As a crowdfunding research team we would like to share knowledge and insights with crowdfunding practitioners. We can do this in an early stage of our research by sharing results of our literature review.
We will publish reviews of recent studies by scientists from all over the world on our website. The focus is on studies from the field of crowdfunding, philanthropy, online communities and temporary organizations.
The reviews will provide a summary of relevant conclusions and will result in a better understanding in how crowdfunding could be used as a more effective and efficient fundraising tool. If possible (i.e. the article is published in an open access journal), a link to the original article will be included.
Feel free to comment or raise questions after reading our review. We would like to hear your opinion since the goal of our team is to build the knowledge together!
Activating your crowdfunding ambassadors
Crowdfunding is a valuable fundraising tool because it makes it possible to encouraged donors to share their donations with their Facebook (FB) friends.
A message request sent by a friend or family member is more convincing than a request from a stranger or the organization itself. Castillo, Petrie & Wardell implemented a field experiment within an online giving organization web site. Donors were asked to share their donation with their FB friends. People could share the information at their FB wall or could send a private message to a specific FB friend. Furthermore, donors received different levels of incentives to post a message after making a donation: no or an additional donation ($1 or $5) to the charity made in the name of the donor. The results give a good insight into the costs and benefits of asking donors to spread the word. Read further...
One sheep follows another?
Successful crowdfunding platforms like Indiegogo enable donors to make their donation visible to other visitors of the site. Their donation amounts give a signal to potential donors. Previous field experiments in other studies show that people adapt their donation toward donated amounts of others. Information about higher (lower) contributions increase (decrease) contributions. The researchers Croson en Shang argue that there are certain limits to this adaptation behavior. They show that when information about the donations of others is too extreme, it does influence individual contributions. More insight into the tipping point could help creators to stimulate crowdfunding donations. Read more....
Crowdfunding: Ready, set goals!
Potential donors of a crowdfunding project are more inclined to donate when the project reaches his deadline. A possible explanation is that a project will simply not get funded when the target amount has not been reached. Cryder, Loewenstein & Steltman show that donors are more inclined to donate because of the increase in perceived impact. Donors experience a greater feeling of progress when the campaigns approach their goals. The results of this study show how crowdfunding platforms could stimulate individual donations by making donations more impactful. Read more...
All or nothing vs. direct donation
Most studies to crowdfunding focus on the success of one single crowdfunding project. It is possible that visitors of a crowdfunding platform want to divide their donation to multiple (ballet) projects. A study of Rick Wash and Jacob Solomon* from the Michigan university shows that the crowdfunding model - all or nothing vs. direct donation model - has an significant influence on how donors divide their money over different project. The results of this study show that the return rule has a positive influence on the success of one single project. However, a direct donation model could be more useful when donors want to donate to multiple projects.