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The Science of Philanthropy in Crowdfunding

The Science of Philanthropy in Crowdfunding. René Bekkers Philanthropic Studies VU University Amsterdam. IF Science for Society.

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The Science of Philanthropy in Crowdfunding

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  1. The Science of Philanthropy in Crowdfunding René Bekkers Philanthropic Studies VU University Amsterdam IF Science for Society

  2. IF Science for Society • IF heeft het laagdrempeligdelen van kennishoog in het vaandelstaan. Hoe kunnen we de kennisdie wordtverzameldaanNederlandseuniversiteiteninzettenbijgoededoelenorganisaties? In eenserielezingengezamenlijkgeorganiseerd door de VU, RSM en het IF vertalen de onderzoekers - in samenwerking met ervaren professionals - hunresultatennaar de dagelijksepraktijk. IF Science for Society

  3. PAO Philanthropic Studies Module 1: Introductie in de filantropiewetenschap Module 2: Geschiedenis en filosofie van de filantropie Module 3: Management en marketing van MaatschappelijkeOrganisaties Module 4: Financiering en Beleggen Module 5: Evalueren Module 6: Juridische aspecten …eenprachtprogrammasinds 2001 IF Science for Society

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  6. Philanthropic Studies Total productivity in the sciences Papers published on philanthropy IF Science for Society

  7. Number of publications per year on philanthropy in various disciplines (empirical studies on determinants of giving, 1899-2005) IF Science for Society

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  9. Why do peoplegive? Peoplegive more (often) when • There is a clearneedneed • They are beingaskedsolicitation • Costs are lower, and benefits are highercosts/benefits • They care about the recipientsaltruism • Theyreceivesocialbenefitsreputation • Theyreceivepsychologicalbenefitsself-rewards • The cause matches theirvaluesvalues • Donations are perceived to beefficientefficacy Source: Bekkers, R. & Wiepking, P. (2011). ‘A Literature Review of Empirical Studies of Philanthropy: Eight Mechanisms that Drive Charitable Giving’. Nonprofit and Voluntary Sector Quarterly, 40(5): 924-973. Available at www.understandingphilanthropy.com IF Science for Society

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  11. Ten Trends in Philanthropy Events Bequests Lessloyalty Localcauses Mega-donors Crowding-out Decliningconfidence Corporate volunteering Transparancy and Impact DIY Philanthropy with crowdfunding IF Science for Society

  12. 961 ? IF Science for Society

  13. Giving in the Netherlands 2011 Amountsdonated in € million Source: Schuyt, T., Gouwenberg, B.M. & Bekkers, R. (2013). Geven in Nederland 2013. Amsterdam: Reed Business. IF Science for Society

  14. What can you do? • To increase the success of online fundraising campaigns? • 5 tips at voordekunst.wordpress.com: (1) sell creatively; (2) be concrete; (3) be personal; (4) tell a story; (5) invest in relationships • Pitfall: fundraising without a specific project for a specific audience IF Science for Society

  15. Charity vs crowdfunding • Charitable causes address practically infinite needs, like poverty, illnesses, biodiversity, human rights. • Crowdfunding is about raising money for a specific, finite project or product. • Charitable causes can use crowdfunding as a fundraising strategy, but should first consider carefully what project can be done with the crowd. IF Science for Society

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  17. ….entijd. Veeltijd. IF Science for Society

  18. Online vs offline giving • Raisingfunds online for specificprojectsshares important commonalitieswith offline fundraising. • The mechanismsthat make peoplegive online are similartothosethat make themgive offline. • Philanthropic crowdfunding also benefits from offline workto get the buzzgoing. IF Science for Society

  19. Why do peoplegive? NOT ENOUGH Peoplegive more (often) when • Theyknowthere is a clearneedneed • They are beingaskedsolicitation • Costs are lower, and benefits are highercosts/benefits • They care about the recipientsaltruism • Theyreceivesocial benefits reputation • Theyreceivepsychologicalbenefitsself-rewards • The cause matches theirvaluesvalues • Donations are perceived to beefficientefficacy IF Science for Society

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  24. Why do peoplegive? YOU NEED TO GET TO THE CROWD Peoplegive more (often) when • There is a clearneedneed • They are beingaskedsolicitation • Costs are lower, and benefits are highercosts/benefits • They care about the recipientsaltruism • Theyreceivesocial benefits reputation • Theyreceivepsychologicalbenefitsself-rewards • The cause matches theirvaluesvalues • Donations are perceived to beefficientefficacy IF Science for Society

  25. Make the Ask • Creating a crowdfunding project webpage is not enough to raise awareness or funds. • If you don’t ask, you don’t get. • Tools that you can use: face-to-face requests, local newspapers, events, tweets, Facebook pages, TV appearances IF Science for Society

  26. Unique opportunities • Online fundraising provides excellent opportunitiestousemechanismsthat are more difficulttouse in offline contexts. • Online platforms enabletesting ‘nudges’ and ‘tweaks’ thatuse these mechanisms. • My advice? • Do trythis at home! IF Science for Society

  27. A/B += TLA + RCT • TLA: TEST, LEARN, ADAPT. • RCT: Randomized Control Trial. • Design interventionsbased on mechanismsthat make peoplegive. • Randomlyassigninterventions in a A/B test. IF Science for Society

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  30. Why do peoplegive? INCENTIVES Peoplegive more (often) when • There is a clearneedneed • They are beingaskedsolicitation • Costs are lower, benefits are highercosts/benefits • They care about the recipientsaltruism • Theyreceivesocial benefits reputation • Theyreceivepsychologicalbenefitsself-rewards • The cause matches theirvaluesvalues • Donations are perceived to beefficientefficacy IF Science for Society

  31. Crafting incentive schemes • Rewards get higher along the donor pyramid. • Receiving a reward should be optional rather than the default. • This saves you money and gives the donor the joy of getting something through an active choice. IF Science for Society

  32. Why do peoplegive? HERE IS THE CROWD Peoplegive more (often) when • There is a clearneedneed • They are beingaskedsolicitation • Costs are lower, and benefits are highercosts/benefits • They care about the recipientsaltruism • Theyreceivesocialbenefitsreputation • Theyreceivepsychologicalbenefitsself-rewards • The cause matches theirvaluesvalues • Donations are perceived to beefficientefficacy AND HERE IF Science for Society

  33. Social influence • Knowingthatothers are giving… Creates a feeling of belonging. Creates a social norm: it is good to give. Createstrustworthiness: others trust this. • Lettingothersknowyou are giving… Givesyou / maintains a reputation. Createsanobligation – sparksreciprocity. IF Science for Society

  34. Who’swatching? IF Science for Society

  35. The power of suggestion IF Science for Society

  36. Framing price reductions as matches IF Science for Society

  37. Matching more does not help IF Science for Society

  38. Matching more does not help IF Science for Society

  39. Seed money: target $3,000 IF Science for Society

  40. Match or seed money: target $5,000 IF Science for Society

  41. Conditional matching http://advanced-hindsight.com/2014/08/28/the-power-of-matching-donations/ IF Science for Society

  42. Conditional matching IF Science for Society

  43. Statistical victims • “The death of a single Russion soldier is a tragedy. A million deaths is a statistic.” (Stalin) • George Loewenstein: the story of one person raises more than the awareness about a thousand victims. • Hope for a better world, one person at a time. • Use pictures: with watching eyes. • Use videos: footage says more than a 1,000 words. IF Science for Society

  44. Similarity • Galak, Small & Stephen (JMR, 2011): • KIVA lenders favor individual borrowers over groups or consortia of borrowers (identifiable victim effect). • Lenders prefer to give to those who are more like themselves in terms of gender, occupation, and first name initial. IF Science for Society

  45. Giving to ‘Voor de Kunst’ projects • Irma Borst selected 5 successful and 5 unsuccessful projects on ‘Voor de Kunst’ (Jan-June 13). • We analyzeddonations to projectsper day. • Social media activity: (#tweets and #facebook updates) • Individual donations are aggregated per day. • Initiators were interviewed to identify the type of relationship with each donor. • PRELIMINARY RESULTS… IF Science for Society

  46. Cases IF Science for Society

  47. Number of donations per day IF Science for Society

  48. Amountdonated per day IF Science for Society

  49. Amountdonatedbytiestrength IF Science for Society

  50. Amountdonated per dayby online media use IF Science for Society

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