Micro-donation is a specific type of crowdfunding scheme that seeks to capture small donations from very many people (e.g. the general public) by giving them the option to ’round up the bill’ when making purchases.
As a potential financing scheme for energy communities (ECs), micro-donations warrant a separate explanation. Under the right circumstances, micro-donations can be extremely effective. The simple act of clicking ‘yes’ while already making a payment and the small sums (between €0.01 and €0.99) make it an easy decision for many people who might not otherwise go to the trouble of looking up how to donate to a specific organisation or EC.
But, as some CEES Partners learned, micro-donations can be more difficult to implement than expected.
Generally, organisations use one of two approaches for micro-donations. Entities with a large client base that regularly purchases goods or services can easily integrate the micro-donation option into bills (see Case Study: Énergie Solidaire) or to cash registers or card payment devices. Smaller entities with fewer customers and more sporadic purchases may try to partner with large organisations or businesses (e.g. a supermarket, hardware store or even an energy supplier) that may be looking for ways to help their clients support local social causes. In some cases, very local shops or small businesses may be open to collaboration.
Barriers to successful micro-donation campaigns
CEES pilots revealed three substantial barriers to efforts to establish either approach.
First, most ECs do not have a particularly large client base and sell only one product, on a monthly billing schedule. This makes it difficult to get a large volume of small donations. Second, small and local businesses may be keen to support local social causes but unable to absorb the costs and efforts linked to taking and transferring the donations.
Finally, for large entities with many customers and transactions, decisions about what organisations to support are typically made at company headquarters. While the local branch of a hardware store, for example, may like the idea of supporting local energy solidarity measures, they may not have authority to do so. While CEES anticipates micro-donations will not be feasible for most ECs, the case study of Énergie Solidaire offers insights into a successful scheme.
Simplicity is key to success
People do not want it to take a lot of time and effort to give a few pennies. How ECs might go about implementing such schemes depends heavily on whether or not they have an existing customer base. Under the right circumstances, a micro-donation scheme can provide a relatively stable funding stream. ECs that need to partner with other retailers or organisations should keep in mind that micro-donations are usually very small amounts, often made on impulse. It would likely be unwise to consider this approach as part of long-term base funding.
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