document it” (Baker-Hallett 2005).

Although giving circles, in essence, have been in existence “throughout history”, groups fitting the concept’s more modern definition are indeed increasing in numbers, suggesting a rise in this “trend” in the future (About; Forum of Regional Associations of Grantmakers). Of those currently in existence, 75 percent “have a relationship with or are "hosted" by an established nonprofit organization. Of those, 70 percent are hosted by a community foundation” (Baker-Hallett 2005).

Importance

Giving circles are of great importance within society, as they provide a number of benefits, advancing the status of philanthropic causes. The benefits of such entities exist on a variety of levels. On a superficial level, perhaps the most obvious benefits surrounding giving circles are that they increase the level of funding often available to charitable efforts and allow individual donors to have more of an impact when giving (Forum of Regional Associations of Grantmaking; Giving New Hampshire). By “pooling” their resources together, those who donate towards and wish to support charitable causes are able to make an even more profound impact, as larger sums of funding are able to produce better results within causes (Giving New Hampshire). Thus, as stated by Andrea Caumont of the WashingtonPost.com, “Giving circles enable people with less discretionary money to have a bigger impact on a particular issue, neighborhood or nonprofit” (Caumont 2005). This also, “proves that the wealthy are not the only ones who can make a differences in their communities” (Baker-Hallett 2005). Since their beginning, giving circles have proven to be an effective tool towards fundraising. In fact, they have raised, “more than $44 million in communities nationwide since 2000” (Baker-Hallett 2005). Another way in which giving circles prove to superficially be of importance to society is the fact that they tend to “appeal” to certain donors (Forum of Regional Associations of Grantmakers). Because donors are able to meet with others who possess similar interests and beliefs, and because they are able to “participate” in, or essentially control, the decision-making processes affecting their “areas of interest”, they are more likely to become involved in such charitable groups (Forum of Regional Associations of Grantmakers).

Giving circles also benefit society on a deeper level by creating flexibility in giving and widening the demographic span of those who wish to donate, regardless of common limitations such as age, race, gender and socioeconomic status. As revealed previously, Baker-Hallett's article summarized a new report released by New Ventures in Philanthropy (Baker-Hallett 2005). In doing so, the author demonstrated the ways in which giving circles surpass the obstacles commonly put into effect by factors such as age, race, and gender. Demonstrating the ways in which factors regarding age can be overcome, her article states, “Eight 5-year-olds make up the Daisy Do giving circle of Fort Gratiot, Mich. All members of a Daisy Troop, a division of Girl Scouts, the girls do chores to raise money and donate their funds at each Daisy meeting” (Baker-Hallett 2005). It also demonstrates the ways in which giving circles overcome limits created by race by stating, “In Baltimore, the 15 young black professionals of The Change Fund each contribute a minimum of $250 a year and meet regularly to learn more about philanthropy in their area. Only in its second year, the fund already has granted $6,000 to youth organizations in Baltimore” (Baker-Hallett 2005). Another notable change surrounding the existence of giving circles is the fact that women are becoming more noticeable in terms of charitable forces. In fact, in reference to giving circles, Baker-Hallett states that, “The majority (57 percent) are women-only or majority female, and 42 percent involve an even mix of men and women. Just one giving circle profiled in the report is for men only” (Baker-Hallett 2005). Yet, some dispute this argument (Forum of Regional Associations of Grantmakers).

Regardless of their causes, it appears that giving circles are becoming a “preferred” choice of many individuals. This viewpoint can be demonstrated by Jessica Bearman’s statement that, “Giving circles are all about the members. You can turn just about any social group into a giving circle -- church groups, happy hours, play dates and poker nights can all become giving circles by collectively giving to charities in the area” (Baker-Hallett 2005).

Ties to the Philanthropic Sector

Giving circles are tied to the philanthropic sector in that the sole purpose behind their existence is giving. Essentially, all funds created through their existence are placed towards the benefit of other, charity-deserving groups. An example of this breakdown was provided in Sonya Baker-Hallett’s article on the topic. Revealing information unleashed in the report that was recently released by New Ventures in Philanthropy, she states, “Giving circles give to a range of causes, including youth development (34 percent), women and girls (27 percent), human services (25 percent), and mental health and crisis intervention (20 percent)” (Baker-Hallett 2005).

Key Related Ideas

Venture philanthropy ”refers to the nonprofit sector's application of certain practices used by venture capitalists when investing in new business ideas” (Center for Venture Philanthropy). First practiced by the Peninsula Community Foundation in 1984, the term was developed in 1969 by John D. Rockefeller (Center for Venture Philanthropy). Some of the key concepts surrounding venture philanthropy are “long-term business plans”, “managing partner relationships”, and ”exit strategies” (Center for Venture Philanthropy).

Investment clubs are similar to giving circles in that they are groups “of people who pool their money to make investments” (U.S. Securities and Exchange Commission). They are also, “Usually organized as partnerships” (U.S. Securities and Exchange Commission). According to the U.S. Securities and Exchange Commission, “Each member actively participates in investment decisions. After the members study different investments, the group decides to buy or sell based on a majority vote of the members. Club meetings focus on education and each member actively participates in investment decisions” (U.S. Securities and Exchange Commission).

The concept of donor-advised funds is best described as stated on the web site About.com. According to the web site, “Donor advised funds are philanthropic investment funds established through a charitable gift but where the donor is able to ‘recommend’ how the fund is used and what charities the fund can support” (About). The site continues by explaining, “A donor contributes funds to a charity that manages assets of many donors in individual accounts…Each type of organization offers donor-advised funds but each also has unique rules for minimum donation, minimum annual distribution of charitable gifts and sometimes the type and of charities that can be supported. Upon establishing the gift fund, the donor receives tax benefits but will not receive any additional tax benefits as gifts are made from the fund in the future” (About).

Related Nonprofit Organizations

  • The Giving Circle of Hope, at www.members.cox.net/strup/about.htm, is an organization that seeks simply to “make a difference in the community with monetary grants and gifts of time” (Giving Circle of Hope). Associated with the North Virginia Community Foundation, the organization allows its members to contribute as little as “a dollar a day” (Giving Circle of Hope).
  • The Jewish United Fund/Jewish Federation of Metropolitan Chicago, at www.juf.org/funds/giving.asp, provides information on a number of methods in which funds are raised for charitable purposes. The organization’s web site defines giving circles, the ways in which they function, and the benefits of such organizations and attempts to reveal information regarding giving circles that are currently in existence.
  • Universal Giving, at www.universalgiving.org/about_us/services-universal.jsp;jsessionid=85F05D1CBB1A08A0AF1E8DA4A5BEE083, is an organization that provides those who are currently involved or wish to become involved in giving circles a medium of donating towards deserving charitable sources. With many of its resources online, it allows individuals to work with others who have common values and provides links to other sources geared towards charity.

Related Web Sites

The Forum of Regional Associations of Grantmakers’ web site, at www.givingforum.org/givingcircles, provides viewers with a wide spectrum of information regarding giving circles as well as their benefits and reasons for existence. The site also provides a number of links to articles regarding the subject as well as links to other sources including downloaded articles.

Giving New Hampshire’s web site, at www.givingnh.org/ways/circles.html, defines giving circles as well as their benefits. The site describes ways in which to create giving circles. The site is most beneficial in that it also provides information surrounding alternative ways of donating towards charity.

The Washington Regional Association of Grantmakers’ web site, at www.washingtongrantmakers.org/WG/Give/Giving/Giving_Index.asp, provides quality information regarding giving circles and their existence. Like other sites covering giving circles, it provides instruction for creating such charitable forces as well as links to other organizations associated with this topic.

Bibliography and Internet Sources

About. “How Donor-Advised Gift Funds Work for Donors and Charities.” About.com. [updated 2005; Accessed 5 December 2005]. Available from www.nonprofit.about.com/od/donors/a/donor_advised.htm?rd=1.

Baker-Hallett, Sonya. “Giving Circles’ Offer a Way to Make a Change.” IndyStar.com [updated 25 May, 2005; cited 6 December 2005]. Available from www.indystar.com/apps/pbcs.dll/article?AID=/20050525/ZONES03/505250353/1023/ZONES03.

Caumont, Andrea. “Giving Funds Provides Flexibility.” WashingtonPost.com. [updated 6 November , 2005; cited 6 December, 2005]. Available from www.washingtonpost.com/wp-dyn/content/article/2005/11/05/AR2005110500289.html.

Center for Venture Philanthropy. Definition & History of Venture Philanthropy. Accessed 4 December 2005. www.pcf.org/venture_philanthropy/definition.html.

Forum of Regional Associations of Grantmakers. Accessed 3 December 2005. www.givingforum.org/givingcircles/allabout.html.

Forum of Regional Associations of Grantmakers. Welcome to the Giving Circles Knowledge Center! Accessed 3 December 2005. www.givingforum.org/givingcircles/.

Giving Circle of Hope, The. About the Giving Circle of Hope. Accessed 7 December 2005. www.members.cox.net/strup/about.htm.

Giving New Hampshire. Giving Circles. Accessed 3 December 2005. www.givingnh.org/ways/circles.html.

U.S. Securities and Exchange Commission. Investment Clubs. [updated 2 March 2001; Accessed 4 December 2005]. www.sec.gov/answers/clubs.htm.