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Web-Based Platform Helps Expand Community-Based Giving Circles

Steve Dubb
May 25, 2018
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“Sun 25/3/2012,” James Niland

 This past February, the nonprofit Global Impact publicly announced that it was launching Growfund for Giving Circles as a donor-advised fund with no minimum, “offering a more affordable and flexible way for giving circles to pool their money together, invest and distribute funds for social causes.”

NPQ has written widely about donor-advised funds, or “DAFs.” It would be hard to ignore them, given that donations to DAFs totaled over $23 billion in 2016, with final 2017 figures sure to be higher. They are sometimes controversial because they have no legally mandated payout minimum, although actual payouts as a percentage of assets far exceed the five-percent payout minimum of private foundations.

In its announcement, Global Impact observes that according to the Collective Giving Research Group, “more than a thousand giving circles and 525 chapters exist in the United States, granting $27.7 million in 2016 and as much as $1.29 billion since inception.” However, most require a minimum initial contribution between $5,000 to $25,000. But Global Impact’s Growfund, with no minimum balance required, makes the DAF mechanism accessible to a much broader public.

Scott Jackson, CEO of Global Impact, notes that, “We developed the Growfund without brokerage fees to have the power of a donor-advised fund and have it for no minimum. Without a minimum, you can save and invest in philanthropy and share with your friends. That’s the overall platform.”

The Power of Giving Circles

Jackson says that Global Impact began to think about giving circles after hearing Tracey Webb of Black Benefactors speak at a conference in Washington, DC.

“Without the giving circle,” he explains, “she said that she wouldn’t have been able to bring the community together. We asked Tracey and others to be a focus group to us to think about how Growfund can support giving circles. We want to make sure that Growfund was really user-friendly for a giving circle.”

NPQ has covered Black Benefactors before, as the group was featured last year in a national study on giving circles conducted by Angela Eikenberry of the University of Nebraska, Omaha.

“For a group like Tracey’s,” Jackson notes, “previously, she had to recruit her giving circle funds. Now, you collect the funds, make a grant and get a report back. All of that is able to be done on the platform.”

“It is still early days,” Jackson cautions. “We have had a number of giving circles come on board in the first couple of weeks.”

One difference with the giving circles is that, unlike DAFs as a whole, they distribute their monies quickly. “In first 18 months, roughly 80 percent of the contributions go back out to charity,” notes Jackson. And, he adds, because it fosters small donor participation, “It is a powerful tool for bringing diversity and inclusion to philanthropy.”

In the first 18 months, the amount of funds deposited in Growfund has gone from 0 to $3 million. Jackson says at present there are roughly 500 users on the platform, with an average of $6,000 each. That average is deceptively high, though, since some larger corporate users skew the mean upward. “A good number of the accounts are at $1,000 or less,” Jackson notes. 

Global Impact and the Formation of the Fund

“Global Impact was formed as the first workplace federation beyond United Way for international nonprofits like CARE,” Jackson says. “We were formed as a workplace giving federation with the mission of growing global philanthropy.” This work has included developing campaigns in an advisory capacity, as in East Africa; campaign management, like workplace campaigns; and technology and financial platforms that support campaigns.

Brandolon Barnett, who directs Growfund, gave some of the background on the fund’s formation. “I had been doing research on who is connecting to philanthropy,” Barnett said, and Growfund is “an opportunity to reach new audiences.” It removes all “of the hoops and hurdles—high minimums, difficulty getting tax receipts, difficult to learn who joined the giving circle.”

In developing the business model, Growfund researched pricing, particularly for the 401(k) community and the DAF community. The model developed charges a fee of three-percent for low balances (below $20,000) and one percent for balances above $20,000. The median user is paying a fee of about $7 a month on an account balance of $2,800. (The average, or mean balance, as noted above, is $6,000, a result of a smaller number of users with higher balances.) Growfund, Barnett says, “is competitive with community foundations and large donor-advised funds.”

A second aspect of the business model is no front-end costs. With the current user base, the Growfund is generating enough fee income to pay for one staff member. Global impact aims to increase the total amount of Growfund-managed funds from $3 million to $10 million, which, if the average account size stays the same, would require increasing the number of account holders from 500 to close to 1,700. At that point, the model would begin to approach full self-sufficiency.

Initially, Global Impact put in funding and in-kind support to get Growfund started. Last year, they also got a small grant from the Gates Foundation to support marketing and product development.

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The Black Benefactors Story

Black Benefactors, a Washington, DC giving circle that encourages donations and community service in the Black community and businesses of the metropolitan area, is among the first group of users of the Growfund platform. From 2015 to 2016, Black Benefactors donated $10,000 to three nonprofits, including Chess Girls DC, a chess instructional program for girls started by DC resident Robin Floyd-Ramson, “who wanted her then five-year-old daughter to have an opportunity to play chess with other girls.”

Tracey Webb began to develop Black Benefactors after her first contact from a giving circle. “I founded it,” she says, “because I used to run a program in suburban DC in Prince George’s County. I had so many challenges running the program and keeping it open. One day—in 2002 or 2003—I got a call out of the blue from a giving circle. Who started it? How does it work? Even though we didn’t get the grant, that stayed in my mind.”

Webb notes that she initially hoped to join an existing giving circle, not start her own. When she looked, she “found one circle in DC, a women’s giving circle, that already was in existence, but I was unable to find a giving circle that I could afford.” When Black Benefactors officially launched in 2007, she intentionally set the minimum buy-in amount at a lower level so that it would be accessible to both herself and her friends and colleagues.

For us, the minimum donation is $300. We have a significant number that give more. I wanted the minimum to be an amount that people could afford. A number were grateful to join at that amount. Now, Growfund has set up a donation schedule. Even if they don’t have the [required minimum] donation up front, they can pay that monthly.

“We’re now in our eleventh year,” Webb notes. “It’s been wonderful that we have been able to support the organizations that are not on a larger funder’s radar. […] It has been amazing to see the growth, and see members react and be part of the giving circle—learn from others and increase their individual giving. That has been a major impact, as well.”

Black Benefactors makes its funding decisions annually. In its last grant cycle in October 2017, the circle gave to two organizations. One grant was for $10,000 to Black Swan Academy, a school led by a woman of color. “We were really drawn to their civic engagement activities,” Webb explains. “And a $5,000 grant went to a scholarship fund that is founded and run by a black woman. The scholarships go to youth who have incarcerated parents. The founder, her parents are incarcerated as well. Those are the two grants we gave out in this cycle.”

Currently, the group has 40 members. “We had a two-year founding membership from 2007 to 2009, and since then we have had annual members.”

Black Benefactors has even spawned some imitators. “One was just launched in Philadelphia,” Webb says. “And there are a couple in Texas. The giving circle movement is growing.”

Black Benefactors officially joined the Growfund pilot group in February 2017. “Over the year, it’s been a big help to me as an administrator,” Webb explains. “I work a full-time job. Even receiving real-time notification of a gift is huge for me. There is customer service that is prompt. It also provides donors with the ability to schedule payments. Members are pleased with the ease of it.”

This administrative ease has helped Webb grow the Black Benefactors giving circle. Webb notes that in a typical year, before Growfund, the circle would raise about $10,000 in a given year. This year, it has raised $10,000 in six months.

“It made a big difference,” said Webb. “That has a huge impact on how much we can support our community.”

Webb also participates in a Growfund advisory group. “I attended a meeting at Growfund’s office right before they rolled out the Giving Circle platform,” Webb noted. “We talked about what works, including both the benefits and the challenges. We help them as they build out this platform. It was also really helpful to hear from other giving circles.”

With 40 members, Black Benefactors is “probably smaller than average,” says Webb. “Some giving circles,” Webb adds, “have over 100 members or even 300 members.” The majority of giving circles, Webb notes, are volunteer-run, although some circles are managed by staffed foundations.

Webb emphasizes that giving circles benefit not just those who receive the donations but the donors themselves. “One important thing to me is not just our support of our grantees, but our members as well. Some have increased their giving. We host regular events for our members. We host dinner series events with philanthropists. We invite our grantees as well. That helps with our mission.”

As Webb explains, while the giving circle’s main focus is to raise money to support the work of small Black community groups in DC, it also provides an opportunity for education and information exchange among the donors themselves. In so doing, the circle supports its own members “in our quest to be better donors.”

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About the author
Steve Dubb

Steve Dubb is senior editor of economic justice at NPQ, where he writes articles (including NPQ’s Economy Remix column), moderates Remaking the Economy webinars, and works to cultivate voices from the field and help them reach a broader audience. Prior to coming to NPQ in 2017, Steve worked with cooperatives and nonprofits for over two decades, including twelve years at The Democracy Collaborative and three years as executive director of NASCO (North American Students of Cooperation). In his work, Steve has authored, co-authored, and edited numerous reports; participated in and facilitated learning cohorts; designed community building strategies; and helped build the field of community wealth building. Steve is the lead author of Building Wealth: The Asset-Based Approach to Solving Social and Economic Problems (Aspen 2005) and coauthor (with Rita Hodges) of The Road Half Traveled: University Engagement at a Crossroads, published by MSU Press in 2012. In 2016, Steve curated and authored Conversations on Community Wealth Building, a collection of interviews of community builders that Steve had conducted over the previous decade.

More about: Black Womendonor-advised fundsgiving circlesOnline GivingPhilanthropy

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