The Rich Appeal of Giving Circles

I recently learned of a new grassroots phenomenon in philanthropy that is apparently growing by leaps and bounds: the Giving Circle. Ranging in size from a dozen to several hundred people, Giving Circles are informal social clubs dedicated to researching social needs and then pooling individual donations in order to have a greater impact. The clubs resemble quilting circles, bake sales and church picnics – a way for groups of ordinary people to come together and contribute their talents and money to a community cause.

Instead of everyone writing $50 checks to their favorite charities, Giving Circles represent a new kind of hands-on, locally driven philanthropy. People become personally involved in choosing issues to address. They research the issues themselves and discuss their choices with fellow club members. And by pooling their money, a Circle can give significant sums of money, often for very specific local purposes.

The rise of Giving Circles is described in a new report recently published by the Forum of Regional Associations of Grantmakers, a Washington, D.C., group. The report, “ Giving Together: A National Scan of Giving Circles and Shared Giving,” brings this innovative new style of social investment into clear focus. The report identified 220 giving circles in 39 states around the country, but selected 77 circles representing more than 5,700 donors for the purposes of the study. Most of the groups have been around for fewer than five years, and averaged between 20 and 30 members. Members of the Giving Circles included people of all ages and income levels. Together, the 77 Circles had given $37 million.

While the focus and structure of each group vary, most had some common features: Donors pool their money. Donors collectively decide what the money will go toward. As a group, donors educate themselves about community needs and grantmaking. And donors participate for both social and philanthropic reasons. A few examples give you an idea of how the Circles work:

Top-down giving by large foundations is often afflicted by bureaucratic hurdles, delays and a n excessive regard for how grant priorities will be perceived. Giving Circles strike me as a novel way to channel money to worthy local causes that are too small, obscure or unproven to be seen on the radar of traditional philanthropy. People can also connect with their neighbors, learn more about their communities, and learn how to be effective givers. It is probably no accident that the rise of Giving Circles parallels the growth of the Internet. Both are famous for creating social value through decentralized, bottom-up modes of organization. This suggests to me that Giving Circles may have a very bright future.

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