The Value of Completing Crowdfunding Projects

Crowdfunding sites like Kickstarter, IndieGoGo, and Spot.Us are becoming increasingly common methods for people to raise money for projects. Kickstarter has helped people raise over $500 million already. People raise money on crowdfunding sites by posting projects: well-defined pieces of work with specific time frames and fundraising goals.  Using data from Donors Choose, a large crowdfunding charity devoted to raising money for K-12 classroom projects, we found that organizing fundraising through projects has some unexpectedly large fundraising benefits.

On a crowdfunding website, most projects require more than one donation to meet their goal.  We have found that the completion donation — the donation that puts the project’s total over their goal – is on average over twice as large as other, non-completion donations on the site.  People seem to be willing to make much larger donations when their donation will enable a project to reach its goal.  This increase in donation size represents approximately 16% of the total funds raised on Donors Choose! Additionally, people who make these donations are more likely to return and donate in the future, and when they do, they make bigger donations than the average person.

Heatmap

Probability of being funded after raising Y% of your funding goal after X days.

Additionally, were were able to estimate project growth on Donors Choose.  Projects don’t need to start out fast in order to succeed; however after about a week or two the amount of funding strongly predicts whether the project will be able to reach its funding goal. Overall, about 70% of projects achieve their fundraising goals.  Surprisingly, there is little waste; over 95% of the dollars contributed to Donors Choose are donated to projects that achieve their goal.

For more, see our full paper, The Value of Completing Crowdfunding Projects.

Rick Wash, Michigan State University

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About Rick Wash

Rick Wash is an Assistant Professor at Michigan State University in the School of Journalism and the Department of Telecommunications, Information Studies, and Media. His work involves understanding how people think about their interactions with computers, and their interactions with other people through computers, with a particular focus on security and collaborative systems. He is PI on three NSF grants (including a CAREER award), studying home computer security, crowdfunding systems, and online communities. He completed his PhD at the School of Information at the University of Michigan. Prior to studying information, Rick completed his masters degree in Computer Science from the University of Michigan, and his bachelors degree in Computer Science from Case Western Reserve University.

4 thoughts on “The Value of Completing Crowdfunding Projects

  1. Hi Rick – this is really interesting work. What do you think are some of the implications for moderators of CrowdFunding sites? Would there be benefits to shutting down efforts early if they don’t look like they will reach their goal in order to shift attention to more promising projects?

  2. Good question. Actually, it looks like of like donors naturally do that anyway — they just stop coming. However, there is still a long tail of projects that slowly but surely build the funding they need over a long period of time, so I think shutting down projects will cut them off.

    • This almost suggests that Kickstarter should implement more goalposts, like “almost at 50% of our goal! help us get there!” to encourage larger donations.

      Or lie and make multiple people believe that they’re submitting the final donation. :)

  3. Thank you for using our data in this article and giving such interesting insights into it! We love hearing about new ways to engage donors.

    Best,
    Margie, DonorsChoose.org Marketing Team

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