The popularity of giving circles is on the rise today. While I do see the value of combining my interests and money with the interests and money of others to do more good (more money = more good, right?), I am worried these circles will ultimately hurt nonprofits.

I imagine that if you’re reading this you probably know what a giving circle is, but let me just make sure. A giving circle is a group of individuals who pool their money and, collectively, decide where to donate that money.

Giving circles have been around for generations, and they are now becoming much more popular. Even I belong to a very loosely organized circle with some friends who support a couple of causes. We got together because we thought if we combined our money and made one larger gift to a nonprofit it would certainly make more of a difference. Have we made more of a difference? Dunno. Maybe I’ll do some analysis and make a future posting about that.

Touted as a way for people to get more involved in the fundraising process and to make a bigger impact with their donated dollars, giving circles make it hard for nonprofits to get access to individuals, where connections and real relationships are built. It’s through these personal relationships we build with volunteers and donors that our organizations grow, and how we “move” donors through a variety of stages, ultimately to a place where they are sincerely engaged in what we do. Giving circles take away our access to the individual and limit the interactions we can have at a one-to-one level. And, as giving circles grow and their interests change, it’s difficult for nonprofits to find funding for multiyear projects.

And, larger, more organized giving circles can require significant accountability reporting about the impact their contribution has made. While larger nonprofits may have the staff to fulfill these requirements, my friends at smaller organizations tell me they are hesitant to go to giving circles because of the reporting burden. Says a friend, “Going to our regional giving circle is like going to a major foundation. There are just too many hoops to go through, and I don’t have the staff to do this.” At the same time, she has found that several of her “rising donors” now give exclusively through the circle, effectively eliminating her access to them directly.

As always, I would love to hear your thoughts!

Happy Fundraising!