Impact of Project Updates and Their Social Endorsement in Online Medical Crowdfunding

Abstract

ABSTRACT Online crowdfunding has become an important fundraising channel for medical care. Yet, individuals in need face numerous challenges in meeting their fundraising goals. To improve fundraising, individuals may use project updates to evoke donors’ sympathy and secure donations. Informed by the sympathy bias literature, this paper conceptualizes two important but distinct aspects of project updates—positive sentiment and negative sentiment—and hypothesizes their individual and relative impacts on the donation amount of a crowdfunding project. In addition, this paper explores moderating effects of social endorsements on the influence of update sentiment. To test our hypotheses, we conducted two studies. Study 1 examined unique project-day panel data from 1,467 projects on a leading medical crowdfunding platform. Results reveal that both positive and negative update sentiment positively affect the donation amount of a crowdfunding project, but negative updates have a greater effect. Further, endorsements by strong ties and weak ties attenuate the positive effects of update sentiment. Study 2 was a controlled, randomized experiment that corroborated findings from Study 1, established the causality of observed effects, and confirmed the mediating effects of sympathy. The findings of this paper underscore the role of sympathy in enhancing online charitable crowdfunding to individual donors and show project updates with positive or negative sentiment to be potent mechanisms to boost donations. Furthermore, the substitution effect of social endorsement on donation amount also adds nuance to our knowledge suggesting that a proper combination of various information can better help improve crowdfunding performance. Platform operators and fundraisers should prioritize project update sentiment to enhance online charitable crowdfunding success.