Here is what you do not need in order to start a giving circle:

Wealth.  Background in philanthropy.  A big ego.

“I know some people tend to get hung up on the little things – should we take credit cards?  Should we admit men?  How should we write the mission?  What’s our vision?”  Hali Lee, founder of Asian Women Giving Circle, explains the factors that get in the way when people consider starting up their own group.  “You need to just do it,” she says.  “Get your group together, figure out your unifying theme and decide on the basics.”

AWGC founder Hali Lee (center) with 2 other members

Marsha Wallace concurs.  Wallace’s giving circle, Dining for Women, is now a 501(c)3 organization with 200 chapters.  But when she started her group in 2003, she was guided solely by her strong commitment to women’s rights in developing countries.  “The inspiration was not to create a national operation – I never would have started if I had known that!  I didn’t know what it meant to be a nonprofit. I had never heard of giving circles.”

Though Asian Women Giving Circle has approximately twenty members and Dining for Women is now a nationwide operation, both are part of a growing trend in charitable giving: giving circles.  Giving circles allow members to pool donations in order to fund a specific cause.

Dining for Women members in Atlanta

There are two essential factors if you choose to start a giving circle:

A cause you care about, deeply.  Friends.

Feeling inspired to start up a giving circle of your own?  Based on conversations with founders and members of several giving circles, we’ve compiled some basic tips for success, and noted the challenges that you should prepare to confront.  But keep in mind that giving circles are a bottom-up, grassroots form of charitable giving.  This means that each one is unique; you can develop a giving circle that meets the particular needs and focus of your group.

1.         Choose your focus

Most giving circles deal with local, civic issues since these are the ones that are most directly experienced by members.

Lee founded Asian Women Giving Circle of New York City because she felt that the needs of the Asian-American community were not being well-funded.  As the director of a nonprofit dealing with domestic violence in the Korean-American community, she struggled to find sources of funds.  “We couldn’t raise money in the Korean community, because it was considered taboo to talk about these issues.  I knew about charities for other groups – African-Americans, Latinos – but nothing in the Asian community.  So we had to compete for funds from big, mainstream white foundations.”

Other groups refine their focus over time.  Birmingham Change Fund, a giving circle of African-American young professionals in Birmingham, Alabama, identified three areas of focus when they founded their group in 2004: education, health care, and economic development.  Since 2010, the group has decided to focus solely on education.  “There’s such a huge need,” explains founding member Crystal Goodman.  “The issues in the schools can seem overwhelming.  We want to keep learning, working to understand what we can do.”

2.         Set the ground rules – time, talent, treasure

Giving circles range in the level and kind of commitment.  Members must agree to make a financial donation of some amount, and will need to decide how often to meet.

Some giving circles have a two-tiered membership structure, allowing donors who make more substantial contributions to vote on grant awards.  Cleveland Colectivo, a group founded in 2004 to address civic issues, welcomes donations and participation at all levels, but requires members to donate $100 quarterly if they wish to vote on grant recipients.

BCF members participate in service and trainings

Since giving circles often have their origins in friendships and connections between members, meetings often combine socializing with the business and education of the group.  At Dining for Women, monthly meetings involve both a potluck and an educational presentation.  Many groups also have a few major annual events, such as a grantmaking ceremony.

Socializing often extends beyond the meetings.  Asian Women Giving Circle focuses on supporting artists dealing with Asian-American concerns; members often meet to attend exhibitions of grantees.

Some giving circles include a service component.  In addition to making a financial contribution, Birmingham Change Fund members pledge to participate in service with one of their grantee organizations.  “We want our involvement to be different than a one-shot campaign, when you just walk away from a service project,” explains Goodman.

3.         Decide on a financial set-up

There are three basic options for giving circles in planning how to keep the money raised by members: to establish 501(c)3 as an independent nonprofit; to work with a host foundation; or to remain unhosted.

According to Prof. Angela Eikenberry of University of Nebraska at Omaha, who has conducted extensive research on giving circles, only 12% of giving circles become nonprofit organizations.  These tend to be the largest groups, and often require sizable donations.  Dining for Women (DFW) is an example of this type of giving circle. As an independent nonprofit, DFW has established a board and recently hired an executive director.  10% of donations now support DFW operations, with the remaining 90% donated to specific organizations.

Most giving circles choose to work with a host foundation, as a donor-advised fund.  This allows members’ donations to be tax-deductible, and can be mutually beneficial for both host and giving circle.  Giving circles dedicated to local issues often work under the umbrella of a community foundation.  This is the case with the partnership between Birmingham Change Fund and its host, the Community Foundation of Greater Birmingham.  “It’s been a good fit for us,” explains Crystal Goodman.  “They’ve allowed us flexibility in deciding on our grants, and helped us understand the world of nonprofits.  And we’ve been valuable for them, in addressing the needs of African-American youth.”

The least formalized financial arrangement is for giving circles to remain`unhosted.’  Once a charity is agreed upon, each individual member writes his/her own check to that organization.  Some unhosted giving circles keep pooled funds in a bank account.  The disadvantage of this arrangement is that members cannot claim tax deductions on their contributions.

4.         Educate yourselves

Once her giving circle had been launched, Marsha Wallace explains that she became aware of needing to educate herself – not only by doing research on issues she wanted Dining for Women to support, but on best practices of charitable giving.

“The inspiration became a path,” she says.  “I feel like I’ve been in a graduate program, learning what I needed to learn as we went along.”  Wallace and her friends developed an understanding of the UN Millenium Development Goals; now, a separate committee conducts research on worthy organizations and issues for DFW to support.

Giving circles also need to understand the nuts-and-bolts of fundraising.  Since Birmingham Change Fund members were new to philanthropy, they worked closely with Darryl Lester of HindSight Consulting.  Over the years, members have participated regularly in national and regional conferences on organized philanthropy, such as Community Investment Network Leadership Conferences.

As giving circles have increased in popularity, online resources now exist to provide support.  The Giving Circle Knowledge Center (www.givingforum.org/givingcircles) is sponsored by Forum of Regional Associations of Grantmakers.  This site provides tips, networking, and sample documents for those interested in starting a giving circle.

Farther down the road…

As your giving circle evolves, inevitably you will encounter bumps along the road.

5.         Leadership

The majority of giving circles rely on volunteers.  Some have no official leadership positions; others designate leadership positions such as president, treasurer and secretary.

Asian Women Giving Circle has made the choice not to designate official leadership roles.  But Hali Lee admits that often someone needs to take the lead: “It’s nice to have the duties informal, but the operational grind can be challenging, especially at the start.  I was willing to do the gruntwork – making copies, putting charges on my credit card.”

Lee adds that some members of her giving circle would like to establish committees.  “I know that committees are good for efficiency, but I’m resisting with all my heart.  It’s so deadly to be part of a nominating committee, to have long processes.”

6.         Membership: making new friends, but keeping the old

At Cleveland Colectivo's anniversary party

Successful giving circles endure, in spite of the fact that Life Happens.  Judy Wright co-founded Cleveland Colectivo in 2004, with other concerned citizens of Cleveland, OH.  She reflects on her group’s changes over time: “Our group is largely in our thirties, so it has been challenging to maintain momentum as many of our group members have been getting married, having babies, changing jobs throughout our process.  People come and go.  If someone has a vital role in the process and is no longer able to participate, that area of the process can suffer.”

Paradoxically, the success of a giving circle can lead to growing pains.  Asian Women Giving Circle has considered options for growth, such as becoming a 501(c)3, starting other giving circles, or even starting a women’s foundation.  “There’s so much untapped money, and the need is so great,” says Lee.  “But we want to find a way to keep our kitchen table spirit at the same time that we want to have a big impact.”

The essential rule:

7.         Keep it fun!

Time and time again, members of giving circles speak warmly of the relationships they’ve made over the years – the amazing people, the sense of family, the connections that have endured over time.  This relates back to the group’s purpose for existence.  As stated by Crystal Goodman of Birmingham Change Fund: “Giving has to do with the heart.”

Did you catch our first article on giving circles?

Get more advice and inspiration from giving circle founders in “Together We Make a Masterpiece:”