A giving circle is a group of philanthropic individuals that come together to pool dollars collectively and decide where to donate the funds. Most giving circles are started by a small group of interested friends, family members, coworkers, and neighbors who all have a shared interest in giving back to their community. Each circle decides its individual operational structure – how much money will be collected by each member, how often the group will meet, the nomination and voting process for each organization, and the overall goals and objectives of the circle. Here are a few things you should know about this increasingly popular concept:

1. Giving circles are growing

   Giving circles have been around for many years, but the number has tripled in the US over the last decade. There are approximately 150,000 members in the US and that number is expected to grow to 350,000 over the next five years. At that point, giving circles are expected to award approximately $1 billion in donations.

2. They promote a philanthropic culture

   Members of giving circles are already interested in giving back to the community, but the operational structure of the organization enables them to donate on a more regular and/or frequent basis. Depending upon the rules of each circle, members are donating annually, quarterly, and even monthly in some cases.

3. Giving circles embody strategic philanthropy

   Each giving circle establishes a specific mission or area of focus. They keep this focus in mind when going through the vetting process of which recipient will receive the circle’s funds. The giving circle is looking for an organization to be as transparent as possible. By showing the members exactly how their money is going to impact the organization, the non-profit will set themselves apart and better their chance for becoming the chosen recipient.

4. They strengthen communities

   Giving circles are one of the best vehicles to make an impact on a local community. Rather than engaging with organizations that have notoriety on a national level, they promote philanthropy at a grassroots level and seek to learn about issues that are important to their specific community. Members of giving circles not only give money directly to organizations within their communities, they tend to volunteer their time as well. The donations of both money and time foster an even greater sense of engagement within giving circles and the communities they’re founded in.

5. They distribute their money quickly

   Roughly 80 percent of the money collected in a giving circle is given back to a charity within 18 months of being collected. It’s also common practice for a giving circle to notify the recipient immediately following the group’s decision. This way, they can let the “winning” organization know when to expect the money. Now more than ever, it is crucial that organizations explore options than can allow for funding to be received in a timely manner. Giving circles are a great vehicle to make this happen.

Communication is key

The Coronavirus pandemic has proved to be an especially trying time for non-profits around the world. The need for funding is greater and with unemployment at staggering levels, the donor pool is smaller. Organizations should be aware of the giving circles that exist in their community, develop relationships, and tap into them for support. It’s important for organizations to advocate for the opportunity to speak to members and share their mission, values, and how funding help make a deep impact in the local community. The support of a giving circle could prove to be critical in a time when funds are even harder to come by.

Sources: Medium.com and Non-Profit Quarterly

The information in this paper is not intended as legal or tax advice. Consult with an attorney or a tax or financial advisor regarding your specific legal, tax, estate planning, or financial situation.