Donors in ‘Giving Circles’ Contribute More and Act More Strategically, Study Finds

Donors who participate in giving circles — in which individuals pool their money and decide collectively how to distribute it — give more than other donors, give more strategically, and give to a greater number of organizations, according to the results of a new study.

The study was based on responses from 587 people.

It found that donors who participated in giving circles tended to be highly involved in their communities, and that 70 percent felt their participation in the circles had increased their awareness of nonprofit organizations and needs in their communities.

The study was conducted by the University of Nebraska at Omaha, the Forum of Regional Associations of Grantmakers, and the Center on Philanthropy at Indiana University.

Doubling in Number

Giving circles have grown in popularity over the past decadetheir numbers have doubled since 2004, according to the Forum of Regional Associations of Grantmakers, which has identified well over 500 such groups of donors in the United States.

Such groups may become even more appealing in a down economy because they allow donors to pool their gifts with others’ and make a greater difference, say researchers. Participation in a giving circle influences members to give more than other donors, researchers concluded, and people who are in multiple giving circles, are in the circle longer, or are involved in the circle’s grant-making decisions give even larger amounts to nonprofit causes.

Giving-circle members were less likely than other donors to give to religious organizations or combined giving funds such as the United Way, the study showed, and instead were more likely to support organizations that serve women and girls, ethnic and minority groups, or groups that promote arts, culture, or ethnic awareness.

Attitudes of Donors

The survey’s findings also suggest that the size of a giving circle can affect the behavior and attitudes of its members.

Larger giving circles tend to make more strategic donations, often conducting research on which organizations to support, examining the performance data of nonprofit organizations, making multiyear gifts, and awarding grants for operating expenses.

But, the study showed, members of larger giving circles also volunteer less and are less likely to believe that giving and volunteering will make a difference to their community than members of smaller circles.

“We knew that people join giving circles to make a difference in their communities,” said Jessica Bearman, an independent consultant and a co-author of the study, in a written statement. “Now we know that giving circles really have an impact on members’ giving, knowledge, and civic participation.”

A report on the study is available online.