In the summer of 1998, Deborah McManus, an architect, was flipping through People magazine when she happened upon the story of Colleen Willoughby and the Washington Women’s Foundation.

Willoughby had founded the organisation in 1995 when she gathered together 116 women who wanted to address the philanthropic needs of the Seattle metropolitan area.

The concept was simple: a group of people form a giving circle, pool their money, decide where to give it and together learn about their community and philanthropy. The collective becomes more powerful than the individual.

McManus was impressed.

“We had started a family foundation and I thought their organisation was an interesting template for New York City,” she says. “So I called up two friends who had extra money and were so inclined and we sat around for a summer to figure out how it worked.”

In October 1999, the WellMet Group – a giving circle – was born. Its members contribute at least $5,000 a year and do the grant-making through The New York Community Trust. It now has 33 members and in May surpassed $1m in contributions.

“I get my socks blown off every single year,” says McManus. The WellMet Group only gives grants in the five boroughs of New York City and looks for nascent organisations lead by dynamos. Members meet four times a year and small groups do one annual site visit so that each potential grantee has been seen.

“Basically we’re going for the new kids on the block – emerging organisations. We wanted to carve out our own place. The big players such as Robin Hood [Foundation] and the community trusts go for established ones. That’s exactly what we didn’t want to do, we wanted to be the first or second funder,” says McManus.

“Each one of the organisations was started by or is run by an incredible individual. Many came from poor backgrounds, many are scrappy fighting idealists, they are awesome. It is such a thrill to see how many people do these things often without a salary. Each one feels strongly their community must be better, it’s really a privilege.”

(The Robin Hood Foundation, which fights poverty in New York City, was set up by hedge fund industry veteran Paul Tudor Jones II in 1998 and is a favourite charity among hedge fund managers.)

The WellMet Group’s earliest grantees included Hour Children, which provides transitional housing for mothers and their children on their release from prison; Ice hockey in Harlem, an after-school programme; and Bottomless Closet, which helps lower-income women who are re-entering the workforce.

The WellMet Group is one of more than 400 giving circles. According to “More Giving Together”, a recent report by the Forum of Regional Associations of Grantmakers, giving circles doubled between 2004 and 2006 and have granted at least $100m to become “an established philanthropic force”.

The giving circles model is especially popular among women, who tend to gravitate to collaborative giving. The study found that 81 per cent of giving circle participants were women.

Karen Putnam, who heads Bessemer Trust’s philanthropy and stewardship advisory, says: “Collegiality – and working together as a group – is the bedrock on which women’s philanthropy rests.”

Most giving circles have formed since 2000 and have moved from fringe to mainstream in a short time. As recently as five years ago giving circles were under the radar, and two years ago they were a trend just beginning to grow, according to the report.

Sondra Shaw-Hardy, a consultant and co-founder of the Women’s Philanthropy Institute, part of the Center on Philanthropy at Indiana University, says: “It was an idea whose time had come. Women looked at the world and decided it wasn’t being changed by the powers that be. Giving circles started in communities looking at community issues.

“It is really easy to start a giving circle – it’s like being in an art or book club or a quilting bee. Women get so excited seeing how by pooling their money they can make a huge impact. They are leveraging their dollars.”

Bonnie McElveen-Hunter, chairman of the American Red Cross, agrees. “Why are five fingers on a hand better than one? It’s the power of the multiplier,” she says. “Women are less interested in who gets credit and more interested in accomplishing the goal together.”

In June the Red Cross launched Tiffany Circle Society of Women Leaders in which 250 women donated $10,000 to support their local Red Cross chapter. The programme had hoped to raise $1m but ended up with $3m, and was so successful the Red Cross plans on expanding it into 17 more communities next year, in addition to the eight inaugural chapters.

“Women are the most powerful new voice in philanthropy,” says Melanie Sabelhaus, chairman of the Tiffany Circle programme and a Red Cross board member. “Once you get a group of women in a room, like-minded business women or mothers or retirees . . . it’s a sisterhood. Women want to make a difference but they want it to be big and bold. This is our golf course.”

The Tiffany Circle is not the first time McElveen-Hunter and Sabelhaus have collaborated: they raised money for the United Way of America, one of the largest US charities.

In 1984 the United Way created the Tocqueville Society. To belong, individuals must give at least $10,000 annually.

The charity expanded the model to form the National Women’s Leadership Council. Women are asked to make a gift at the leadership level ($1,000) or Tocqueville level ($10,000) to their local United Way in their own names.

The council’s goals are to develop “a powerful voice for women in philanthropy”, raise $100m by 2008, and impact public policy in areas that women care about.

Giving circles have sprung up across the US, many without the umbrella of a big non-profit organisation. They range from a handful of members to “jumbo” giving circles such as the Washington Women’s Foundation. It now has 467 members who make an annual contribution of $2,300 and commit to five years of membership.

Willoughby, the foundation’s president, says: “Our mantra is: we might not all be individually wealthy women but we hold great wealth in common. And that’s the point of collective giving. You can leverage a $2,000 contribution to a million dollar result.

“A collective allows more people to be involved in philanthropy without feeling like they have to be a very wealthy person. Giving together is the new way of producing more impact for people.”

Shaw-Hardy says giving circles have resulted in “a democratisation” of philanthropy. “There are a lot of wealthy women who are part of giving circles but you don’t have to be [wealthy].”

Cynthia Williams, the founder and director of the Austin People’s Action Center in Chicago, launched Illinois’ first African American women’s giving circle on March 8 2005, International Women’s Day.

“We started with 30 women who pledged $1,000 each and one woman, who was on public aid, gave $25. We are now more than 80 women,” says Williams.

The Sistuh Fund Giving Circle believes every woman deserves a purse of her own and the ability to write her own cheque. “We teach young girls how to give,” says Williams. “A giving circle is a more intimate way for us to give back. The women didn’t only want to write a cheque but also wanted to be involved in the giving, they wanted to touch and feel the giving.”

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