Last week, Non-Profit Quarterly noted that the number of Giving Circles in the US were growing and wondered if this had implications for institutional giving. If you haven’t heard of them before, Giving Circles are usually comprised of a number of individuals in a community who pool their money and collectively make decisions about what causes the circle will support.
Lynn O’Connell, DFW’s grants chairwoman, belongs to four giving circles. She said, “No circle looks or acts like any other. Dues, size, structure, and mission are all a little different. It’s not just about writing a check, but the circles area a major force in helping people learn about philanthropy and about nonprofits.” Further, because giving circles have very little overhead, most of the money raised goes directly to grants.
I want to call attention to two things in this quote. First, low overhead being cited as a benefit. Despite efforts to reduce overhead as a criteria of effectiveness, it remains part of the conversation. The second is a little more promising – the fact that circles are educating people about philanthropy and non-profits. A trend in this direction can be benefit non-profits.
An additional positive perspective: “A previous giving circle study by the University of Nebraska found that people who join giving circles give more, volunteer more, and are more engaged in their communities.”
The financial support that giving circles provide is relatively small scale compared to large established foundations. However, they are apparently growing out of a distrust of donating through mediating entities.
It’s also interesting to contrast the giving circle form as it relates to the trend away from “intermediated” giving, which has weakened general funds in United Ways and community foundations and boosted the use of donor-advised funds. Perhaps this tropism is less about greater individualism and more a “no confidence” vote on past intermediaries.
Something I wondered was if we might see online giving efforts evolve from models like that of Kickstarter where many people give to projects, to virtual giving circles where those of shared interest and giving philosophies might cooperate regardless of geographic separation.
Since wealthier individuals might have more tax incentive to form and give through foundations, it is possible that some Internet based giving circles with thousands of members could emerge as influential in diverse sectors either competing with foundations or providing leadership in new directions. A geographic spread of members might also see giving less concentrated around urban regions.
I think that distrust of the honesty of institutions like the United Way is a big part of the equation. There is no way that a CEO of a non-profit should be paid over a million dollars a year.
There is a difference between justifiable overhead and feather-bedding. An organization that is actively doing things (like running a theater or a homeless shelter) can more easily justify overhead than an organization that just shuffles money around, scraping off a big chunk for themselves in the process.