If you have been invited to join a women’s gifting circle or been reading the posts all over Facebook and online, you may be asking yourself:

“Are gifting circles even legal?”

“Should I join one?”

“I’ve heard mixed messages. Is this right for me?”

This article presents the balanced view you’ve been looking for.  First, I’ll address the issues of legality, taxation, the math and secrecy.  Then, I’ll give you specific criteria to evaluate to determine if it’s right for you.

Perhaps you’ve heard, or had a sense, that gifting $5,000 to another woman – with the promise of receiving $40,000 back at some point – is illegal because it’s a pyramid or ponzi scheme.

Search online and you’ll readily find evidence for the illegality of gifting circles in the format that they usually take. For example, here are links to articles warning about the illegality of gift circles from the State of Hawaii,  New Hampshire, and a group comprised completely of women naturopaths in Oregon.

The list goes on and on. There are rumors that these circles have been around in one form or another for more than 40 years, starting in Canada, ostensibly as a way to help women out of domestic abuse situations.  Whether or not this is true is unknown.

They’ve shown up under a variety of names — Women’s Empowerment Circles, Women’s Wisdom Circles, Women’s Gifting Circles, and more — a quick google search or Wikipedia search of your own will reveal the prevailing view that these circles are basically pyramid schemes.

While they have been around for years, they’ve only recently begun to saturate our community of cultural creatives.

Even Android Jones, a respected artist, has noticed the impact and created a work of art to express his displeasure with the circles and the pain he perceives this social construct is ultimately having on the sisters who join.

If you do the math, there is logical, rational, left-brained evidence to support his conclusion that these circles are absolutely unsustainable in the end.

There is a mathematical certainty that up to 87% of the women who gift their money into a circle will lose their money.

To see the math in action, see this spreadsheet that my extremely mathematical, linear thinker of a sister created.  You can play with it  and change the variable on the number of times women re-up after cashing out so you can see what happens when women reinvest in the circles after receiving their gifts.

Bottom line: If 100% of women who complete the circle and receive their $40,000 in gifts rejoin another circle 3 more times, 80% of women who join will still lose their money.  The best possible scenario would be that every women who completes the circle rejoins 6 times and you still end up with 50% of women losing their money.

All of this is true.

Yet, there’s something else going on here that none of these articles, my mathematical sister, Android Jones, or the governmental agencies that call these circles illegal pyramids are saying:

For some women, joining a circle is absolutely the right thing to do.

The rest of this article is devoted to those of you who, despite all the evidence above, are still considering joining a gifting circle, to help you make the right choice for you – beyond the propaganda.

Legality

A friend of mine, Morgana Rae, recently posted this on Facebook about another topic:

“A word on legality. Hitler’s “Final Solution” was legal. The genocidal Trail of Tears was legal. Slavery was legal. Don’t confuse legal with just.”

Yes, it’s true that in the form these circles exist, the government would say they are not “legal.” And, chances are, if you are reading this, there may be various activities that you engage in that are not legal.

Very likely, you consider whether to participate in non-legal activity by feeling into your body for a truth response – toward or against. You evaluate the potential to harm yourself or anyone else. Perhaps you even examine the facts to determine your level of risk and the potential consequences of prosecution. (Which, incidentally, is a recognized stage of moral development – see Kohlberg Stage 6)

There are plenty of cases and news articles threatening negative consequences – in the form of public humiliation, fines and criminal charges if the authorities ever get involved.

That said, the legality of gifting circles is probably not one of the major factors in your consideration. It’s a pretty quick decision. If you aren’t a rule breaker, don’t join. {also: if you are involved at all in public office, you probably do not want to join a gifting circle.}

Now, just because you may happen to be a rule breaker, and proud of it, doesn’t mean you should join the next circle you’re invited to. You have to evaluate whether it’s really right for you.

If you evaluate the circle you are considering joining based on the rest of the criteria I share in this article, the chance of the authorities ever getting involved is de minimis.

Bottom line on the issue of legality: Circles typically only get “busted” when someone complains. People only complain when they feel treated unjustly. If you select a gifting circle that treats women justly, legalities aside, you are unlikely to experience governmental involvement. That’s not legal advice, it’s simple karma.

Taxes

There is the pesky issue of taxes.

Women participating in circles maintain that the money gifted into the circle is just that, a gift. As of my writing, “The IRS offers taxpayers a golden opportunity to give substantial and meaningful gifts up to $14,000 annually… in 2013 to as many people as desired in cash…”

According to the Internal Revenue Code, a gift is only a gift IF and WHEN there is no expectation of return.

Two women were recently charged with and convicted of evading taxes through the gifting circle structure because it was clear from the way they held their circles that there was an expectation of return by the participating women. As you’ll see in my criteria for joining a circle, don’t do it if it’s about the money you’ll receive. That not only takes it out of the context of a gift for tax purposes, but it also makes it less likely you will receive.

Join a circle if you are ready to learn the power of receiving through giving with NO expectation of return. It’s a paradox. If you don’t get this viscerally, don’t even think about joining a circle because you’re asking for trouble – for you and your circle.

Bottom line on taxes: This non-reciprocal attitude about your gift, and the gifts you may receive in the future, is the determining factor regarding whether you are evading taxes by joining and gifting into a circle.  There is definitely risk here if you are audited and can’t explain where ya got all that money.

Unsustainability

As I wrote earlier, mathematically speaking, these circles are not sustainable.

Some number of women WILL lose their money, so I’ll say it again in a different way …  if you are entering a circle for the promise of a $40,000 return, don’t.

Plainly, 12% of women make it to the middle of a circle and receive all $40,000 in gifts and 87% do not. Pin that on the wall next to small business failure stats: only about 50% of small businesses survive past the 5 year mark (and some say that number is much higher, even up to 95%).

There are a lot reasons a business may fail – from lack of experience to a faulty business model and under-capitalization. Depending on your business acumen, one could argue the odds of getting a return on your investment are better putting $5,000 into a circle than putting $5,000 into starting your own business.

In a circle, depending on how many women who “cash out” re-join another circle, your risk of financial loss could be between 50% and 88%, not that different than your risk of loss in business.

I’ll take it a step further … if joining a circle is in alignment with what I call your Entrepreneurial Archetype (more on that in the “criteria for joining” section below), a circle could be the very best “business model” training you could possibly get and make it far more likely that any business venture you get involved with in the future will succeed.

Just don’t join it for the money. Have I said that enough times yet?

Secrecy

There’s no doubt that secrecy (or, as women in the circles insist it be called, privacy) is a key component of participating in a circle.

I’d like to change that.  What I don’t know is whether it’s a vital component and bringing circles out of the shadow and into the light would somehow do more harm (for the women they do benefit) than good.

I have a personal belief that “we are only as sick as our secrets” and transparency is one of my highest personal values, so I could be admittedly biased in such a way that I am blind to the power of the privacy.

I’ve never been part of any cool secret societies or clandestine collectives, so I can’t speak to the power of it.  If you can, have at it in the comments.

I do know that the secret nature of the circles has the power to corrupt, but perhaps it also has the power to bond at a deeper level and the women being supported in and by the circles are able to receive more as a result.  The jury is out on this one for me still.

Even with all that — the illegality, the tax issues, the math that indicates women down the line will lose money — for some women (maybe you) joining a circle may still be the right choice for your personal path.

So, how do you decide?

The Criteria for Whether You Should Join a Women’s Gifting Circle (or anything for that matter)

So, it all comes down to this.

If it’s right for you to join a gifting circle, it’ll be the best thing you’ve ever done. In the process of writing this article, I’ve interviewed a number of women who have benefited tremendously from their experience and process in circle, even many who have not yet received a single penny of financial return from the circle.

Nevertheless, for the women it’s right for … they have experienced things like:

“It is about MUCH more than just the gifting as I have yet to receive any gifts but shifted everything about my relationship w abundance including buying a house and brand new Prius because of the energetic shifts and collective prayers it has brought into my life”

and

“I’ve known of sisters who are quite sick or were the caretakers of others who are ill and have joined gifting circles, received the abundance that they provide and not gone into extreme debt. They also received the support of a circle of women who care and love them and are willing to stand by their side, no matter what.

I have known sisters who have gone into debt and owe a bank much money to start a business (and end up not actually owning their business due to selling equity to shareholders in order to raise capitol).

Then there are sisters who join a circle, receive abundance to birth their dream, therefore being full owner of their vision and product AND are part of a group of women who will midwife that dream.

I, as a court advocate for sexually and physically abused women, have seen MANY sisters go into shelters and homes with their traumatized children, and receive little support, financial or otherwise, from a cold and overwrought system. The spiral downward from here can be intense, including children in foster home, forced prostitution and much more.

Then there are sisters who I have heard of coming from violence and are empowered to leave those situations and rebuild their lives (and their self-love and learn their gifts) due to the abundance that a circle provides including the sisters who are willing to ally with another when the rest of society would simply go about their day.”

When it’s right, it’s right.

Of course, there is a flip side.

If it’s wrong for you (or you join a circle for the wrong reasons), it’ll be a karmic mistake you’ll pay for in a variety of ways.  Clearly the case for this woman and these women and these.

So, When Is it Right?

A gifting circle may be right for you under the following circumstances:

1. Your entrepreneurial path includes the Star/Connector Archetype*

and it’s either where you are now on the map OR where you are going and you are ready to stretch for it.  A fundamental part of your success in the circle will be your ability to invite other women to join your circle.  This is the classic Star/Connector business model — inviting people you know to do what you are doing.

This requires you to learn how to connect, communicate and invite.  You are going to have to sell.  If you hate sales, this could be a fairly non-intrusive way to learn to like it better, but if you are unwilling to learn to sell, do not join.  It’ll be bad for you and the other sisters in the circle.

2. You want to receive training to embody the Sage/Guide Archetype*

and the Circle you are joining will actually provide it.  The Sage/Guide Archetype is the one who holds people through a transformative process.  She is a coach, consultant, healer, guide.

If you make it to the middle of a circle (often called the “dessert” position), you will need to learn to hold a container of at least 15 other women in order to keep your circle together.  You will need to learn to hold the projections of those women, keep their energy high when they flag, maintain your energetic boundaries, and so many other things that are necessary when you are supporting a group of people so intimately.  Especially around money.

According to Lindsey Vona, a woman who publicly renounced her circle participation on a post-Lightening in a Bottle blog post, there is no training in the Circles.  At least there was not in her Circle.  So she left and gave up the whole thing.  I imagine that happens quite frequently.

I connected with a good friend who also abandoned ship after making it to the middle of a circle, into the coveted dessert position.  She didn’t know how to hold the circle together when women began losing energy for it.  And rather than seeking support, she let it go.

If you are joining a circle, ask your current Dessert contact (woman at the middle of the circle) how she is held and supported to hold the women in the circle and keep the circle together.  Feel her response.  Ask to speak to the people holding and supporting her as they will be the people holding and supporting you if and when you make it there.

This needs to become part of your criteria for investigation and due diligence.  How is this training provided? What sort of support structures actually exist? How can you tap into those support structures when you have made it to the “Dessert” part of the circle and things feel as if they are falling apart.

Because they will feel as if they are falling apart.

That’s part of your learning, actually.

How can you learn to lead if you aren’t given the opportunity to be a warrior?

 

If and when you finally make it there, to the coveted role of “dessert”, the center of the circle, you will be in perfect position to hold the guru projection (in which all the women on the outer rings of your circle project their gold and their shadows onto you), and hold it well, without taking it on.

If you can do this, not over-inflate your ego, take anything personally and keep remembering your role at the center of the circle — to lead from a place of presence, you can keep it going.

If not, your circle will die.  And then you’ll be left with that.

3.  You really aren’t doing it for the money.

I know it sounds weird that I would tell you that it’s right for you to join a gifting circle that is about you receiving $40,000 in gifts back, only if you aren’t in it for the money.

But, it’s the truth.

If you are in it for the money, you are likely to be disappointed.

If you are in it to stretch your abundance muscle, to learn how to receive, to learn how to manifest, for the sisterhood, for the leadership training, for the emotional support to get through a tough time in your life, great.  You cannot lose.

Yes, it’s a paradox — you learn abundance by giving away money with no expectation of receiving it back.

If you go into it for the money, odds are that you will. Lose.

One of the hardest to learn tenets of the law of attraction is the concept of getting crystal clear about what you want and then letting go of all attachment to actually getting it.  Another is the concept of giving more than you think you possibly can so as to create a vacuum that the Universe cannot help but fill.  A third is the idea that all giving must happen from the overflow with no expectation of return.

All three of these concepts can be practiced and experienced through the gifting circles.

Things to be sure of if you do join a circle:

Whatever you do, make sure you are not joining a circle that is rushing to split and has gifted women into it so the split can happen sooner.  This is the A-number-one sign that the circle is about to fall apart.

You must confirm that every single woman in the circle has gifted her full gift.  And, that she has done so and released all expectation of return other than the benefits that come from the support of the sisterhood.

If you sense anything otherwise from any member of the circle, either find a different circle or don’t join one at all.

The giving of the gift begins an alchemical process that cannot be activated without the giving. It begins as soon as a woman commits to join and then sets out to find the money to gift.  She explores resources she hasn’t been willing or able to tap into previously.

As soon as she does, a portal opens that up until then was invisible to her. (note: this exact same portal opens when a women invests in herself via an investment in her own business creations that are focused on giving her gifts in the world.)

If a gift is not made in full, the portal doesn’t open.  The alchemy doesn’t get activated.  The circle is on its way to disintegrating.

Period. Don’t let anyone tell you otherwise.

If you are offered to be gifted into the circle or to come in at a discount, run.

Being “backed” into a circle, however, is acceptable and can activate the alchemy.

What is Backing and Should You Back a Woman Into a Circle?

If you are interested in participating in the circle economy, but don’t have the time, energy, desire or right entrepreneurial archetype to participate, you can support another woman who is right for circle via backing.

This would meant that you loan another woman part or all of her gift to participate. She then makes the gift into the circle, opens the portal for herself and works the process.  If she makes it to the middle/top and receives gifts in return, you receive the loaned amount plus additional money (to be agreed upon by you and the woman you backed) back.  If she doesn’t make it to the middle/top, you could be out altogether.

I have a friend who backed a friend of hers for a ½ share.  This means that she made a gift of $2,500 and at such time (and if) the gal she backed makes it to the center and receives the gifts back, she will receive back double her gift.

Of course, the risk for the backer here is significant. And she really has no control.

There’s only a 12% likelihood that the backed woman will make it to the center and receive gifts back, so it’s important that the backer either give his or her gift with no expectation of return OR expect to provide emotional support and coaching to the person he or she has backed, with the intention of increasing the chances of return.

Before backing a woman into a circle, ask yourself this question:

Would you make an investment in this woman’s future without any expectation of financial return? Would an investment in her growth be worth it to you even if you never saw a dime back?

If so, go for it.

One Last Point on the Math

Much has been made of the math of the circles. The math is undeniable IF the circles are in a hurry to split. I’m not a mathematician, but it seems to me that there is a timing issue here.

If women join, not for the money, but per the criteria I shared above — for the sisterhood, the training, and the support — I believe there’s a likelihood that the circles could sustain themselves if they move slowly, in no hurry.

The right women will join, and the circles will be moving slowly enough that more and more women will become eligible. I’d be interested to know how slow a circle would have to move in order to truly make it a circle and not the pyramid structure that so many are railing against.

In a future article I intend to explore alternatives to these circles that could replicate the support women are receiving without the illegality, tax issues, or privacy.  If you have thoughts about alternatives, please share them in the comments so we can explore together.

Author’s Note: While I have been invited to join a few circles and back a few women into circles, I have chosen not to for a few reasons. 1) I wanted to keep my perspective totally pure so I could write this article without any risk of personal bias; 2) now that I have written the article and applied the criteria to myself, I cannot in good faith join because I would be joining purely for the financial return — I have plenty of sisterhood, entrepreneurial and leadership training already; 3) joining would not be in alignment with my personal Entrepreneurial Archetype.

* the Entrepreneurial Archetypes are a set of archetypes I have developed that key your personal archetype to a business model that is right for you based on where you are now and where you want to go in the future.  By understanding your current archetype and your future archetype(s), you can map a business model progression plan for your personal path to financial sovereignty in the new economy. Learn more at http://www.EyesWideOpenLife.com

 I invite you to share your thoughts below and to share with any woman who may be in the process of consideration as to whether a gifting circle is right for her.

8/1/2013 UPDATE: Since this writing, there have been more discussions you will want to be aware of. This one from Adam Apollo Amorastreya: Women’s Wisdom Gifting Circles — Illuminating Light, Investigating Shadow. And significant discussion on Philippe Lewis’s Facebook wall about Gifting Circles, which you can read here.  Philippe has called into question this article because he says it does not address the negative impact on the community from participation in the Circles.  To that I offer this:

When women join a Circle for the wrong reasons there will be a negative impact in her life that reverberates through her community, just as there is whenever a woman does anything for the wrong reasons.  To the extent that distrust and hurt feelings are created this is an opportunity for the woman who has lost trust to look inside and investigate her own motives for becoming involved in such a way that has caused her to lose trust for herself and for her sisters.  This is an opportunity for women who have lost trust in another sister – perhaps because she is making invitations inappropriately or excessively — to lovingly communicate with her what they see.

It is not the Circles that are harming our communities.  It is the way we behave that is harming our communities. Yes, perhaps it is true, as Philippe says, that the Circles are exacerbating it and bringing to light what’s already there, under the surface.  So why not use it as an opportunity for growth and awareness so that instead of blaming our sisters, or the Circles for our hurt, we instead use the opportunity to discover the source of our pain, heal it and grow as a community.

Here’s my offer to ANY woman who feels hurt by her participation in a Circle or by an invitation into a Circle:  Message me directly at [email protected] and I will sit with you at no charge to find the nugget of gold you are so close to discovering below this hurt.  Private coaching with me is $1,500/hour (and totally full), but I will charge you nothing.  Let’s find the gold in this shadow. I’ll help you do it.