Green-Business Experiment: Crowdsourcing a power Upgrade

What sort of unique customer-donation program helped a little cafe purchase energy-efficient lighting. But will this fund-raising method gain traction?

Restaurant owner Arnie Sturham knew his growing business was a power hog. Operating in a 70-year-old building on Bainbridge Island, Wash., Treehouse Café needed $3,000 to retrofit part of its space with an increase of energy-efficient lighting. If the upgrade was done, the business enterprise stood to reap around $1,800 a year in reduced electric bills.

With money tight, Sturham tried a unique way for raising the needed up-front money: He got donations from customers.

Sturham didn’t pass the hat — instead, all patrons who spent a lot more than $10 had a 1 percent surcharge put into their bill. A check-box allowed customers to "opt out" if indeed they didn’t want to help make the donation.

The result? In under half a year, Treehouse raised the full total necessary for its lighting upgrade. About 90 percent of patrons participated. Treehouse’s fundraising campaign ended in March, and Sturham says the lighting upgrades are anticipated to be completed come early july.

The Treehouse Café

How did this 50-employee company pull it off? It had help from the building blocks for Responsible Technology, a little, 26-year-old nonprofit in Carson City, Nev., focused on energy technology and efficiency. The building blocks created the customer-donation program software that automatically adds the right donation total customers’ bills. In addition, it conducted a power audit to recognize changes that could bring the very best energy savings and helped Treehouse make an application for available utility rebates.

The price to Treehouse café? About $500 to customize the point-of-sale software supplied by the foundation, in order that patrons spending significantly less than $10 wouldn’t get the surcharge.

Related: Raising Cash from Customers to invest in Growth

Sturham says he likely to hear from a whole lot of customers about the 1 percent charge, but there is surprisingly little reaction.

"It went almost unnoticed," he says. "I had some individuals pull me aside and pat me on the trunk and say just what a wonderful thing it really is, and a few other folks said it must be opt-in instead of opt-out."

Lessons Learned Whether this fundraising model could turn into a trend for small-businesses seeking to live green remains to be observed. The foundation’s plans for the Bainbridge project, a pilot program, fell short of its original vision of fabricating a more substantial community campaign. And despite fundraiser’s success, the restaurant called off plans for another project with the business.

Kevin Cross

The foundation’s goal was that several area businesses would run donation campaigns simultaneously, creating a crucial mass of public awareness about the drive to "green" local businesses and reduce energy use, according to Kevin Cross, the foundation’s business-relations director. However the foundation has yet to join up other Bainbridge merchants, even though some are still great deal of thought, he says.

Sturham says he was disappointed that neighboring businesses didn’t participate. While only a small number of patrons objected to this program, he felt stretched to create time to talk with each one.

Related: — Reeling in Funds from Fans

"I don’t possess time to personally field every disapproval," he says. "I was sick and tired of being the only guy doing this."

Treehouse received positive press about its initiative in the neighborhood paper, however, not until its fundraising campaign was nearly complete — too late to greatly help generate buzz. "Creating more marketing materials is certainly on our radar," Cross says.

A drive to greatly help pay to "green" a for-profit business may face more resistance than typical charity fundraisers, says Jennifer Kaplan, partner at the small-business consulting firm Greenhance in Washington, D.C., and writer of Greening YOUR ENTERPRISE. "By all demographic studies, no more than 10 percent of individuals are self-motivated to accomplish green activities," she says.

While crowdfunding projects with customer dollars and other donations is gaining traction with online platforms such as for example Kickstarter, IndieGoGo and the green-focused, one reason behind their success may be the incentives wanted to participating donors, Kaplan says. Often incentives include only email updates and product samples, sufficient to greatly help donors feel involved. It’s a model charities have used for many years, supplying a coffee mug or t-shirt to donors of a particular dollar amount.

"The act of donating money to green somebody else’s business is an extremely hard sell lacking any incentive," says Kaplan.

The building blocks plans to launch another campaign to improve energy-upgrade funds at a Seattle-area grocery and café soon, according to Cross. Meantime, the building blocks is searching for other communities for similar fundraisers, he says. "We are ready to partner with any size business, any place in the united states."

Related: How Crowdfunding Leverages the energy of Peer Persuasion