The Math Behind Women’s Empowerment Lotus/Giving Circles (AKA Pyramid Schemes)
COVID-19 update! Since the pandemic, this post has been blowing up. A lot of the “artists supporting artists” circles, etc. that are going around on Instagram and elsewhere use the exact same math as this. Just an FYI.
If your wonderful, thoughtful, trustworthy, and intelligent friend invites you to a “non-hierarchical, circular, feminist, anti-capitalist, secret-society-esk, women’s financial empowerment weekly emotional support group” …it might be a pyramid scheme!!!
The pitch makes you feel valued and like you’re in on a Big Secret; the whole thing is presented in such a way that convolutes the pyramid-ness of it all. It took me a solid 12 hours (and my best friend laughing in my face when I broke the rules of secrecy to confide in her) to realize I was being duped. I suspect most circle members don’t realize what they’re participating in.
Anyway, here’s how it supposedly works:
(Or just scroll down for how it actually works.)
The circle starts as a branch-off from a previous circle. It has seven women: one in the middle ‘receiving,’ two around her ‘supporting,’ and four around them ‘attracting.’ The woman in the ‘receiving’ position is leading weekly support groups by phone (which actually sound wonderful.) The women go about recruiting new members to an outer circle, or ‘giving’ positions. These new ‘giving’ members all gift $5,000 to the woman in the ‘receiving’ position. But — don’t fret — every woman in the ‘giving’ position will, at some point, be in the ‘receiving’ position and cash in on $40k (or a $35k profit, considering that she also gave away 5k). The whole thing is “cyclical” and “non-hierarchical.” As these ‘giving’ positions fill up, the women continue with their weekly support groups. Once the lotus is full, the ‘receiving’ woman is finished with her circle experience. She exits with her profit, and the remaining 14 women branch into two new groups of 7. The two ‘supporting’ women become ‘receiving’ facilitators in their new circles. ‘Attracting’ women are now in ‘supporting’ roles, and the ‘giving’ women are now ‘attracting.’ Everyone levels down, one spot closer to their inevitable ‘receiving’ day. You don’t pay more money to level down, only to enter.
Here’s some paperwork that they send out, describing all the magical benefits of joining.
Here’s how it actually works:
Let’s assume that we start with one lotus circle. It begins with seven women and accumulates eight more women (for a total of 15). When it reaches 15, one women completes her circle, and the remaining group of 14 split in two new groups of 7.
Let’s assume that both of those new two groups also each successfully accumulate and split. Now we have four groups. Now we have eight groups. Now sixteen, etc. Each new circle accumulates eight new women who were not previously participating.
The above spreadsheet models a hypothetical perfect growth of circles, where all of them successfully accumulate and split. You can see that by iteration 23, we exceed the population of the United States. By iteration 29, we exceed the population of all women in the world. By 30, we exceed the population of the world. The percentage of women who have not received the 40k payoff ranges from 100% (at iteration zero, with the original seven women) to 87.5%, when all women on Earth are participating. Naturally, it is impossible for the last 87.5% of participants to cash out, as we are out of humans.
This demonstrates that, even when circles work perfectly, this is not financially empowering women. It is exploiting women. We can assume that in the imperfect world, rather than the entire population participating in circles, the groups are actually unable to successfully accumulate eight new women. They putter out. And 87–93% of women at the bottom are losing.
Turns out, this math is exactly the same as The Airplane Game, a classic pyramid scheme from the 1980s. The lotus trickery just took a pyramid and swirled it around in a blurry circle of “anti-capitalist emotional empowerment.”
And here’s my spreadsheet link, again, that I worked really hard on and all the circle participants ignored:
And one more thing!
Since creating this post, a lot of folks have brought to my attention a money lending strategy that’s popular in many immigrant communities, and maybe looks a little bit like what’s gong on in this blog post. Everyone chips in $10 (or however much), lends it to one person, and then that person pays it back over time. The “pot” of money goes from person to person in the group. This is not a pyramid scheme, as everyone is paying the money back. This system doesn’t result in anybody makeing a profit. It’s just a micro-lending thing. Super lovely!