Early in my career a mentor taught me something I never forgot: You’re not being strategic unless you diversify your sources of revenue!
Even though you may be sitting pretty right now, with a preponderance of funding coming from one or two major sources that seem dependable, you can’t assume this will always be the case. It’s irresponsible to put all your eggs in one basket.
- One or several individual major donors could become more passionate about another cause; run into a personal hardship causing them to pull back; move out of your locality, or pass away.
- One or several significant foundation funders could change their philanthropic priorities.
- Politics may change, and government funding could dry up.
- One or several business partners could suffer a downturn or simply change their choice of beneficiaries.
- Board members will cycle off and could move on to other philanthropic interests.
- Events could start underperforming for a variety of reasons, including Covid, changing demographics of your constituents or evolving trends.
When you look at your revenue pie chart, you don’t want any one slice being significantly larger than the rest. Because this makes you too dependent on that one slice.
Or if you’ll forgive another metaphor, always search for new pastures. If you just graze on the same ground you’ve been on – or the same ground as all your competitors – you risk depleting your resources at some point. That’s why farmers leave fields fallow, and plow new ones, coming back to the old ones later with a fresh approach.
If you don’t look outside the major funder segment of your funding pie, you’re going to miss important resources that could make a significant difference in your ability to fulfill on your mission. Today I’d like to talk about one “outside the box” strategy for generating greater and more diversified support from non-major donors.
Best Nonprofit Strategy You’ve Never Heard of
I’m talking about Giving Circles. If you’ve been looking for a way to diversify and democratize philanthropy, look no further!
It may not bring in a lot of money at first, but neither do donor acquisition programs. And those cost you $1 – $1.25 to raise a dollar! This is something more along the lines of foundation fundraising, which costs just 20 cents to raise a dollar. So the return on investment is high, and it doesn’t take a lot of work on your part.
This is a concept that’s been around for a long time. Yet lately it’s stepped into the limelight, having been effectively rebranded. I credit this new popularity, in large part, to the effectiveness of peer-to-peer fundraising (P2P)– something I’ve been recommending to charities as a priority leveraging strategy, together with monthly giving, for at least the past five years. Why? Because P2P is:
- capable of being leveraged, enabling one individual to grow their philanthropy by influencing others (using the power of social proof) to join them;
- ongoing, so sustainable;
- user-friendly for donors and the charity once it’s set up, making giving easy for donors regardless of age, geography, wealth or other demographics, and
- social (humans are social animals), having a ripple effect that boosts awareness and introduces new supporters to your cause.
NOTE: Social fundraising grew dramatically over the past 18 months during a time of social distancing, with more than 27% of U.S. adults reporting fundraising for, or giving to, a peer-to-peer campaign during the pandemic. A huge advantage for nonprofits, especially those who had to lay off staff during the recessionary economy, is generous supporters do the fundraising on your behalf, creating ambassadors for your mission. We’ll see many of the same advantages hold true for Giving Circles.
The Core of Giving Circles
At its core, a Giving Circle is simply a group of people who band together to pool their philanthropic money and make democratic decisions regarding charitable recipients. By banding together they’re able to amplify their power and make a greater impact than they would as individuals.
- Some groups hold fundraisers to generate a philanthropic pool.
- Some groups ask for a defined contribution amount from each participant. Charities are recommended; the group may vote on the beneficiaries or simply select them at random via a drawing.
- Some groups are extremely democratic, letting each member select a charitable beneficiary when their month to choose comes around.
Old School Giving Circles
When I began in fundraising we didn’t use the term “giving circles” as much as “service clubs,” “fraternal organizations,” or “charitable investment clubs.” If a donor was a member of one of these groups (e.g., Rotary… Kiwanis… Elks… Lion’s Club… Soroptomists… Junior League… and so forth), they’d sometimes come to us to suggest we apply for a grant. After we did this successfully a few times, we began to reach out to other local groups on our own. A whole new world of potential funders opened up. I did this at four different charities where I worked as director of development. The grants weren’t large, generally ranging from $1,500 to $5,000, but they began to add up.
We learned we could depend on them over time as the groups got to know and trust us. In fact, when I worked at Jewish Family and Children’s Services, one organization, a women’s sorority, became a reliable $10,000/year donor. I stewarded them like I would any other donor, having individual lunches with some of the members and religiously attending their annual fundraising fashion show.
New School Giving Circles
Today’s Giving Circle movement is broad, deep and growing beyond traditional boundaries. They’re a way for diverse groups of individuals to turn smaller gift dollars into a larger force for community change. Whereas men comprised most of old school giving circle equivalent organizations, today women comprise 70% of Giving Circle membership in the U.S. One reason women give more money away today is they have significantly more. By one estimate, wealth owned by women around the world could total $81 trillion in 2023, up from $34 trillion in 2010. And since women give more than men, this is good to know!
How to Participate in the Giving Circle Movement
1. Go to Existing Giving Circles
One simple strategy is to get yourself listed as a Community Service Club Nonprofit on “Great Nonprofits,” a place where donors and giving circles go to look for beneficiary options. As a bonus, this is also a great way to find new direct service volunteers.
Familiarize yourself with the relatively new Grapevine Global Giving Circles Directory, launched in mid-2021 in collaboration with Philanthropy Together (launched in April 2020). You’ll find a comprehensive list of 2,000+ Giving Circles. The site is designed for donors to find causes in which they’d like to participate, but you can use it to:
(1) Search for circles near you/causes like yours;
(2) Reach out and see if any likely prospects have an open application process upcoming, and
(3) Start your own “Grapevine” (defined as “a group of people who pool funds and decide together how to direct donations to nonprofits”). Note that Grapevine is FREE to nonprofits and donors.
NOTE: To-date Grapevine has written checks to 3,000+ nonprofits and have 7,000+ members. Yet only about 20 Fundraising Circles have been initiated by those nonprofits. Want a leg up on your competition? Get in on the ground floor!
2. Create Your Own Giving Circle
People have always been able to set up their own Giving Circle. It just wasn’t simple, and they weren’t that easy to find. That’s all changed today due to services like Grapevine and Philanthropy Together’s Launchpad. In the past, to accept tax-deductible donations Giving Circles needed to have their own 501 c 3 status or a fiscal sponsor. This put a roadblock in the way, making the process more onerous than some groups wanted to tackle. Since Grapevine is a 501 c 3 itself, this burden is eliminated when circles are started on the platform. Every donation made through the Grapevine community is tax deductible. And through the Launchpad, would-be Giving Circle leaders are walked through all the steps needed to establish and run a Giving Circle.
Not only can you find existing circles here; it’s easy for charities to set up Giving Circles as well! When you do this, you become the group leader. This means you will receive details on each member donor (e.g., contact info and how much they gave; members can keep their giving anonymous, but most don’t). In this way, your Giving Circle becomes a community forum and you can engage, send surveys about areas of interest, and generally get to know the members better.
The heart of the model remains community-based grant making. Groups meet on a regular basis, determine the amount of individual contributions, and make decisions about beneficiaries. Grapevine collects the donations; holds on to them until a distribution determination is made by the group; grants it out; tracks and reports it. They also send out tax receipts. The Giving Circle doesn’t need its own financial and administrative structure. There’s no overhead. Grapevine works on a voluntary “tip” basis; donors may give back in gratitude for services provided.
Grapevine is like a community-based Donor Advised Fund, but all the money is given out! [Generally either quarterly or annually.] You can set up a Circle (or several) or simply recommend to your support base they consider setting up a Giving Circle using this platform. If you have constituents in book groups, family groups, neighborhood groups, congregational groups or school groups consider suggesting to donors they add this philanthropy feature to their group.
There are a number of different models to consider.
Giving Circle Models
1. Raising and Distributing Monetary Grants
For these types of “Giving Circles” there are variations you may wish to consider and promote. One easy way to promote them is through the “Ways to Give” menu function on your website. Another is through a platform like Grapevine. You can, of course, do both! Here are some models:
EARMARKED: All the money goes to your nonprofit. This is great for nonprofits with multiple programs. It’s also something to consider if you’re an educational institution looking for a way to involve students and alumni. Let members know they can give and/or raise money; then vote on which project they want their money to support. This model helps donors create community in a way that’s more active, and bonding, than P2P fundraising. It’s an excellent option for engaging donors who can’t make a major gift, or a restricted gift, on their own at this point in time.
PARTLY EARMARKED: A percentage of the money goes to your charity; the balance goes to other charities. This model is more about engagement and introduction to donors. You might set this up to engage non-donor volunteers, ticket buyers, members, users of services and their families or other potential supporters in different communities. There might be a defined monthly or annual contribution; a defined amount or percentage goes to you and each member gets to choose another beneficiary every month.
2. Building Community
A number of charities are using the Giving Circles model as a means to engage volunteers and slowly transition them to also giving monetary support. These groups take a relational, community-building approach. The purpose of the group is not simply to pool donations for the purpose of making impactful grants, but also to have fun raising additional funds to add to this pool. These “Fundraising Giving Circles” can also be established on Grapevine. Again, the group leader is generally the development officer, who can then see who joins the group (members can keep their giving anonymous, but most don’t). The group conducts their own FR activities (e.g., P2P birthday campaign, bake sale, business sponsors, or simply asking for food or raffle prizes to make the community aspect of participation more fun).
Bonding with Community
Leveraging one-time grants into ongoing support takes commitment on your part. And this is a hugely important step if you want this slice of your giving pie to become something you can depend on – and grow – over time. Typically Giving Circles initiated by others don’t share individual donor-member information with nonprofits. Here are some ways to become better known to your supporters:
For Circles with an Application Process:
These operate much like a foundation. Service clubs fall into this category, for example. You may apply and be curated into short list of potential beneficiaries. You may pitch in person. Even if you don’t, you will get introduced through this process to a whole new community of donors. There will be people who voted for you, even if you don’t “win.” Some of these people will send you their own checks. Or become advocates for you in the next round.
Take the opportunity to ask for feedback so you know how to put your best foot forward the next time.
Ask the group administrator if they’re willing to share contact information for their members so you can thank folks individually and report back to them on the outcome of their giving. Maybe let them know you’d like to send a small gift to show your gratitude (not something expensive, but perhaps useful content like “10 Ways to Keep Seniors Safe,” “How to Help Your Baby Sleep,” “12 Ways to Save the Planet,” or “How to Enjoy Museums with Kids” – all depending on your mission, of course.) This showcases your expertise in action. You can even include an offer to subscribe to your e-newsletter or blog if they’d like to receive more useful content.
For Circles on the Grapevine Platform:
Tap into the power of networks sharing similar values. Grapevine categorizes Giving Circles according to a variety of networks with which different Circles choose to affiliate — e.g., “Network 100,” “100 Who Care Alliance,” and “Philanos.” Peruse these while thinking about your most natural constituents and the networks to which they belong. Where do you see the most likely matches?
Each network has a slightly different model which you’ll want to understand. Philanos, for example, is membership oriented. If you set up a Giving Circle you can pay annual membership dues to their network, enabling you to attend events and access some of their resources. The largest network has over 700 giving circles! Another network model is to get a group of individuals together quarterly, have them pitch in a defined contribution, and then distribute that. So if 100 people get together quarterly, and everyone pitches in $100, they’ll have $10,000 quarterly to give away. Does that appeal to you?
NOTE: For Circles set up by you, where you are actually the leader of the group, take advantage of the opportunity to create a community forum. You can strategically engage, send surveys about areas of interest, and generally get to know the members better.
Investing in P2P vs. Giving Circle Recruitment
Giving Circles are potentially a better long-term solution. They leverage the P2P dynamic of peer influence and social proof, but are longer lasting in the sense they are not one-off campaigns. Groups meet regularly, and their grants can become a reliable source of recurring income. Plus, you get high exposure to people who’ve self-identified as philanthropists.
Another benefit of Giving Circles is to the donor. They offer a more social experience than the somewhat transactional practice of simply asking friends, family and colleagues to donate to a one-off campaign. In fact, merely writing this article is making me want to go ask a group of friends if they’d like to do this in lieu of a book club (I just don’t have the bandwidth to read that many books these days), but discussing best ways to help our community sounds fun!
In prioritizing your fundraising and community engagement strategies for the year ahead, think seriously about Giving Circles.
Philanthropy is changing, and this is one movement to democratize giving, involve diverse communities, and increase the overall number of folks aware of and engaged with your work.
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Photo by Hannah Busing on Unsplash.