Circle of friends.

In the days when many Americans were homesteaders, giving back to the community was as natural as knowing your neighbors. Everyone pitched in to raise a barn, fund the schoolhouse, or help others bridge hard times.

Today, that neighborly impulse is re-surfacing in the form of "giving circles" -- new charitable groups that are springing up nationwide to carry on the legacy of mutual aid societies from bygone days.

Collective philanthropy

Also referred to as "social investment clubs," giving circles are transparent, democratic organizations whose members do a lot more than write checks. Typically, they visit and learn about nonprofits in their communities, often inviting local professors, educators or foundation directors to speak about social issues and challenges. Members review proposals for funding, determine how much money to give, and then work together to make grants. Many giving circles follow their grantees over time to evaluate how the money is used.

Pooling money and effort for greater impact is a concept that appeals to people of all income levels.

"We all write these $25 checks for appeals in the mail, but that's just going to buy stamps," says Linda Strup, who founded a circle called HOPE in Northern Virginia. "As a group, we can give thousands."

Circles come in all sizes and shapes

A recent count showed that giving circles were operating in some 40 states, in towns like Angleton, Texas, as well as Chicago and Los Angeles. Some consist of a half-dozen friends who get together in someone's living room a few times a year. Others have evolved into 400-member organizations with legal nonprofit status as well as structured committees and bylaws. And there's everything in between. A major attraction for most people is these groups' flexibility. Should donors decide that the rules aren't working, they simply change course.

Contribution requirements also run the gamut. Often, circles ask donors to make a giving commitment for three or so years, so that the group can develop real grant-making experience and consistency. But commitment amounts range from as little as $15 to $20,000 or more a year. Some groups have tiered recommendations, depending on what members can afford. Still others leave the amount entirely up to each donor.

Giving circles offer special benefits

What all giving circles offer is a personal and highly participatory experience for people looking to make a difference. Most people join them for social as well as philanthropic reasons. In addition, they can see an immediate and tangible impact for their funding -- an experience that's far different from writing a check to behemoth groups such as the Red Cross or United Way.

"This is a way to study the community, have fun with people you know, and make a real difference," says Hank Doll, who, along with his wife, Mary, founded the 12-member Giving Back Gang in Shaker Heights, Ohio. "We started with $500 contributions, but interest has been so great that we increased the amount to $1,000 a year."

The Giving Back Gang focuses on public education. Its first grant went to a Cleveland school puppetry program designed to help kids and parents handle emotional issues.

"All the handheld puppets are made by parents and kids. So four of us showed up to help make them," says Doll, who is in his late 60s. "It was a wonderful evening."

Start your own giving circle

You may want to check the list of existing giving circles at http://www.givingforum.org/givingcircles/gcinaction.html to see whether you might join one in your area. If none is listed -- or membership to those on the list is restricted -- then you can start one of your own. Like any group effort, giving circles demand time and resources. Here are some suggestions to help you get going.

  • Do some homework. Although there is not a national umbrella organization for giving circles, you can find out how others run their groups by consulting these references:
    • Frequently asked questions
    Giving circle resources
    Mission statements and agreements

  • Assemble interested friends or colleagues. Set aside an evening or two to talk through the options.

  • Discuss possible missions. You may decide to recruit members first and then define your mission as a group.

  • Set priorities for grantmaking. Once you have a mission, you will want to decide what kinds of projects to fund - for example, whether to focus on a single issue or location or to branch out more widely.

  • Define a group format and structure. Do you want to restrict membership or open it to all? How often will the group meet? Is attendance always mandatory? How will decisions be made? You may also want to consider an alliance with a host institution, such as a foundation or sponsor.

  • Determine the level of commitment. How much money and time must each member commit? How much expertise will they need to participate?

  • Choose a home and manager for the money. Will you open a separate bank account for the circle? Ask an institutional host to manage the account? Who will write the checks? Check the account statements?

  • Don't forget expenses. Some funds will be needed to cover materials, food, postage, financial arrangements, and so on. Decide who will track and manage these expenses.

  • Delegate other tasks. Who will be responsible for notifying people about meetings, decisions, and events? Who will run the meetings? If you decide to have officers, what are the responsibilities for each role?

If this seems like a lot to think about, don't be discouraged. Just remember how much difference you can make by joining forces with others. As anthropologist Margaret Mead famously said, "Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has."