Making Charity Crowdfunding Work: An Empirical Study of Project Promotion with Subjective Sorting for Improving Donor Contributions

Abstract

A number of charitable causes around the world are in dire need of funding. Crowdfunding offers the ability to directly reach supporters of products, causes, and organizations. However, a vast majority of charity projects fail to attract donor attention and contributions due to an oversupply of projects on crowdfunding platforms. They also suffer from a lack of pecuniary incentives, making it particularly challenging to garner donor support. We propose as well as empirically test a novel method to gain donor attention by addressing the “middle-period malaise” effect in charity crowdfunding projects. We show, while controlling for unobserved time-invariant project level heterogeneity and addressing endogeneity issues, that departing from the way commercial crowdfunding projects promote themselves and using the concept of subjective sorting helps charitable projects increase their amount of fundraising. We find that outreach during less attended and lower performing periods—middle periods—helps gather 91% more daily donations and $257 more final pledges. As charity projects struggle to capture donor interest, using subjective sorting to spotlight projects during the lower performing middle periods could offer a crucial new way to overcome middle-period malaise and achieve charitable crowdfunding success across a broader range of social and environmental settings.