Editor’s Note: The following article was originally published on February 17, 2021.
When it comes to maximizing our financial impact, there is often an “either/or” approach to leveraging wealth. Do we use our dollars to fund a philanthropic effort, like a campaign or organization dedicated to women and girls, or do we turn our funds toward investment opportunities, like supporting companies with a strong commitment to diversity?
As new forms of giving spring up to meet the challenges — and opportunities — of a digital society, we are able to move further away from that attitude of “either/or.” There are ways to stretch our donor dollars further — through two types of collectives that maximize impact.
Giving Circles vs. Impact Circles
In recent months, we’ve reported frequently on the prevalence of giving circles in the philanthropy world. This seemingly new practice has timeless roots in the “it takes a village” mentality of collective philanthropy. As giving circles grow in number, size, and popularity, new giving models take shape as well.
One of these models, known as an impact circle or investing circle, is built off of the same basic strategy as a giving circle: Leveraging collective educational and financial resources for maximum impact. Where giving circles focus on philanthropy, however, impact circles focus on impact investing — activating financial resources to support companies and organizations committed to social change.
Invest for Better, a national initiative aimed at helping women demystify impact investing, take control of their capital and mobilize their money for good, relies on a circle model called an “Invest for Better Circle.”
“An Invest for Better Circle is intended to help women activate ALL their financial resources in support of a better world, not just their philanthropy,” says Ellen Remmer, Senior Partner of the Philanthropic Initiative and Champion of Invest for Better. “Participants learn how to align their investment and retirement assets in accordance with their values and support companies that do things like provide pay equity or commit to carbon neutral practices.”
This represents a slight departure from the traditional giving circle model, which focuses on collective philanthropic impact.
“A giving circle consists of a group of women who each contribute a certain dollar amount to a pool of giving,” explains Elisabeth Williams, Founder of AWE Partners, LLC. “Then, together the members of the giving circle explore organizations to fund and vote on the recipient. Their pooled resources are then donated to one or more organizations.”
“While some [Invest for Better] Circle members do co-invest – much like Giving Circles which pool charitable money – most Circles aim to help each member take the action steps that they are personally ready for,” Remmer says.
The Power of the Purse
Both types of circle offer significant opportunities for women’s empowerment. A major component of both types of circle is education: Circle members do not just commit financial resources to a collaborative goal, but rather dedicate themselves to a course of study, through educational resources, in-person or virtual workshops, and panel discussions to compare notes on their experiences within their circles.
“We have discovered that many women who join [Invest for Better] Circles are new to investing,” Remmer says. “We adapted the Circle model to support both novices as well as those with more experience, by adding several supplementary ‘Investments 101’ modules for the newbies. Circle leaders do not have to be experts, but they will be more comfortable if they already understand the fundamentals of investing.”
These teachings from circle workshops and trainings also extend to everyday life. The lessons learned in both giving circles and impact circles offer new perspectives on everyday philanthropy and campaigning for change.
Impact circles, for example, place a large emphasis on financial empowerment. When women have the resources to become changemakers simply in the companies they choose to support, they are able to respond more formally to social change and campaign for causes they believe in by making informed decisions with the dollars they have in their wallets.
Simply the act of gathering together as a group of women, and committing to a course of financial and philanthropic education, offers circle members the opportunity to form meaningful connections with each other, and carry their newfound knowledge and confidence into their everyday life decisions.
Williams calls this “the power of the purse.”
“Women learn that they have the ability to use their resources of time, talent, and treasure, to effect change in the world,” she says. “The collective giving of a circle means that women of all income levels can participate in addressing our social challenges so we realize the democratization of philanthropy.”
There is a similar methodology in impact circles, something Remmer refers to as “financial feminism.”
“Circles help members to bring feminist values to deploying their investment assets,” she says. “With your philanthropy, you can support a STEM course for disadvantaged girls; with your investments, you can invest in women-led life-science companies, who offer gender smart employment practices, and create products that improve women and girls’ health!”
Remmer does not espouse choosing impact investing over philanthropy. Rather, she says, “It’s critical to do both if we want to have long term, systemic change. Let’s be honest with ourselves – the capital markets are the dominant sector, and if we ignore them, we are only working around the edges.”
Jumping in with Both Feet
Ultimately, when we’re considering how best to leverage our financial resources for the greater good, it’s up to our values, needs, and fiscal responsibility to choose which model to follow — or to strike out and make our own paths as we go!
What works for me, a Millennial just starting out in the world of charitable giving, may not work for a woman with more experience and resources, looking to put her investment and retirement assets to work. And yet, we could find ourselves part of the same circle, focused on maximizing our impact, resources, experiences, and knowledge together rather than struggling to make a difference on our own.
Both types of circle allow for the power of collective effort: By empowering each other, listening to each other, and learning from each other, we can stretch a dollar further than we ever thought possible.
To women considering starting or joining a giving circle or impact circle, both Remmer and Williams say, “Do it!”
“Our goal is to help ALL women, regardless of experience or assets, to understand the power of their investment assets, learn how to align their investments with their social and environmental values, and activate those resources to make a more just and sustainable world,” Remmer explains. “Once they get started, they won’t want to stop!”
“You have nothing to lose and everything to gain,” Williams encourages. “I see so many women sitting on the sidelines wanting to make a difference but not sure where to begin. A giving circle is the perfect entre into the world of philanthropy and social impact. You don’t have to know anything to get started. You’ll learn in community with others. And whether you stay with the giving circle or launch out on your own, you’ll emerge with the realization that the world needs exactly what you have to give!”
To learn more about giving circles and impact circles, check out Lis and Ellen’s respective organizations. AWE Partners, LLC works to empower women to make AWE-some financial decisions with their philanthropy, while Invest for Better facilitates training and leadership resources for women who want to start or grow their own Invest for Better Circles.
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