Nov 30, 2019

"Giving Circles," which pool money for a cause, are on the rise

Illustration: Aïda Amer/Axios

Philanthropy tends to center on a small number of affluent donors, but a grassroots movement known as "giving circles" — in which more modest donors pool their resources — has been gaining popularity.

The big picture: Giving circles are still a drop in the philanthropic bucket, but proponents say they open the field to younger and more diverse donors — and broaden the reach of giving.

  • Members decide by vote or consensus which organizations to fund.
  • "This is activism in the world of philanthropy ... and an antidote to other concerns," Dianne Chipps Bailey, a philanthropic strategy executive for Bank of America, tells Axios.

Giving circles are growing: More than 1,000 such groups existed in the U.S. in 2016, compared with 400 in 2006, per a Women's Philanthropy Institute database.

  • The model resonates with women: Of those groups, about 70% said more than half their members were women.
  • Giving circles tend to be hyper-local and to come together around shared identity. (Examples include Asian Women Giving Circle in New York, and Amplifier, a network of circles focused on Jewish values.)

Black Benefactors, a 12-year-old giving circle in Washington, D.C., donates to Black-led nonprofits — which tend to be overlooked by the broader philanthropic community.

  • 40 members donate at least $300 a year; so far, $70K has been given away.
  • Grants focus on organizations that support local children, youth and families — like $10K in 2019 to a group that sends middle-school girls of color on trips abroad, and $10K to one that funds math and science enrichment programs.
  • Donations are getting larger. “I see more people putting value on Black-led nonprofits through this work," Tracey Webb, the founder of Black Benefactors, tells Axios.

Yes, but: "The fact of the matter is, it is still donor-driven" rather than government funded, Angela Eikenberry, a professor of public administration at the University of Nebraska at Omaha, says of giving circles.

  • The model "still has the limitation of relying on philanthropy to make sure people have basic human rights."

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Deep Dive: Billionaires build new "benevolent aristocracy"

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If charity is giving alms to the needy, then philanthropy is charity's more high-minded and strategic relation.

The big picture: Philanthropists don't want to give a man a fish; instead they want to take credit for building a proof-of-concept that will persuade governments around the world to invest in large-scale programs of fishing pedagogy.

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Silicon Valley's brand of philanthropy

Illustration: Aïda Amer/Axios

Silicon Valley's new, moneyed class has a very different view of philanthropy, often inspired by "effective altruism"— using data and analysis to choose causes and approaches that will yield the most impact.

Why it matters: This brand of philanthropy is focused on large problems — like access to education and issues in the developing world — and can come at the expense of local community needs and other more traditional areas of giving (like the arts).

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The rise of DAFs: Tax breaks now, money for charity later

Data: National Philanthropic Trust; Chart: Axios Visuals

Billions of dollars are sitting in tax-free Donor-Advised Funds (DAFs) rather than going directly to charities, according to data from the National Philanthropic Trust.

What they are: A DAF "allows donors to make a charitable contribution, receive an immediate tax deduction and then recommend grants from the fund over time," the NPT explains.

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