Amy, Ben and their friends are participating in one of the newest trends in philanthropy - the “giving circle.” All across the country, small groups of people with common interests are pooling resources to make charitable gifts that will impact causes that they care about.

Giving circles can be constructed for a variety of charitable purposes, according to Buffy Beaudoin-Schwartz, director of the Baltimore Giving Project, which recently has focused on the creation of giving circles as a way to promote philanthropy.

“We have circles started by young environmentalists; by women, for women and girls’ causes; by business leaders and entrepreneurs; by investment professionals; by families in suburban neighborhoods,” Beaudoin-Schwartz explains. “Typically, the amount of money given is the same from each person, and the members of the circle get together to learn about issues, and then decide jointly where to make donations.

A good example of this is taking place in the Midwest, where Carolyn Steinhauser has started the Women’s Giving Circle with 30 women who will each commit to at least $1,000. Members will choose an issue area, study the topic and then develop strategic grantmaking around that topic.

“Giving circles are a great philanthropic ‘learning lab,’ where individuals can network, become civically engaged, and learn about the grant-making process. People in giving circles leverage their time, talent and resources for greater impact,” Beaudoin-Schwartz says.

Community Foundations can be an excellent resource for giving circles - by providing financial governance, 501(c)(3) status, some staffing, and community and grantmaking knowledge, they help giving circles educate and cultivate a new generation of donors.

There are several key steps involved in creating a successful giving circle:

1. Set Goals and Structure
Start with a small, informal group and make some basic decisions such as where and how often to meet, the right size for the group, how new members can be recruited, and how much each person should give.

2. Establish a Mission
Decide on a name for your group and determine its mission and objectives- for example, creating after-school programs or improving dental care for the needy. Next, decide whether you will simply give out grants or engage in public education, advocacy, or community service in order to achieve your mission. Who will do the work? Creating committees can help distribute the workload.

3. Consider Where to Place Your Fund
Often, a community foundation provides the best option. They can help you establish a donor-advised so each gift that giving circle members make will be immediately and fully tax-deductible, even if grants are not made at that time. The Community Foundation can handle accounting and reporting requirements as well, and when it is time, they will distribute funds at your instruction.

Once you have laid the foundation for your giving circle, it’s time to move on to the fun part - deciding how and where to invest your charitable donations. There are many options. For example, your circle might invite local nonprofit organizations to submit proposals, or seek out giving opportunities at particular organizations based on your established goals. Again, the staff at your local community foundation can be of great help to you in this process.

Over time, giving circles can achieve tremendous good. Some have even evolved into fully staffed philanthropic organizations, committed to meeting specific community needs. Others continue to provide wonderful social venues where people get together quarterly, or even monthly, to discuss and respond to concerns in the community.