The role you play, the life you have: Donor retention in online charitable crowdfunding platform

Abstract

Crowdfunding was first used by individuals and entrepreneurs to collect small-sized investments from crowds to support for-profit ventures, but now it is being touted as a valuable alternative to raise money for non-profit causes. Similar to various online settings, a key challenge for online charitable crowdfunding platform is the problem of donor retention. In this research, we disentangle donor retention behavior and build up a structural model to jointly examine donors' donation and latent attrition. By incorporating donation relationship and action related covariates into the model, we illustrate the drivers of donor retention and quantitatively examine their influence on individual donor's contribution and attrition activity. After calibrating the model with longitudinal donation transaction data from a leading charitable crowdfunding platform which enables teachers to request materials and resources for their classrooms, we find that (1) Teacher-donors (people who can be both donation makers and fundraisers) usually exhibit higher donation rate and lower attrition rate than normal donors on the platform; (2) Compared with site-donors (donors directly acquired through website visit), donors acquired through teacher referral usually have lower contribution and attrition rates; (3) The provided “charity gift card” and “donation matching offer” prosocial marketing programs on the platform seem to be a double-edged sword to donor retention. They have positive impact on donors' contribution rate, at the same time, they significantly increase donors' attrition rate; (4) Donors' initial contribution amount to the platform, successful donation result and “Thank-You” feedback from fundraisers can significantly decrease their attrition rate. Our results provide insights on new donor acquisition and donor relationship management in online charitable crowdfunding market.