Giving circles can cause tension and power struggles within charities and charitable foundations and are not always worth the organisation’s time and resources, according to a new study.
The report, The Landscape of Giving Circles in the United Kingdom and Ireland, by the academics Angela M Eikenberry and Beth Breeze, is the first-ever piece of research into giving circles in the two countries. Giving circles are groups of donors who pool resources and discuss collectively how to give.
The report is based on 27 interviews with 80 giving circles in the UK and Ireland – 16 of them hosted within charities and charitable foundations, including the Tiffany Circle within the British Red Cross and the Rosa circle within the Suffolk Community Foundation. It says that tension between the host organisation and the circle was an issue at all but one of the giving circles polled.
Issues of control appeared to prompt most of this tension, caused by the need for organisations to meet legal and accountability requirements and prove that their giving circles were producing positive returns on investment.
"Giving circles also, at times, want to give to areas that may be difficult or impossible to give to due to legal or bureaucratic constraints," says the report. "This can put the host at risk and make it difficult to determine the value of the giving circle to the host, especially if a lot of staff time is devoted to the giving circle."
Power struggles are also a common problem, the report says, with some giving circles’ desire for independence or separate brand recognition causing conflict with the original intent of the circle or compromising the legal structure of the circle’s fund.
It cites a situation at one host organisation where the host had little control over the group – which was described as an "unruly teenager" – even though it was supporting it with a lot of staff time.
The report says that giving circles do not always produce a good return on investment for organisations, which makes them difficult to justify to trustee boards.
Asked about the solutions to these challenges, Eikenberry, a global expert on giving circles and the first Fulbright scholar to come to the UK to study philanthropy, told Third Sector: "Some organisations recommended trying to be clear and up front about the goals and obligations when a new group is created. Many of the groups were not founded very long ago, so a lot of things have been negotiated as they’ve gone along. But as community foundations work with giving groups more, they’re being able to establish the parameters in advance."
Despite the challenges, Eikenberry said, most organisations said they believed giving circles had strong potential and that many donors wanted to participate in them in order to give more strategically.
As well focusing on giving circles hosted within organisations, the study also looked at other set-ups, including as mentored groups – which match young philanthropists with more senior philanthropists – and event-based groups, where individual donors gather at events to support small charities.
The authors of the report have also contributed a blog