Researchers from the City University of New York and the University of Texas at Austin have recently contributed to the Journal of Marketing with a study assessing self-donations’ impact on crowdfunding achievements. Titled “Self-Donations and Charitable Contributions in Online Crowdfunding: An Empirical Analysis,” and authored by Zhuping Liu, Qiang Gao, and Raghunath Singh Rao.
According to Giving USA, a record $557.16 billion was donated by Americans in 2023 to support various causes, including education, religion, human services, and public health. While traditional charities have long relied on celebrity endorsements, galas, public service announcements, and extensive advertising campaigns to raise funds, modern online crowdfunding platforms like GoFundMe and DonorsChoose offer a more direct approach. These platforms connect projects directly with potential donors, thereby bypassing the need for costly marketing strategies.
The study reveals that campaign organizers who personally contribute to their crowdfunding initiatives significantly increase their chances of success. This act of self-donation not only serves as a strong endorsement of the project’s value but also accelerates the pace and volume of contributions from others, enhancing the overall probability of meeting funding targets. The increasing dependence of non-profit and educational initiatives on crowdfunding platforms underscores the effectiveness of self-donation in bolstering these efforts.
An extensive analysis of millions of donations made through DonorsChoose, a platform where educators seek financial support for classroom supplies and educational projects, was conducted. The findings indicate that when teachers visibly contribute to their projects, it effectively communicates the project’s worth and their commitment to it. Liu emphasizes that the success of self-donation hinges not just on the amount given but also on the timing and visibility of the contributions.
By investing their funds, educators can attract additional support, which is crucial, especially for projects at the initial stage or for new users on the platform without a well-established reputation. Gao notes that larger self-donations are particularly impactful, increasing the likelihood of achieving the fundraising goals. Moreover, projects with self-donations often follow up with impact letters to donors, providing further indirect evidence of a project’s quality and its correlation with self-donation.
There is a strong case for platforms to encourage visible self-donations to enhance the efficiency of matching donors with high-quality projects. This could be achieved by promoting self-donations on project landing pages or tailoring project recommendations based on donor preferences. Such strategies could significantly improve campaign success rates.
Promoting self-donation as a fundraising strategy could be transformative for school administrators and district leaders. Given the constraints of school budgets, empowering teachers with effective fundraising tools can substantially improve the educational quality of students. From the standpoint of platforms like DonorsChoose, facilitating and promoting self-donation can augment the efficacy of their services.
The concept of self-donation extends beyond the educational sector, applying to political campaigns and corporate social responsibility (CSR) initiatives. Political candidates frequently use personal funds to demonstrate their commitment, while companies may donate some of their profits to boost their public image. In each scenario, self-contribution is a potent indicator of dedication and quality, influencing the actions of others.
Crowdfunding platforms might consider developing features that simplify the process for project organizers to make visible self-donations and highlight these contributions to potential donors. Furthermore, providing guidelines or best practices for strategically timing self-donations could maximize their impact.
For Chief Marketing Officers, self-donation visibility is critical to fundraising success. It is crucial to manage the risks associated with anonymous self-donations. The timing, frequency, and amount of self-donations should be strategically planned to maximize their fundraising impact. Ideally, an initial self-donation can significantly boost a project’s chances of success.
Rao concludes that by leveraging self-donation as a signalling mechanism, educators can enhance their likelihood of successfully funding their projects, thereby enriching students’ educational experiences. Crowdfunding platforms can improve service offerings by supporting and advocating for self-donation strategies.
The dynamics of self-donation could vary in more complex situations where funds go directly to fundraisers, potentially raising ethical concerns. Future research could expand this inquiry by exploring self-donation’s effects in diverse contexts.
More information: Zhuping Liu et al, Self-Donations and Charitable Contributions in Online Crowdfunding: An Empirical Analysis, Journal of Marketing. DOI: 10.1177/00222429241260687
Journal information: Journal of Marketing Provided by American Marketing Association