Can a few dollars produce significant impact? And by a few I mean very little. Because that’s the idea behind microgiving, a relatively new approach to fundraising that asks multiple donors to cough up small amounts of cash to support a cause. The idea stems from the beliefs that philanthropists need not be millionaires, that each one of us has something to give, and that if we pool enough of our small change together, a group of modest donations can effect real change.

Call it the Barack Obama election effect: if a large enough crowd offers small disbursements, victorious results can occur. The concept is not new. We see it every Sunday with the passing of collection plates in church pews, or in the donation boxes at the grocery store or coffee shop. But as an online fundraising model for charities and nonprofits, it’s growing in favour, thanks to social media’s ability to elevate microgiving to a new level.

“Many organizations are looking at how microgiving can help them reach a broader pool of donors than regular appeals like direct mail, telemarketing, direct response or television,” says Tania Little of Ideate Philanthropy. It’s what inspired American-based organizations Kiva and its younger brother, Kickstarter. But how effective is microgiving and should charities be making it a greater priority in their fundraising strategies?

What is it?

In Canada, microgiving recently established a strong presence thanks to Small Change Fund (SCF), an organization with a dual goal of funding projects with small amounts of money and servicing donors across Canada. “We make sure groups get the funding they need that is responsive, timely and flexible,” says Executive Director Mary McGrath, explaining how she and co-founder Ruth Richardson were frustrated witnessing great projects struggling to find funding, shut out from traditional avenues or too small to afford reporting burdens. “We knew there had to be a mechanism to get funding.”

Here’s how it works: organizations submit a project for consideration. It gets reviewed by specially trained SCF advisors. Once approved, the project goes up on the website and is promoted by SCF and the organizations themselves. Potential donors visit the site, read through profiles or watch video entries and then make a donation to support the funding goals that most resonate with them.

While a few people have shown deeper pockets, giving in the $500 to $1,000 range, SCF reports that some donors do consistently give at the $5 to $10 level. The average donation runs about $50.

Once funded, every organization has to report back to its donors via video (videocameras are lent out to every project) to ensure transparency and messages of gratitude are transmitted effectively.

Over time, the organization has expanded its focus beyond the projects themselves to engage with and offer services to potential donors. Juggling the needs of two audiences isn’t easy but SCF is seemingly on its way to helping both. In June they completed their first campaign — encouraging Canadians to donate to selected “Seven Small Wonders of Canada” in honour of Canada Day — which was a great success, despite a small budget and few corporate partners.

Already planning a fall campaign, McGrath is hopeful. “If we could eventually get to the point of generating the number of donations like that every month, we would be fine,” she enthuses.

Small is beautiful

The various projects posted on the site are building a slow and steady momentum of awareness and support too. Just ask Jennifer West of Halifax-based Ecology Action Centre, one of the largest environmental organizations in Canada, with 30 staff members and a range of projects in areas like transportation, energy, food, water and urban design. This year West posted a profile on SCF for the organization’s Project Groundswell, hoping to raise money to purchase data loggers to help monitor groundwater levels in Nova Scotia. Today the project sits proudly on Small Change Fund’s success stories page.

West is delighted by the outcome and is already working at getting her next project approved on the site. And she has only good words for SCF’s prospect as a powerful broker of funds, ideas and relationships. “It was efficient and a great way to network,” she says, adding that the site allowed her to learn about other important projects she may not have known about otherwise. “Even though Small Change Fund is just starting out I can see huge potential for seeing so many projects up there,” she says. “I have nothing but good things to say about them; it’s very exciting.”

Keep in mind…

As with any new initiative, the experience was filled with lessons learned. For one thing, before West’s project was deemed a success, she chose to reduce the amount she initially requested because she simply wasn’t going into the field enough to maintain the momentum. And, as she explains, “You can’t get to your funds until it’s taken down.” After considering her options and realizing she had already raised a sufficient portion of her costs, West decided it best to take it down and move onto the next phase of her work. It worked out for the best, she says.

When she posts her next project, she’ll be doing so with some best practices up her sleeve. For one thing, she’s learned the necessity of taking good photos and videos. In fact, after two months on the site, West took a webinar on how to better communicate environmental messages. She immediately changed the profile picture — from a neutral photo to one that was a lot more engaging and positive — and the results were astounding. “Just by doing that, I got $2,000 in one day,” she exclaims.

“Video is key,” echoes McGrath. “It helps engage people and makes those little asks very real.”

Little offers other tips for those new to microgiving, including, ensuring you have compelling stories to share that are directly related to why you’re raising money. She adds, “Remember to focus on the donors’ needs and wants, not the organization’s needs and wants.” Also have existing vehicles of communications in place, such as websites and blogs, to effectively get people involved.

Little says the majority of organizations who have successfully built microgiving into their fundraising planning are organizations that have already embraced social media and have a broad range of communications vehicles to spread the word. West agrees. When she initially joined SCF, she wasn’t yet on Twitter or Facebook and hadn’t yet established a strong social network. But now that’s become essential. “I’ll be able to promote my project better next time,” she says.

And storytelling is really important, says Little, explaining how potential donors who come onto microgiving sites view many ideas that can divert their attention from supporting yours. “That notion of competitiveness and needing to tell your story in a really compelling way will be critical to any single idea’s success,” she says. It comes down to engaging your donors. After all, “no matter how big or small the gift, people want it to be meaningful,” agrees McGrath. “The more meaningful you can make it the better; everyone wants to know where their money goes and everyone wants a connection with people they’re supporting.”

SCF’s co-founder offers another tip: break down the ask into really tangible pieces. Show exactly what their money will help purchase and what that means to the recipients. “But be honest, or else it won’t work,” she cautions.

Is it for you?

Microgiving is not for everyone. If you have something small, immediate, tangible and easy to contribute to, it can work wonderfully, explains West. “But if you’re mostly administrative, it would be a challenge to sell your project.” Also if you’re looking to raise a substantive amount quickly, sometimes applying for larger chunks of funding can work best. For their part, SCF’s upcoming fall campaign will be focused on corporate engagement, asking employers to match the donations of their employees. Leveraging funds while engaging an entire workforce can prove doubly impactful, says McGrath. “It will take us a long time with individual donors,” she concedes. “It’s good to reach many at once.” She says schools are another possible target.

Regardless of how you approach it, organizations need to be aware of the challenges ahead with microgiving and maintain a realistic outlook, says Little. Building long-term relationships with one’s donor base is not always easy once the microgiving goals are met. After all, she explains, one of the largest donor audiences for microgiving is millennials who are known to be notoriously committed to causes but less tied to organizations.

“They are more likely to participate in specific campaigns that stir their passions and likely to stop supporting the organization once that campaign is done. That can be an issue for organizations who see microgiving as an acquisition tool for future givers.” There’s also the issue that microgiving — still in its infancy — is seen as primarily a vehicle for emergency appeals versus “an opportunity to make a compelling call for action to a specific project that could appeal to their donor base,” says Little.

But like all other young techniques for raising funds, the development of the field will lead to greater understanding and best practices that the sector doesn’t have the benefit of today. The thing that all charities need to understand, says Little, is microgiving is only one of many strategies for prospecting donors and connecting them to your organization. She says the best idea is to “provide them with a number of a number of ways to support you, so that you can deepen your relationship with them.”

Elisa Birnbaum is a freelance journalist, producer and communications consultant living in Toronto. She is also president of Elle Communications and can be reached at: info@ellecommunications.ca.

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