The Truth About Gifting Circles: When Scarcity is Disguised as Abundance

It was a Thursday afternoon when I received the invitation to join an “abundance” gifting circle. I had just set my money goals for the month. A half hour later I was contacted about an opportunity to be a part of a group focused on abundance where I could make money.

Was it Divine Right timing? I was curious.

This sounded like a group of amazing entrepreneurial women who were focusing on and creating abundance.

Awesome! Sign me up.

But before we went further into the conversation, I had a question. I asked, “Is this one of those things where you have to give money upfront and then you get a bunch of money back?”

She answered, “Yes. How did you know?”

It was simple and sounded too good to be true. But was it?

The initial investment was $500 and I was to get $4000 in return, merely weeks after I recruited two more people, who would also invest $500 and recruit two more people each. You do this for two cycles, investing or giving a total of $1000 and receiving $8000, with a $7000 profit.

The idea of receiving that kind of return for something so simple was appealing. And it would certainly help with the financial goals I had just set.

I wanted to learn how this worked. So, we set up a call for the next day with a mutual friend who would help me understand how it worked.

But I didn’t make it that far.

I couldn’t ignore the big fat red flag my gut was waving at me.

My impatience and curiosity got the better of me and I did some research online. And soon I felt disappointed that I wouldn’t be in a circle with these amazing women.

There were many fresh articles on gifting circles and warnings about pyramid schemes. I quickly learned there had been an uptick in such circles since COVID came around.

I found this article in the Washington Post that did a great job of clarifying what is going on with this kind of model:

A “pyramid scheme” is defined as a fraudulent moneymaking scheme in which early participants are paid out of money received from later recruits, with the final recruits putting money in and getting nothing back.

Pyramid scheme defined by the Federal Trade Commision: They promise consumers or investors large profits based primarily on recruiting others to join their program, not based on profits from any real investment or real sale of goods to the public.

I was assured that the gifting circle is not a pyramid scheme. That there were no people “at the very top” benefiting. It’s a circle with people on the inside, in the “water position” or “dessert position”(based on example below). The people in these positions are abundantly “gifted” money from those coming into the circle. She said this group is very “high vibration“ and some people have even gotten their money back when they decided to leave. OK, great.

The idea is beautiful — people receiving and giving and increasing their capacity to both give and receive. This idea I love. And I value that some people have benefited and likely received some healing around money because they expanded their capacity to receive.

There are just a few problems. To start, a gifting circle IS clearly a pyramid scheme.

This blog by Nala Walla does a beautiful, thorough, and gentle job of clarifying how the “flower” or nature-based model, is in fact a pyramid:

“This concept of an imploding bloom is not only inaccurate (more like a black hole than a flower), it is inappropriate at best, and at worst, deliberately misleading. The only structure that is even remotely comparable to this “eight-four-two-one” sequence is a pyramid.” Walla goes on to say:

“Please recognize your participation in an unbalanced, growth-based economic structure, which closely mimics the larger (masculine!) economy in which you are embedded, rather than challenging it. Please see the contradiction inherent in discrediting your critics by accusing them of “linear thinking” when your very system funnels wealth unilaterally upwards.

Years ago, not being clear with my financial numbers and how business worked led me to bankruptcy. If I’ve learned one thing about money, it’s to do the math.

If I gave $500 and received $4000, that is eight times my investment, or a 700% increase.

That $3500 gain has to come from somewhere. There’s no product or service underlying the exchange of money and no real value created(another red flag). So, how can everyone invest only 12.5% of an amount and receive 100% in return? There have to be people at the bottom or on the outside coming in constantly for it to feed money to the people receiving.

For it to be completely in integrity, it would have to be an infinite loop. Gifting circles are shaped like a pyramid.

This is clearly impossible in the finite Earth-plane, so the last people in before the pyramid ends, are the ones to lose out.

It’s like a high-stakes game of musical chairs — when the music shuts off, most people have a seat. However, there remains at least a few or most likely exponentially many more sad people wandering around with nothing. Here’s a vivid mathematical explanation of this model and a few similar ones. It shows graphics showing the astounding percentage of people who buy in who lose.

I still worried that I was caught in scarcity thinking. Maybe those in the circle were onto something that I couldn’t see or sense and I was going to miss out. Was I holding myself back from magical abundance and infinite possibilities of receiving? Was I the fool saying no to an opportunity to have $8,000 by “giving” $500 to two people on the inside of the circle?

I was trying to be open because I have experienced many money miracles. Moments where money seemed to go further than logically possible somehow. Where a mindset breakthrough led to money arriving. In the past, this has usually arrived in the form of payment from a product or service I offered or a gift. And when I say “gift,” I mean money that required no recruitment or upfront investment.

But over the following days, no matter how much research I did, which financial or legal expert I consulted, it literally did not add up. When there’s no product or service, there’s no value being created or exchanged, money cannot magically grow by 700% just by moving it around via Venmo or PayPal.

This pyramid scheme is categorized as a gifting circle with countless different names online. They’ve been around forever. No matter what you call it or how long people have used them, it’s considered predatory and illegal, and (often many) people eventually lose in the end.

The reality is, money isn’t magic. It’s math.

As many of us may have heard as children — money doesn’t grow on trees. There is no recurring, sustainable cycle to this model with the fake flower.

Roxanne Olson, a lawyer in California says:

“It could be a flower, a pentagram, or a solar system — if the scheme involves paying money, introducing new people to the scheme, and a resulting chance of compensation (no matter how slight) it is an illegal “chain.”

She cites an example of a group called “Women Helping Women” in California getting busted for “giving” in this kind of structure.

The Federal Trade Commission, the Better Business Bureau, and many state organizations have issued warnings about these circles. They describe this exact kind of structure of investment and that it is always disguised as “giving.”

Giving does not require anyone to recruit two people and to have an expectation that everyone will receive eight times their investment. When there are these conditions around a “gift,” it becomes an “investment.” It doesn’t matter what your intention is or how generous you feel when you are transferring the money to the person in the circle. The bottom line is, this structure is illegal and is sacrificing those in the end. Here is a case where a woman who started a “gifting table” was sentenced to prison.

There ARE giving circles where people pool money together and give to actual charities. That’s entirely different — the charity benefits and not the people who put up the money. That is giving.

My gut and rational mind agreed that this was not a ‘yes’ for me, and that I would be out of integrity with myself if I said yes. Yet, a part of me still feared that I was missing out and would be left out. That mammalian part of my brain that wanted to fit in, belong, or be included kept on grasping. This structure is a great example of “belonging marketing.”

This form of marketing uses a sense of belonging, especially with the polarization of so many logical people being against it.

There have been plenty of times when I have left logic behind in budgets and business plans. And sometimes following my gut worked out, others it didn’t. So these days, I still follow my gut when it comes to money. But only AFTER I do the research and learn what I need to learn to make an informed decision.

Two days after I was asked about a gifting circle, I received an email about an opportunity to invest $85 and invite two others to do the same. I could get up to $100,000 by continually reinvesting and inviting people in and I’d get access to some entrepreneurial educational materials. This is more legit because of the educational materials. There’s a product and training involved…at least to some degree.

I couldn’t help but ask myself why I was being presented with these “opportunities.” Again, I wondered if I was coming from scarcity and blocking “abundance.”

I realized that saying yes to either “opportunity“ would in fact be me saying yes to scarcity.

Believing that I’d need to say yes to something that goes against rational thinking, my vision, intuition, basic math, my integrity, and potentially the law, in order to get money, THAT is truly scarcity.

I’m not that motivated by money itself.

Charles Eisenstein, author of “Sacred Economics,” wrote this article that clarifies that participation in such a pyramid “brings further scarcity.” He states:

“One problem with many of the “abundance” teachings is that for the generosity to have its intended effect, it must be genuine. It must reflect a genuine belief in life’s abundance. If it is intended, even unconsciously, as a way to manipulate God or the universe, then it is actually an embodiment of scarcity thinking.”

Prosperity is about being confident in yourself to create money in the world, not from magical thinking where someone or many down the line will lose. Gifting circles are not about abundance.

Calling something spiritual or having a spiritual intention to increase abundance for people can cause people to bypass a regard for personal responsibility and logic. It’s easy to think, “Because it’s ‘spiritual,’ it must be good.” But clearly the two concepts are not mutually inclusive.

Prosperity isn’t as simple as giving money away and getting a bunch back. Conflating spiritual principles with a pyramid scheme does not give it integrity.

Money has been such a significant and powerful teacher for me. I shared my biggest financial low in my TEDx talk along with how I reframed my relationship with money and business to create success at a new level. I believe these two recent gifting or investment opportunities showing up were a test for me.  This fortified my resolve to share empowering financial and business literacy & to support creative and holistic business owners to thrive.

You deserve to live and give in prosperity. I plead with you to not bypass the math, facts, and laws of the 3rd dimension. I’ve learned the hard way not to ignore the numbers and fine print. You can create more money without sacrificing those on down the line with a win-lose paradigm. Not to mention karma is a bitch.

And money alone (especially with sacrifice) is not prosperity. It is possible to create prosperity that is aligned with your purpose and in integrity with your values.

A true experience of prosperity comes from creating value in the world through your innate gifts and talents and having the freedom to live from your values.

Let’s create women’s circles, communities, and businesses where we contribute to each other. We can do this through listening, connection, masterminding, and sharing talents and resources to support our thriving, thus creating win-win’s all around. That sounds like abundance to me.

My hope is that this article helps those of you contemplating joining a gifting circle make an informed decision. It’s the article I wished I had found when I was doing all the research before I made the decision not to join.

Because of this article, I’ve had a lot of people contact me who are in challenges related to gifting circles. I am not a lawyer and am not able to give advice on the matter.

However, if you are ready to create, grow, or optimize your prosperity on all levels through business, I may be of some help there. Apply for a consult to see if it’s a fit to work together.