The Australian Centre for Philanthropy and Nonprofit Studies, qut
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- Why do people become proponents of crowdfunding projects
- Australian context
International contextRates and patterns of giving in 2015It is estimated that 1,250 crowdfunding platforms are active worldwide with a 167% expansion of raised funds in 2014, totalling US$16.2 billion. This year, crowdfunding is poised to reach an astounding US$34.4 billion (Massolution.com 2015). Demographics are gradually portraying who is likely to crowdfund and what affects their motivations and behaviour. Crowdfunding is mainly a Western-centric phenomenon. Figures report that the US leads the world by raising US$9.46 billion, followed by the UK which accounted for $3.26 billion. Nevertheless, having technological and economic leadership in Asia, crowdfunding recently gained huge momentum in this region where volumes increased by 320% to $3.4 billion in 2014 (Massolution.com 2015). Intake for social causes represented $3.06 billion—a sizeable volume considering that business and entrepreneurship, the largest category, amassed $6.7 billion last year. Why do people become proponents of crowdfunding projects?There is evidence that people are inclined to get involved in crowdfunding due to intrinsic reasons, social reasons and, if applicable, to claim a reward. More specifically they are motivated by the desire to access innovative products before their official release dates (Profatilov, Bykova and Olkhovskaya 2014). People instinctively get caught up in the fervour of wanting to participate in harvesting a breakthrough idea. Crowdfunding is different because the onus is on the public to cooperatively decide through their pockets whether or not to provide capital to a start-up company interested in bringing a concept to fruition. Also, there are different structures established within crowdfunding platforms that have an effect on donor behaviour, dictating whether people will decide to fund a new product or to help a charity, as seen in Table 16.2. Examples are given on a few of the primary crowdfunding platforms that apply reward and donation-based schemes. These online portals follow ‘all or nothing’ (AoN) or ‘keep it all’ (KiA) funding models. The former type only collect donations when a predetermined goal is completed, whereas the latter one will furnish to project initiators whatever funds get pledged minus fees that are charged (Ashton, Heenatigala and Russo 2014). Table 16.2 International crowdfunding platforms offering donations or rewards (adapted from Ashton, Heenatigala and Russo 2014)
Empirical data from a quantitative study exploring the determinants of crowdfunding success shows that intake of contributions at the onset of a campaign is a strong antecedent to obtaining the seed capital (Agrawal, Catalini and Goldfarb 2013; Fisk et al. 2011). A recent investigation drawn from 669 Kickstarter campaigns run during 2012 (Colombo, Franzoni and Rossi‐Lamastra 2015) found that when many people are willing to participate just after a project is launched it triggers a ripple effect. Factors of quality and trustworthiness are also found to be highly significant to potential funders so prospective donors will be reluctant to back uncertain projects. Early funding is a sign, however, that helps to reduce uncertainty because is activates three mechanisms. First, individuals are induced to believe that the project is valuable; site visitors can see statistics of the number of people who actually pledged their support and what share of the target they comprise. This ‘observational learning’ (Bikhchandani, Hirshleifer and Welch 1998) is very persuasive. Second, early supporters may cause a snowball effect by indicating their support for a project on social media. Facebook alone is a powerful tool because it allows funders to immediately circulate messages to their existing contacts using links that are embedded right in the crowdfunding platform. Third, donors will usually converse with project developers. Obtaining feedback from the donors serves another purpose in that it helps the developers to refine their product to meet consumer needs better, consequently heightening the probability that a campaign will achieve its financial goal (Colombo, Franzoni and Rossi‐Lamastra 2015). Nurturing social capital on the crowdfunding platform additionally plays a fundamental role in project success. Developers and members of their ‘collective’ form an alliance with a project by engaging in computer-mediated relationships. This process builds internal social capital that is distinct from one’s external contacts. It effectively connects the crowd with the creator, and raises visibility for a project so there is a positive correlation between social capital and the likelihood of project success (Colombo, Franzoni and Rossi‐Lamastra 2015). Other studies lend deeper insight to pinpoint the predictors of support for crowdfunding projects. Duvall (2014) led in-depth interviews with people who contributed to one or more campaigns on Kickstarter. He discovered that not only do backers enjoy becoming immersed in the creation phase of a project but this process also manifests in giving donors personal satisfaction in its outcome. Backers enjoy the opportunity to contribute to work that they perceive is important within a field, and they like being recipients of exclusive rewards that may be tied to specific donation amounts. On the other hand, it was determined that localism, income, education and, surprisingly, having an accountability policy on a crowdfunding site are not factors that sway people’s decisions to support a project. Best practices learned from successful crowdfunders (Ashton, Heenatigala and Russo 2014) are these recommendations for newcomers: implement strategies to build awareness for a project to mobilise community support activate a promotional campaign that is professional and includes a video plan a budget that factors in costs to meet a sound financial target in a realistic timeframe run ongoing and varied posts on social media to build credibility, and use networks to extend contacts in real time pre- and post-campaign. Mollick (2014) summarises that the ability to achieve financing boils down to the quality of the documentation on the project’s development, the videos and associated advertising online and leveraging of social networks. Australian contextRates and patterns of giving in 2015The size of the local crowdfunding market for charitable giving can be inferred from Pozible, arguably Australia’s leading crowdfunding platform. By 30 September 2015 Pozible amassed A$40 million from 497,204 supporters after launching their 10,000th project (Pozible 2015). An average project size for NPOs is A$10,460. Their fastest growing category is funding for community projects at 67%, and the majority of their site visitors are Australians. Recently this site formed a partnership with GiveNow charities and NPOs, allowing the company to accept straight charitable contributions. For initiators, it is stipulated that a project must be linked to a specified target and outcome. To determine what attitudes drive people to crowdfund on platforms in this country it is important to analyse the Australian sector. Table 16.3 lists predominant Australian platforms for philanthropy. Some are strictly devoted to charitable giving, whereas others collect for a vast range of projects. The competition among platforms is growing as global sites such as Kickstarter are making inroads here. StartSomeGood (2015) responded by ramping up their marketing by offering workshops to prospective project creators. The idea behind such efforts is to help fuel campaign development to maximise social impact because more than half of crowdfunding ventures fall below their targets. Table 16.3 Information on Australian crowdfunding platforms for charitable causes (adapted from Maguire 2015)
Australian crowdfunding models conform to those presented in the international context. After all, businesses cross lines through the medium of the internet. The only real difference between the Australian and international landscape is that Australia has a smaller population and economy relative to larger Western nations, such as the US and the UK, translating into fewer home-grown platforms. Having many rivals overseas who are setting up offices elsewhere lessens the need for Australians to start their own rival operations. Kickstarter (2015), as mentioned, penetrated the Australian marketplace and many other territories. Hence, the limitation of not all individuals or legal entities creating crowdfunding projects on main sites like Kickstarter is now diminishing because the company is now entering new geographic zones; residents from areas beyond the reach of Kickstarter can opt to partner with individuals who live in countries where they operate to set up projects (Profatilov, Bykova and Olkhovskaya 2014). Directory: wp-content -> uploads -> 2016 2016 -> 2017 afoCo Landmark Scholarship Program 2016 -> Instructions for the Preparation of Camera-Ready Contributions to the Conference Proceedings 2016 -> Step student Scholarships for Year 10-13 2016 -> The united church of canada 2016 -> Idan raichel biography – May 2016 Brief Producer, keyboardist, Lyricist, composer and Performer Idan Raichel 2016 -> An introduction to centre’s interventions expanding access to justice 2016 -> Sanchar Shakti 2016 -> Unit analysis should help here. We want number of bananas 2016 -> The Autobiography of Elder Joseph Bates 2016 -> The Great Heat and the Rhode Island Deep Water Bay Scallop (Argopecten irradians) Fishery 1875-1905 Download 4.28 Mb. Share with your friends:
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