A philanthropic giving circle could best be described as a book club or discussion group meets investment group. I’ve been fascinated by the idea of giving circles for some time as a way to bring together friends, or donors, to collectively give even more.
While giving circles appear to vary dramatically, they all share the same philosophy—that by pooling money and working collectively to decide where money can make the most impact, donors can make their money work harder and give more.
To me, the magic of a giving circle is that it can vary so much in size, structure and focus. Each giving circle sets the amount to donate, goals, size, issues to focus on and make decisions through democratic processes.
It could be a group of classmates, church members, work colleagues, or just a circle of friends who want to give collectively to make an impact. It could have a $1 million donation minimum per year per member, a more accessible $1 a day contribution, or even an anonymous donation box where each member simply contributes what they are able to give when they meet.
It might be a small, informal group that meets each month in living rooms, to drink wine and eat cheese (when all good decisions are made!), while sharing ideas to decide where the funds should go. Others are highly organised groups with hundreds of members that generate thousands of gift dollars and sometimes are big enough to have their own not for profit status. They may have detailed investment criteria and even paid staff to manage this. For example, the Impact100 Melbourne Giving Circle, Melbourne’s collaborative giving circle supporting local not-for-profits. Each round, 100 donations of $1,000 are combined to make one grant to one charity totalling $100,000.
Benefits of giving circles
Members are able to find ways to give more strategically, it educates those involved in a shared area of interest, where they can become engaged, active and connected givers. It also encourages learning of best practice in philanthropy – including effective grantmaking and evaluation, to collectively decide where the group’s money can make the most impact. It’s a grassroots, bottom-up alternative to traditional philanthropy via a foundation.
It can also expose members to “off the beaten track” charities and causes they might not otherwise have heard of. It also makes a donor more proactive, rather than simply reacting to donation requests.
Plus, as with most things, giving is more fun when done together!
Starting Your Own Circle
Starting a giving circle its pretty straight forward. It only takes a few people with a shared passion to create a giving circle. There are a lot of resources out there to help guide you, but below I have summarized eight steps that might help you explore how a giving circle might be structured.
The Gift Trust is also able to provide support to groups giving more than $5,000 per year with admin, due-diligence and fund management. Contact us if you’d like to explore ways to make a giving circle easier.
Eight steps to starting a giving circle.
Reach out to family and friends to discuss the idea of a giving circle to see if there is interest. Discuss what areas you may want to focus on and set a date for the first meeting.
2. Set structure /ground rules.
At the first meeting create the rough giving circle structure. Explore questions like:
- How often will the members meet and where?
- What contributions will you make and will everyone give the same amount? Many circles choose one set level contribution so that all votes are equal, while others find that a tiered giving structure (e.g based on a % of your income) or an anonymous cash gift box can meet their needs.
- And, most importantly, what will you call your giving circle!
3. Establish a mission
Agree upon goals and intentions - what problem do you want to address and what would you like to accomplish?
4. Decide where your group will put your money while you decide where you will donate it.
Will you set up a bank account? Could you partner with an organisation that can administer your funds (The Gift Trust can offer this service). Will you create a private foundation if you’re giving larger amounts (e.g maybe suitable if you gift over $1,000,000 per year) or can you explore other options that suit the group?
Some other things to consider include:
- Growth. If you all make one large annual donation once a year, could these funds be invested for growth during the year while you decide where to place these funds?
- Donation tax credits. If those in your circle want to get a donation tax credit for their donations (up to 33% of their donation), you might want to ensure a process that enables them to do this. As a registered charity, a gift account with The Gift Trust can help make this easier. If your group is giving more than $5,000 per year - equivalent to 10 members giving $500 per year/ $42 per month – talk to us about options. Each donor will receive an annual receipt in their name for any funds they place into this Gift Account.
How much do you want to give away annually? How large or small do you want your grants to be? When do you want to make these gifts? After you’ve set these guidelines, make sure to check in with members to make sure they are willing to make this commitment.
6. How will you select grantees?
What will the process be for nominating charities? You might all bring a charity to discuss, or develop a theme in your meeting and identify that charity you want to support through research at the Giving Circle. You may even decide to ask for written applications from a charity too.
There might be other parameters you put in place:
- Will it be organisations which at least one member is familiar with?
- Will you focus on a local community or international giving?
- Does the recipient need to be a registered charity?
- Will you focus on small to medium sized charities or larger charities only?
- Will you fund start-up charities or causes?
- Will it be a majority-rule process for deciding where to place the funds?
If you want to take this a step further, your circle could also meet with those charities you are interested in supporting to find out what they do, how they do it, and how efficiently they spend their funds. Conducting site visits with potential grantees can be helpful in the grantmaking process. This is the time to ask questions, get clarification, and see the organisation in action.
If your group is unsure of how to assess an organisation, you may want to consider asking someone with a background in grant making to give the group assistance. Again, The Gift Trust is available to our Gift Account holders to provide expert philanthropic advice and guidance if required.
7. Make grants
Following the group’s decision, get someone from your group to alert the recipient and let them know when they can expect a donation (that’s a pretty fun part, so make sure to share this job around!). If you have met with an organisation but aren’t going to fund them, it is good practice to let them know of your decision too.
Reflect on your goals and also seek feedback from the organisations you have funded to see how things have gone. You might also want to reflect as a group to see how the first few grants go so you can adjust your processes to ensure you are all enjoying being part of the giving circle and want to continue to be involved.
Interested in exploring this further?
I can't wait to start a giving circle with my friends and family. If you are keen to explore this further, we would be happy to talk further with you about Giving Circles.
The Giving Forum also provides some excellent resources for starting a giving circle.