Donor Retention in Online Crowdfunding Communities: A Case Study of DonorsChoose.org

Online crowdfunding platforms like DonorsChoose.org and Kickstarter allow specific projects to get funded by targeted contributions from a large number of people. Critical for the success of crowdfunding communities is recruitment and continued engagement of donors. With donor attrition rates above 70%, a significant challenge for online crowdfunding platforms as well as traditional offline non-profit organizations is the problem of donor retention. We present a large-scale study of millions of donors and donations on DonorsChoose.org, a crowdfunding platform for education projects. Studying an online crowdfunding platform allows for an unprecedented detailed view of how people direct their donations. We explore various factors impacting donor retention which allows us to identify different groups of donors and quantify their propensity to return for subsequent donations. We find that donors are more likely to return if they had a positive interaction with the receiver of the donation. We also show that this includes appropriate and timely recognition of their support as well as detailed communication of their impact. Finally, we discuss how our findings could inform steps to improve donor retention in crowdfunding communities and non-profit organizations.Comment: preprint version of WWW 2015 pape

An Annotated Bibliography of Recent Literature on Current Developments in Philanthropy

As philanthropic organizations play an increasingly important role in societies around the world, the research on philanthropy – from giving and volunteering practices to regulatory frameworks to digital innovations – has also evolved in recent decades. It is important to develop a thorough overview of the relevant scientific discourses and literature on current developments in philanthropy. This will allow researchers and practitioners to enhance the understanding of philanthropy and to improve its practice worldwide. This report provides new insights on current developments and important changes in the global philanthropic landscape, including trends in global philanthropy and its interaction with other sectors of society

In crowdfunding we trust : a trust-building model in lending crowdfunding

Trust critically affects the perceived probability of receiving expected returns on investment. Crowdfunding differs in many ways from traditional forms of investing. We have to ask what builds trust in this particular context. Based on literature regarding the formation of initial trust, we developed a model to explain which factors lead to crowdfunders’ trust in a crowdfunding project. We tested it on data collected from actual investors in a real project on a crowdlending platform. Our results show that trust in the crowdfunding platform and the information quality are more important factors of project trust than trust in the creator

Communication Style in Medical Crowdfunding: Effect of Emotional Framing and Updates Frequency on Funding and Emotional Support

Despite the rise of medical crowdfunding and its benefits to patients including reducing financial hardships and providing emotional social support, limited attention has been paid to how a campaign organizer can drive performance. In this study, we investigate how the communication style used in a medical crowdfunding campaign can affect both the funding performance and emotional support received. We find that emotional framing and frequent updates have a positive effect on funding and emotional support and discuss the implications

(No) Time for Change : When and Why Entrepreneurs Act During Underperforming Fundraising Attempts

Entrepreneurs need to mobilize funds, but they do so under considerable uncertainty about resource holders’ preferences, leading often to fundraising attempts that perform below entrepreneurs’ aspirations. Past research has offered contrasting theorizing and evidence for why entrepreneurs then make changes to their product offering during such attempts as well as for why entrepreneurs refrain from taking such action. This paper develops and tests behavioral theory to reconcile this tension, explicating when and why entrepreneurs change their product offering during underperforming fundraising attempts. Specifically, we argue that entrepreneurs draw on three sources of information that are inherent to fundraising attempts and that inform the extent of their actions to change their product offering: the degree to which they perform below their own fundraising aspirations, the degree to which they fall below peer fundraising performance, and the time that remains until the deadline for the fundraising attempt. Longitudinal data on 576 fundraising campaigns (6,758 observations) published on the crowdfunding platform Kickstarter support our theory. By developing novel behavioral theory on when and why entrepreneurs take action during resource mobilization, we offer contributions to research on entrepreneurial resource mobilization, the crowdfunding literature, and the Behavioral Theory of the Firm.© 2023 The Author(s). This work is licensed under a Creative Commons Attribution-NonCommercialNoDerivatives 4.0 International License. You are free to download this work and share with others, but cannot change in any way or use commercially without permission, and you must attribute this work as Organization Science. https://doi.org/10.1287/orsc.2020.13803, used under a Creative Commons Attribution License: https://creativecommons.org/licenses/by-nc-nd/4.0/.fi=vertaisarvioitu|en=peerReviewed

Click to Success? The Temporal Effects of Facebook Likes on Crowdfunding

Small and medium-sized businesses as well as individuals are increasingly using online crowdfunding platforms to raise funds in the fintech world. Creators of crowdfunding projects depend heavily on social networks like Facebook to publicize their projects. Social media activities such as “liking” on Facebook bring massive traffic to crowdfunding projects and attract contributions. Using data collected from Facebook and Kickstarter, our empirical tests demonstrate that social media activities significantly and positively impact the likely success of crowdfunding. Our duration model analysis reveals that the impact of social media activities on crowdfunding outcomes follows a J-curve in the temporal space. We explain the J-curve by identifying two important effects of social media activities throughout the crowdfunding process: a quality-signaling effect in the opening period and a herding effect in the closing period. Especially in the “last mile,” there is a strong herding effect that helps crowdfunding projects reach their respective fundraising goals. Our results offer useful contributions to the literature and suggestions for practitioners

More Goals, More Money? An Investigation of Stretch Goals on a Crowdfunding Platform

An increasing body of entrepreneurship research highlights the prevalence of effectuation as an effective strategy in uncertain environments, yet little is known about how investors react to entrepreneurs’ effectucation strategies. In this study, we examine how stretch goals, an effectuation strategy where entrepreneurs adaptively adopt new goals on top of the initial and predetermined goal, affect investors’ decisions. On the one hand, stretch goals may mitigate perceived uncertainty by demonstrating an entrepreneur’s continuous commitment and sharp sense-making of the changing opportunities and whereas, on the other hand, it may raise questions about the entrepreneur’s ability to reach the target, thus increasing uncertainty. An analysis of data from one of the largest crowdfunding platforms in Southeast Asia shows that stretch goal adoption has an instantaneous negative effect on fundraising performance. However, as the fundraising unfolds, entrepreneurs can mitigate, and even reverse the negative effect. Moreover, further exploration demonstrates mechanisms that can worsen or alleviate the initial negative effect. Our study highlights the countervailing effects of stretch goals and has important implications for entrepreneurs that use stretch goals as a strategy to optimize the chances of success in resource acquisition

Goal Size Signaling in Entrepreneurial Finance: Evidence for Costless and Simultaneous Signaling in Initial Coin Offerings

Initial Coin Offerings (ICOs), a novel form of entrepreneurial finance, are characterized by extreme information asymmetry. To reduce this asymmetry and attract potential investors, entrepreneurs send signals about unobservable characteristics of their ventures to investors. This paper examines the signaling effects of entrepreneurs’ fundraising goals in ICOs. Using a hand-collected dataset of more than 400 ICOs, we show that the relationship between the size of fundraising goals and actual funding obtained follows curvilinear shapes. We also find that these curvilinear shapes are contingent on the presence of simultaneously sent, costless signals. Our findings enhance understanding how fundraising goals affect fundraising success and provide evidence that in ICOs costless signals are interpreted by investors in conjunction with each other

An Empirical Investigation on the Impact of Crowd Participation on the Degree of Project Success: The Perspective of Crowd Capital

Fundraisers expect to raise as much funds as possible even after they have reached initial threshold of funding goal. This study focuses on the degree of project success defined as the total amount of funds a project can obtain after it is already successful (reached the initial threshold of funding goal). Drawing upon the theory of crowd capital, this study aims to explore the effect of the crowds—represented as crowd participation—on the degree of project success. Three types of crowd participation are identified, namely funds pledge, popularity creation, and on-site communication. We postulate that funds pledge will have an inverse U-shaped relationship with the degree of project success; while the other two factors will positively influence the degree of project success. Our empirical data from a reward-based crowdfunding platform supported our predictions for funds pledge and on-site communication. Future research and implications are discussed