Giving circles spur creative tension

Giving circles, or networks of people who pool their funds and use them to support causes they care about, are one of the fastest-growing areas of philanthropy.

And a new study finds that giving circles are producing mixed reactions from nonprofits.

All nonprofits surveyed say they appreciate the value in dollars and expertise that giving circles add to their work.

But other nonprofits say giving circles' full potential still has not been realized and they can create challenges in:

* Recruiting donors

* Adjusting quickly to a range of personalities in the giving circle

* Dealing with donors who want to be actively involved in the nonprofit

* Balancing a possible “mismatch” between the priorities and application process of the giving circle and a foundation or other group that may be hosting the giving circle

* Overcoming the fact that giving circles are not always consistent in their expectations and simply cannot be counted on for sustained and long-term funding.

Angela M. Eikenberry, an assistant professor at Virginia Tech who conducted the study with a grant from the AFP Foundation for Philanthropy, says giving circles are generating tensions between donors and nonprofits that reflect an emerging dynamic that is part of a larger evolution in philanthropy and society itself.

That tension, she says, involves balancing the needs of donors, particularly those who are trying to learn more about philanthropy and get more involved in it, with the needs of nonprofits.

And as other research suggests, Eikenberry says, this move for greater engagement is occurring at the same time that social networks are becoming looser.

“We’re transitioning to a new philanthropic environment,” she says. “Donors want to be more engaged and have more say in where their gifts go.”

But the new philanthropy, dubbed “supply-side" philanthropy by Paul Schervish of the Center on Wealth and Philanthropy at Boston College, “doesn’t necessary equate to meeting needs and demands in a society where government is doing less and expects nonprofits to do more,” Eikenberry says.

Her next undertaking, she says, will be to study the implications of the emerging “fragmented structure” of giving.

And as philanthropy evolves, the challenge for nonprofit, as always, is to better understand donors, help them understand the needs of nonprofits, and get them involved in helping to shape strategies and provide resources to address the needs of nonprofits and the people they serve.