Giving circles are a form of community philanthropy in which groups of individuals get together, coordinate their charitable giving, and typically have a lot of fun doing so. This may be done informally as described below or more formally in the form of a nonprofit grantmaking organization or as a fund of a 501(c)(3) sponsoring organization, like a community foundation (e.g., a donor advised fund).
A giving circle may serve as a great way for friends and/or like-minded individuals to get to know one another, be more active and informed in their charitable giving, and develop relationships with prospective grantees. Instead of simply responding to solicitations on a case-by-case basis, an individual can have a coordinated giving strategy. A giving circle can thereby turn a modest donor into a philanthropist.
An informal giving circle might implement its giving strategy over a few dinner meetings with the result being each member making his or her individual gifts as part of the coordinated effort. For example, Alice, Bob, Carol, and Edward each decide to give $500 this year for a combined total of $2,000. After some discussion, they decide to collectively grant $250 to each of 8 organizations that cover their mutual giving priorities. Rather than each member making a check out to each of the 8 charities for $62.50, they decide that each member will make two donations on behalf of the giving circle, each for $250.
By identifying the giving circle in the check’s “For” line, the charity may recognize the gift as coming from a philanthropic group rather than from a single individual. This may allow members of the giving circle to develop a deeper relationship with the charity and make the giving an even more rewarding experience.
One warning about the informal giving circle – members must be careful to avoid engaging in (1) activities that might result in personal liability (they are not protected by a corporation's limited liability shield), and (2) activities that require formal registration (e.g., charitable solicitations beyond the membership). For example, members of an informal giving circle would probably not want to host a major fundraising event, apply for a grant, or instruct grantees on how to manage the gift.
Asian Americans/Pacific Islanders in Philanthropy (AAPIP), an affinity group of the Council on Foundations, is leading an effort to build democratic philanthropy in part by promoting and supporting giving circles throughout the country that help get support to AAPI communities that are disproportionately underfunded by the philanthropic community. AAPIP has been able to leverage AAPIP-affiliated giving circle funds with some matching funds provided by other institutions, giving circles, and donors. If you’re interested in building a giving circle that benefits local AAPI communities, I recommend that you review Giving Back, Giving Together: Starting a Giving Circle in your community and contact AAPIP.*
* Disclosure: AAPIP is a valued client of NEO Law Group.
Also see our previous post: The Impact of Giving Circles
More on Giving Circles:
Donors Turn to Giving Circles as Economy Drops, NPR (5/14/09)
Giving Circles, Time (11/5/08)