Giving Circles: The Future of Philanthropy?

I wasn’t aware that the Giving Circle was an actual concept within the philanthropic sector until I tuned into Episode 33 of the Positive Impact Philanthropy Podcast. Sara Lomelin, Executive Director of Philanthropy Together joined Host Lori Kranzcer to discuss the impact of Giving Circles Latin American communities in the US. Sara talked about her experience as a Latin American woman in the US and the impact that Giving Circles had made to real people by ordinary individuals. That you didn’t need to be super wealthy to give charity. It was possible to do it small, do it regularly and still see an impact in the community and groups you care about.

I remember listening and thinking, I have seen this all my life but I didn’t know it had a name. It was my earliest conceptual knowledge of charity but just seemed like one of things you participate in, a form of community that you were initiated into and without a name or formal structure.

I’ve learned that a Giving Circle is a group of individuals who come together to give pool donations to specific causes through collective action. So any time a group decides to raise funds for a specific cause, it is technically a giving circle. They differ only in size, structure and form of giving which I hope to examine a little bit in this article.

These groups, which vary in their structure and goals, bring individuals together to learn about community issues and solutions and subsequently use their collective funds to make a difference usually to beneficiaries from a community or charity of choice.

The best thing about Giving Circles is the process of giving is entirely transparent, democratic and based on trust between funders and recipients of support.

Formal Giving Circles

Formal giving circles have transformed entire communities, neighbourhoods, villages and cities through long-term targeted peer-to-peer investment. Some times these cash injections are short-term but still impactful. A good example is the African-American Women’s Giving Circle hosted by the Washington Area Women’s Foundation. Launched in 2004, the African American Women’s Giving Circle (AAWGC) pools monetary contributions to support member-identified nonprofits serving the needs of African American women and girls. To date, AAWGC has invested more than $225,000 in 20 local non-profits. The circle decides who receives the funds and the charity handles all grant and risk management.

Formal giving circles leverage the connections, wealth of individuals who are capable of giving on a long-term or short-term basis. The scaffolding that a relationship with a charity partner is also valuable. The formalised structure offers stability, confidence and strategy to the goodwill that drives contributions to these giving circles. They build off the want to create impact by making the process of giving back as simple as possible whilst ensuring how that impact is created is fool-proof.

Informal Giving Circles

I have grown up witnessing my mother and extended family participate in local and international giving circles. During the droughts in Somalia in 2016, I remember many neighbourhood groups in London fundraising to save families in the villages/towns that they were from. New fears of a serious drought have re-emerged in recent months and I have no doubt that these event-based giving circles, which are both local and trans-national, will pop up in affected communities across the world.

Members of the Islington Somali Community

Usually they are spearheaded by women and are centered on cultural and spiritual charitable giving practices. My aunt is a member of an informal giving circle in her local neighbourhood which has been in function for at least a last decade. The group collects funds from a few dozen local women every month to contribute to an ongoing fund designed to support bereaved community members who are unable to pay for funeral costs. Usually caused by a sudden and expected death.

The community of givers step in to preserve the well-being and grieving process by off-setting financial concerns — at least in the short-term. The support is direct, its personal and makes an impact. It is this person-centered approach which has made platforms like GoFundMe become a crucial tool in the tool-kit for fundraising of this nature.

Semi-Informal Giving Circles

Online crowd-giving platforms like GoFundMe and CrowdFunder are the ultimate examples of digital-friendly giving circles. I’ve given to everything from funds supporting local libraries and parks, bereavements and surgery costs to droughts in Somalia or tree-planting in Kenya.

These platforms are informal in their approach in that you don’t need a good comms strategy or fundraising plan to be successful — your cause just needs to connect organically with the right audience. Some campaigns are well-executed with teams of fundraisers backing it but for many… people just give because they care or because it matters to someone they care about.

A GoFundMe campaign launched during the pandemic to deliver oxygen tanks to Covid-19 patients in Mogadishu, Somalia. Donations from diaspora equipped the hospital with emergency tanks that went of to save lives.

Platforms like GoFundMe are easy to set up, you see exactly how many backers a campaign has and have the opportunity to instantly share it with your own networks. It is essentially digital-friendly semi-informal Giving Circle but it works in reverse to the aforementioned Informal and Formal Giving Circles in one major way. The above forms of giving are borne of existing relationships of trust and collective action — semi-informal digital giving like GoFundMe is catalysed by the need for urgent action, which forms a community after the point of giving.

More recently, giving circles have also been used to benefit local businesses or social enterprises that serve a public good too.So why am I suddenly thinking about this? The pandemic showed just how vital locally-rooted networks based on community knowledge were in terms of saving lives. Is there something that local authorities could be doing better — to tap into neighbourhood groups such as the one my aunt is a part of to contribute to bigger strategies around local philanthropy? Could more be done to support these informal fundraising pools with additional top-up grants from local councils?

Photo by John Cameron on Unsplash

Beyond financial donations, there is a huge potential for in-kind giving through informal giving circles. Hooyo East is a community social-enterprise in Tower Hamlet, East London serving authentic Somali cuisine through a take-away service which sustains the Women’s Inclusive Team’s wider work. Volunteers from the local community offer their time and skills whether it is cooking meals, packing meals or processing orders.

WIT has tapped into the brilliant cooking skills of its service users who enjoy giving back to a charity that represents and supports them. There is definitely an interesting angle to explore in this space where members of a community pool their skills together to support a cause — what else could they do to drive the strategy of giving and philanthropy beyond this?

A woman volunteer is pictured chopping onions for the Hooyo East Takeaway service which supports the Women’s Inclusive Team.

I have always been interested in Rotational Savings and Credit Assocation (ROSCA) structures. I’ve grown up calling this Hagbad or Ayuuto and it was the primary way members of my family were able to save for major milestones — the arrival of a baby, a new home, a new car and even holidays. The informality of the hagbad system means that trust is the real currency that binds the group together — you all trust the Lead Saver (manages admin of the saving circle) and by default you trust the others in the circle — even if you’ve never met them. Rotational savings systems are appealing because they are easily accessible interest-free loans — perfect for families on low incomes or people who don’t want a loan with interest.

I’ve been interested in the potential for rotational savings system, like the hagbad, to offer an incentive for savers to contribute towards social good. The system is democratic (everyone agrees who will be paid and when) and usually (thinking of POC communities specifically) people save with members of a similar ethnic and/or religious background. What if these groups could be leveraged to donate 5–10% of their shared saving to a project they all wanted to support? I understand that this defeats the purpose of the saving circle as its designed to support individual goals but what if there could be a space to give back too? With the rise of digital ROSCA’s, this might be an area to explore in the future as consumers become more concerned with paying it forward in some capacity.

MoneyFellows is just one of many apps which have attempted to modernise the traditional ROSCA through digital apps.

For major funders, Giving Circles provide an invaluable opportunity to offer major donors and philanthropists the independence to manage their giving in the safety of a formalised structure. However smaller, localised Giving Circles could offer the sector another way of identifying needs at a grass-roots level. By understanding what people are willing to give to on a regular basis, the sector could become more responsive and targeted in approach.

It feels as though Giving Circles are technically, all around us. We all have the capacity to create our own spheres of influence to see real changes in our neighbourhoods, communities and wider society. If you’re interested in starting or participating in a Giving Circle, check out the links below:

  1. Research on Giving Circles in UK & Ireland: http://www.vssn.org.uk/wp-content/uploads/2015/06/2014DecEikenberryBreeze1.pdf
  2. How to start a Formal Giving Circle’s: https://www.unitedphilforum.org/resources/ten-basic-steps-starting-giving-circle
  3. Another How-To Guide: https://www.globalgiving.org/learn/how-to-start-a-giving-circle
  4. Third Sector Article: https://www.thirdsector.co.uk/giving-circles-cause-power-struggles-within-charities-report-says/fundraising/article/1319779

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Sharing my ideas with the Medium community one post at a time. Follow me on twitter at @faiza__ali

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Faiza Ali

Faiza Ali

Sharing my ideas with the Medium community one post at a time. Follow me on twitter at @faiza__ali

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