Giving circles — generally small groups of people who make a charitable impact by pooling their money — are growing in popularity. If your not-for-profit isn’t already actively appealing to them, you need to get up to speed because they’re capable of providing substantial financial resources.

Collective decision-making

Giving circles sometimes are confused with crowdsourcing, where the number of donors can run as high as thousands of people. Giving circles, on the other hand, usually represent groups of friends, neighbors, family members and coworkers. In some cases, they’re made up of people with no other connection outside the group.

Regardless of who’s involved, a hallmark of giving circles is that they conduct research on potential causes and grantees and make a collective decision about what and whom to support. Immediacy of action is another common characteristic. In contrast to donor-advised funds, giving circle funds are unlikely to sit undistributed for long periods of time.

Some giving circles also are supported by community foundations. The foundations offer services to donors who want to establish charitable funds without assuming the administrative and legal costs typically associated with launching independent foundations.

Breadth of giving

Giving circles have tripled in number since 2007, to about 1,600 groups with more than 46,000 members in the United States, according to the Dorothy A. Johnson Center for Philanthropy. Approximately $1.3 billion in grants have been made by these groups.

Membership in giving circles tends to produce donors who give greater amounts and to a wider variety of organizations. The breadth of giving means more nonprofits receive support. That includes organizations that usually don’t receive much, or any, government or foundation support. Members often take active roles in the charities they support financially, which can be invaluable for smaller organizations with limited resources.

Giving circle funding can be particularly helpful if your nonprofit is trying to jumpstart new projects or programs. Getting in “on the ground floor” and seeing immediate results provides a positive experience for donors and may encourage further activity. These givers have the potential to become some of your most loyal supporters and passionate ambassadors.

Locating donors

Finding giving circles isn’t difficult. Charity Navigator hosts The Global Giving Circle Directory (in partnership with Grapevine and Philanthropy Together) on its website. The directory compiles information on more than 2,500 donor groups, supporting a wide range of causes. Contact us for help expanding your funding sources.

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