Giving circles: Maximize your giving potential

Jerilee Bennett/AP - Kim Crom pulls out her checkbook on April 15, 2011 to write a check to go into her envelope. A group of neighbors in the University Park area of Colorado Springs, Colo., have been getting together for six years for the giving club.

Laura Arrillaga-Andreessen is founder and chairman of SV2 (Silicon Valley Social Venture Fund) and Stanford Center on Philanthropy and Civil Society (PACS) and author of the best-selling book “Giving 2.0: Transform Your Giving and Our World.”

During the holiday season, many of us sit at desks with a pile of mail solicitations, writing checks, sealing envelopes and checking charitable giving off our seasonal to-do lists. This might provide an immediate high, but these activities fail to generate the immense satisfaction we could be getting from continuous giving. Instead, one way to give throughout the year — strategically and collaboratively, leveraging small pools of money and making your time matter more — is through a giving circle.

(Jossey-Bass) - The cover of Giving 2.0 by Laura Arrillaga-Andreessen

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Giving circles bring individuals together to give collectively, maximizing the financial, intellectual and emotional bang for every philanthropic buck. They help individual givers to become proactive rather than reactive and to practice structured rather than informal giving. Giving circle members, by virtue of collective action, are constantly learning and improving their group’s giving decisions.

Part of a tried and tested philanthropic model, giving circles are numerous with up to 800 across America. They collectively grant about $100 million a year, according to a 2009 estimate. However, their structures vary tremendously. Some are small and informal, such as Womenade, pooling volunteer efforts and sharing decision-making. Larger ones, such as Impact Austin, might employ staff to manage finances and administration. Some are housed in philanthropic institutions, such as Black Men and Boys and the Jewish Venture Philanthropy Fund. They can also be independent nonprofits with membership fees and minimum donation amounts, including SV2: Silicon Valley Social Venture Fund and Women Moving Millions.

However, giving circles share one powerful idea: that through collaboration and action-based learning, donors can do more with less, enhance their giving and create measurable impact.

Giving circles are easy to create. Gather a few friends, colleagues, family members or people from your place of worship and pool your giving resources — dollars, time, expertise or networks. You can even use an existing group, such as a book club, an investment club or a religious group, as the platform for a giving circle.

However, creating a circle is just the first step. Successful participation takes commitment and careful planning. First, there is the question of how to steward the group’s funds. You can set up a joint bank account, create a public charity or establish a donor-advised fund managed by a community foundation, financial institution, or your alma mater. Several universities now have funds. They often require, however, half or more of your grants to go to university programs.

A series of important questions need to be asked before you go any further:

What should be the size or range of each member’s financial contribution and will members be asked to make year-long commitments? If members have an equal say in how the money is distributed, it might make sense for everyone to give the same amount. Another option is to have tiered donation levels.

What will the group’s funding focus be? Will it donate to one cause or organization, a range of organizations working on the same issue, or a variety of causes, issues and organizations?

How will you give away the funds the group collects? Your giving circle might decide to make decisions based purely on the group’s research and discussions among the members. The group could also put together a request for proposals for nonprofits to submit grant applications.

How will you deal with differing opinions? Perhaps your group will require a unanimous or majority decision on what organizations or issues to fund.

How will you research the nonprofits you’re considering investing in and verify that gifts — particularly larger ones — will be used as the group intended? Depending on the grant size — in relation to the nonprofit’s annual operating budget — you may require a line-item accounting of how your funds are spent. Remember that staff time and salaries will probably be part of that accounting, so expect to see an appropriate amount of overhead costs as part of that report. For smaller grants, a written summary of what services or infrastructure needs were provided with your funds constitutes standard reporting practice.

What kind of feedback will the group ask beneficiaries to submit on how donations have been spent and what impact they have made? Depending on the grant purpose (programs, organizational capacity building, general operating), members could require mutually determined benchmarks at the beginning of the grant, as well as interim and final reports on progress meeting those objectives.

Can new members join at any time, or can they only sign up, say, once or twice a year? It’s important to think about the future and how the group will evolve. You might want to keep the group intimate, restricting membership to the people who first formed it. Or it could expand rapidly to become a powerful agent of change.

As with any collaborative enterprise, giving circle founders need to think about how to overcome obstacles such as changes in members’ interests, disagreements on a voting decision or instances where grantees fail to live up to expectations. Setting out procedures in advance for tackling such challenges can make it easier to smooth out any difficulties that arise. And, with the right tools in place, even unsuccessful grants can be learning experiences that help the group do better next time.

In fact, the most powerful aspect of giving circles is their ability to help individual donors become far more informed and strategic in all of their giving. By pooling both financial and intellectual resources, giving circles can turn funds that, given individually, might have limited impact, into a significant force for good. And when people give together, they have fun together and share the joy of seeing their giving make a real difference — not just during the holiday season, but year-round.

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