The Rise of Microphilanthropy: Small Donations With a Large Impact

Philanthropy is often represented by a large check donation sent to charity. While this is a fair representation, this kind of charitable giving isn’t always accessible to everyone, especially younger generations. The social media boom that has consumed the past decade has created the demand for a closer relationship between a donor’s daily activities and the causes that they care about. Social media may have created this demand, but innovation in financial technology has expanded its popularity and adoption by enabling the efficient aggregation and distribution of micro philanthropic donations.

According to Tech’s Good, micro-donations, which are donations between $0.25 and $10, are powerful as they encourage everyday giving and they make philanthropy more affordable and meaningful for internet and smartphone users across the globe. They are an excellent way to “democratize” donating on a grassroots level, in which everyone, despite age or socioeconomic status, has the opportunity to donate. Crowdrise’s social fundraising data report for nonprofits revealed that Millennials and Gen X generations made up nearly 50% of all GoFundMe donors. However, it is also reported that they give smaller amounts per year than older generations. Therefore, micro-donations act on the existing compassion of younger generations by engaging them in everyday giving.

Microphilanthropy takes multiple forms, but they all work toward a bigger picture that includes thousands of daily or weekly donations that will eventually equal the sum of a large check. Digital roundups transform mundane activities, such as purchasing your morning coffee, to opportunities to give back. Payroll RoundDowns allow donors to give small percentages of their paycheck to nonprofits, and repeat donations of small amounts are also a valuable way to build a large donation over time.

All forms of microphilanthropy require innovative technology, knowledge of social media patterns and an understanding of behaviors demonstrated by younger generations. The result is a lifestyle in which donating seamlessly integrates with daily activities.

Amazon, for example, has paved the way for a new trend of micro-donations with Amazon Smile. Through this donation software, customers doing their normal Amazon shopping are given the opportunity to donate 0.5% of their total amount to the nonprofit their choice. Though 0.5% may not seem like a lot, micro-donations have proven to be extremely impactful over time, as the amount of customers donating and the frequency of donations increases. This service allows customers to join in Amazon’s donation strategy and aid nonprofits that are making a difference.

During the COVID-19 pandemic, many companies have launched efforts to donate percentages of their sales to relief funds and organizations like Feeding America and Doctors Without Borders. Women’s swimwear company Summersalt, for example, chose to support No Kid Hungry by donating $15 of major purchases to support their cause. Purple Carrot, a meal delivery service, has supported Feeding America by donating a portion of its sales. While some larger corporations have taken it upon themselves to donate 100% of their proceeds to support COVID-19 relief efforts, smaller businesses haven’t neglected their responsibility to help. They have joined the fight with smaller contributions that make a large impact.

In the past, a major obstacle to the spread of micro-donations had been high credit card transaction fees of $0.30 per transaction. However, as technology in mobile payment methods continues to advance, credit card transaction fees have significantly decreased and will continue to do so in the future.

Microphilanthropy has answered the question of how to incorporate charitable giving into the growing digital sphere, even in a worldwide pandemic. Given these continued advances in fintech, we can expect to see an increasingly higher volume of donations made this way in the future.