Giving Back Through Giving Circles

Simple, personalized charity groups with the power to make big changes

A few years ago, a group of urban residents found themselves in a faltering city. Crime, unemployment, failing schools and vacant lots had turned Cleveland into a place thousands of people decided was best seen through the rearview mirror. But rather than ditch their hometown, these friends decided to make it better.

They formed a giving circle, one of 400 or more around the country that pool money and donate time to nurture neighborhoods and support local causes. Such circles generated nearly $100 million between 2002 and 2006, according to surveys by the Forum of Regional Associations of Grantmakers. Because many circles fly under the radar, the actual amount is probably far higher.

Why form a giving circle when you can dole alone? "I could write a check to the Cleveland Foundation and they would do all the work, but then I'd be so distant from it," says Walter Wright, a founder of the Cleveland circle, which calls itself the Cleveland Colectivo. By giving money directly to causes close to home, Wright says, "we have an understanding of what's going on in the community and can build relationships."

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Giving circles are spontaneous. Wright started the wheels rolling on the Cleveland Colectivo (opens in new tab) (loosely taken from the Spanish word for a bus on which passengers share the fare) with a casual suggestion to friends. "I sent out an e-mail saying 'Why don't we throw out some money and find something to get behind -- let's just do it.' " That's the impulse that sparks most circles, according to More Giving Together, a report by the Forum.

In the Colectivo's case, "we wanted to make a difference at a grass-roots level, to plant seeds that will later blossom into real change," says Lee Chilcote, a founding member. So far, the group -- now 25 strong, with another ten volunteers -- has contributed a total of $21,000 to ten projects, including parenting classes at a refugee center, an art program for juvenile offenders and a program to strengthen father-son ties in the Latino and African-American communities.

There are no rights and wrongs in forming a circle. Like most clubs, giving circles consider socializing to be part of the program. "Members talk about their lives, connect on a personal level, then talk about the community and what its needs are," says Daria Teutonico, of New Ventures in Philanthropy (opens in new tab), an arm of the Forum. Most groups meet in someone's living room or gather at a local restaurant.

Sooner or later, though, even the gabbers have to get down to business. "What's so appealing about circles is that there's no right or wrong way to do them," says Buffy Beaudoin-Schwartz, of the Association of Baltimore Area Grantmakers. Small circles, including the Colectivo, often expect members to take turns or share chores, such as running the meetings, bringing food to activities and soliciting grant applications. Large groups -- say, 80 or more members -- find it more practical to have a president, who leads a board and runs the meetings, as well as committees that research grants and make recommendations.

Washington Womenade (opens in new tab), a Washington, D.C., circle that has inspired others around the country, limits its planning to a few potluck events a year. Members invite friends and colleagues to bring a dish and a $35 donation to a party, held at a member's home. The group uses the proceeds to help needy people in the D.C. area pay their bills.

Giving circles support local issues and groups. The choices are plentiful, but most circles stick to local issues or those important to a particular ethnic group or interest. For instance, the Latino Giving Circle (opens in new tab), in Chicago, sponsors projects that provide services to the local Latino community, whereas the Natan (opens in new tab) circle, in New York City, addresses Jewish interests.

Circles also try to help groups that traditional philanthropies overlook -- say, small nonprofits for whom a few thousand dollars represents big bucks and those that are "high-risk or entrepreneurial," according to a report on giving circles by Angela Eikenberry, an assistant professor at Virginia Tech. Some give money directly to individuals, although that precludes claiming a tax deduction on contributions.

One of the Colectivo's first grants literally went toward planting seeds for a better Cleveland. The circle contributed $750 to the owner of Lucky's Café, in the up-and-coming Tremont neighborhood, to help her put in a garden in a vacant lot next door. Now, both café and garden serve as neighborhood showpieces. Teens grow veggies there under the aegis of City Fresh, an initiative that promotes local farming, and Lucky's uses the produce to turn out chic dishes, such as ratatouille on cheddar polenta. Says Heather Haviland, the chef and owner, "You can't get much more local than taking it and cooking it right at that moment."

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Giving circles handpick their beneficiaries. Just how do you find people or groups in need that everyone else has overlooked? Foundations are a good starting point for suggestions, as are newspapers, workshops on philanthropy and your own members. A little marketing of your circle -- with, say, fliers or notices in a church bulletin -- lets prospective grantees know you exist. Once you have a few prospects, check them out by making a site visit or invite them to your next meeting.

At first, Colectivo members thought they could find enough grant candidates through their connections in the nonprofit world. Now, they solicit applications on their Web site, with fliers and by word of mouth. Of the 70 or so applications they receive per year, "we narrow them down to 12 and invite those people to present their case to us," says Noelle Celeste, one of the members.

If you think your book club has a hard time agreeing on its next novel, imagine choosing among worthy causes in your own neighborhood or in an area that desperately needs help. Most circles give every member a vote, and smaller circles try to reach consensus. The Colectivo aims for decisions that represent at least 80% of its members; usually, the vote is unanimous.

Last year, members of the Clarence Foundation (opens in new tab), one of the relatively few circles that directly fund international projects, spent ten days visiting groups in the slums of Nairobi. "We were all incredibly moved by the groups and how desperate their circumstances were, and we were so impressed with their leadership," says Margae Diamond, of Schwab Charitable, which sponsored her donation. In the end, the visitors abandoned their original plan to donate most of the money to one group and divided it among six.

Annual cash contributions can be lowered for committed members. Despite their social nature, giving circles expect members to kick in enough bucks to constitute a serious commitment. In Creating a Women's Giving Circle (opens in new tab), Sondra Shaw-Hardy puts the magic number at $1,000, a sum big enough to have an impact on recipients and also to let circle members see themselves as philanthropists, as opposed to dabblers. A few circles ask as much as $5,000 or $10,000 annually from each member or set tiers for contribution amounts. The average donation is about $3,000.

There's no rule, however, against setting a lower minimum or allowing two or more people to combine their donations for a single membership (and, usually, a single vote on grants). The Colectivo exacts $400 annually from each of its paying members, most of whom make modest salaries at nonprofits. Members of the Latino Giving Circle pay $250 twice a year.

Don't forget to factor in administrative costs, such as for letterhead station-ery, a Web site -- or even the wine and cheese at meetings. Although many circles initially ask members or local companies to pick up those costs, most end up allocating a portion of donations to paying overhead or increasing the annual fee.

Giving circles can also be volunteer circles. Making site visits, sorting through proposals and agonizing over grant-making are effort enough, but about two-thirds of the circles surveyed by the Forum reported that their members also volunteer. Many also contribute extra money or provide pro-bono services, such as technical or legal assistance.

The Full Circle Fund (opens in new tab), founded by venture capitalists and entrepreneurs in the San Francisco Bay area, says volunteering is central to its mission. "The members knew they had more to give than just checkbooks," says Amy Lesnick, the fund's executive director. "They wanted to use their skills and knowledge to make a difference." In addition to donating $1,000 to $25,000 each a year, members work with community leaders to improve housing, education, technology and the environment in the Bay Area.

Colectivo members, on the other hand, have increased their involvement gradually. Members learned about different parts of the city by researching grant projects and pitched in after getting to know the nonprofits, including those that didn't score grants. Each activity led to something else, says Celeste. "That's what it's about -- the ripple effect."

So, is Cleveland all fixed? Hardly. Its problems, long in the making, won't be resolved anytime soon. Still, Lucky's urban garden shows that even small projects can bloom into something lovely. Says Haviland, "One little boy got to watch beans grow. He was 10. He had never eaten a bean. He would show up every single day to water them. All summer, he could have been doing nothing but watching TV. When he saw the beans growing, he thought it was the most amazing thing. One day, he said to a friend, 'Look! We make magic over here.' "

Jane Bennett Clark
Senior Editor, Kiplinger's Personal Finance
The late Jane Bennett Clark, who passed away in March 2017, covered all facets of retirement and wrote a bimonthly column that took a fresh, sometimes provocative look at ways to approach life after a career. She also oversaw the annual Kiplinger rankings for best values in public and private colleges and universities and spearheaded the annual "Best Cities" feature. Clark graduated from Northwestern University.