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.
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