When Givers Get Together

From Business Week
3/7/2005

By Jessi Hempel

"Giving circles" let you have more of a say in where your charitable dollars are going If your name is Bill Gates (of Seattle), you have considerable say in how your philanthropic dollars are used. But if your name is Bill Allen (of Hockessin, Del.), you may not have much direct influence on the charities you support -- that is, unless you funnel your funds through what's known as a "giving circle."

An idea born in the late 1990s, when New Economy do-gooders sought to put their tech riches to philanthropic use, these giving circles have kept growing even as many tech entrepreneurs have seen their wealth dry up. Today there are about 220 giving circles in 39 states across the country, ranging from small groups of neighbors who organize around the dining room table to large-scale organizations such as Seattle's Social Venture Partners, which sponsors 22 giving circles with thousands of members worldwide. Now potential donors can connect to nearby giving circles through Givingforum.org/givingcircles, which was launched on Feb. 8 by the Forum of Regional Associations of Grantmakers, based in Washington, D.C.

Unlike traditional giving circles, which are often sponsored by colleges or museums and require donors to pledge a certain amount to help maintain that institution, these new philanthropic endeavors are distinguished by their hands-on approach. They are often founded by a small group of donors interested in making an impact on a certain social problem. Members are asked to chip in from $100 to $25,000 a year, with the average contribution around $2,500. The cash is usually held by a community foundation, a public charity designed to save individual donors the cost of setting up their own private foundations. Giving circle members then determine which nonprofits receive their grants, often targeting causes such as education or environmentalism. Many circles also require members to volunteer their time. Members do everything from the minimal -- a service day cleaning up a local school -- to the more time-consuming -- a seat on the nonprofit's board of directors.

"A CHECK IS JUST A CHECK"

Bill Allen and his wife, Kim Lumhoo Allen, belong to the Delaware chapter of Social Venture Partners. He is a senior executive at a local financial-services firm; she heads a company that runs for-profit schools. Two years ago the couple looked for philanthropic opportunities that would allow their limited dollars to have a greater impact on their favorite cause -- education. In addition to their $7,500 donation -- the annual cost for a family to join -- Bill joined the SVP Delaware board, where he reviews grant applications. Kim conducts teacher training at a charter school that SVP supports. "A check is just a check," says Bill. "Here we can see the difference we're making."

Stanford University philanthropy professor Laura Arrillaga started Silicon Valley Social Venture Fund (SV2) in 1999 to appeal to younger donors. "They view their social investments with the same importance as for-profit investments," says Arrillaga. According to the group's bylaws, all SV2 members get an equal vote on how the group allocates its $350,000 in annual grants. Last year, for instance, they helped support local doctors who volunteered their time to care for people with chronic illnesses.

Many of these social venture groups encourage members' children to get involved. Kahryn Nix, who owns a court reporting firm, works with teens in Social Venture Partners Arizona. Like the Delaware chapter, the Phoenix chapter operates independently but meets certain SVP criteria such as the $5,000 minimum donation. Her granddaughter Lauren Fielder, 16, is one of a few dozen kids who raise funds through car washes, garage sales, and bowl-a-thons. Nix then helps the junior givers to decide where their funds should go.

Recently, after a visit to a local nursery for homeless children, Fielder and her friends decided the children needed shoes. They sponsored a car wash and purchased 60 pairs. Says Nix: "We want to bring her up to understand giving is important."

This hands-on philanthropic culture is often what attracts donors to giving circles. In San Diego, medical entrepreneur Ted Tarbet and his wife, Michele, have been members of the local SVP chapter since 2001. When wildfires struck nearby Julian, Calif., in October, 2003, the Tarbets took their daughter, Alexis, now 14, to Julian along with other SVP friends to help distribute food and clothing. "The clothes I was giving out weren't as nice as the ones I had at home," says Alexis Tarbet. So she collected money from SVP members, nearly $30,000 in all, and put it toward $275 gift certificates for every teenager in Julian. "Sure, we could write a check to the Red Cross to help victims, and we probably would anyway," says Ted Tarbet. But with SVP, he adds, you see the impact of your efforts. It beats seeing your name on some givers' plaque.