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The Disruptive Concept of Micro-Donations

By January 30, 2019 February 19th, 2019 No Comments

In northern Scandinavia, there is a saying, “many small streams form a river in the end”, and while this saying can be transposed upon many different situations, it echoes well in the world of micro-donations.

While the holy grail of donation users, the regular giving, should have the maintained focus for any donation strategy, it is easy to forget the portion with smaller disposable income, as well as the younger generation, being more cautious giving donations to organisations.

These groups are however still passionate and very motivated users and could bring a steady revenue stream outside of the regular funnel services and in 2019 it is calculated that the millennia generation will start overtaking the baby boomers as the largest demographic in the US. More countries will thus follow. It is therefore important to futureproof the ways to donate for the rising demographic of millennia’s.

The concept of Micro-donations is forming small streams, usually from 50 cents to 10 dollars, could be a potential disrupter in the non-for-profit space but have traditionally been hindered by expensive transaction fees and cumbersome donation processes. However, with the breakthrough of payment technology for online payment and the use of mobile technology this concept is worth revisiting.

With smaller donations come smaller tangible targets. The movement Share the Meal which is an initiative of the United Nations world food program have developed a mobile application that allows a user to make a micro-donation towards meals for children. A single meal cost as little as US$0.50 which a user can choose to support or can put in more money for more meals. However, the concept of giving the user an easy way of donation to a tangible target through a micro-donation is very much the core of the initiative.

Millennials as a group are not unfamiliar with the concept of micro-payments. Thanks to the continued penetration of mobile devices and technology, micro-payments have been in use by corporates/apps and SAAS platform providers for quite some time and have proven the ability to build reliable revenue streams of this nature. Activision Blizzard, one of the gaming industry’s largest design studios and game publishers, reported that in 2018, half of their 7+billion dollar revenue stream came from microtransactions (ranging from around $1-25). Similarly, Electronic Arts (makers of games like FIFA) also made close to $1 billion through in-game microtransactions alone.

We could assume that the generation of new donors, millennia’s, are more receptive and familiar to the small transactional landscape based on these numbers and could, therefore, be an interesting avenue for Non for profits to explore and add this into a new type of marketing funnel to retain the new donors and in the end make them a long-time user for the organisation.

Challenges around the tax deductibility of donations under $2 remain and many payment gateways still charge transaction fees that make this type of donation difficult if not impossible, but times are changing and newer more progressive payment gateways will increasingly enable micro-donation giving. Suffice it to say that this is a space for all fundraisers to be watching and learning about.

At Leafcutter we are dedicated to helping nonprofits succeed through technology and we embrace disruptive technologies that improve the ability for marketers and fundraisers to tell stories and raise money for their cause. Whilst micro-donations are far from being part of mainstream fundraising strategies, progressive organisations can and should explore the technologies enabling micro-donations and strategies/tactics for incorporating this type of giving into their plans. If you want to know more about the technologies driving micro-donations then reach out and let’s work together to get micro-donations into your broader fundraising strategy.

 

  • Photo by Thomas R. Eudaly