Small donations to creative projects and good causes are adding up to big money. This year, crowdfunding is expected to raise $1.6 billion globally, with donations growing at about 14% per year, says Fortune Business Insights.
With so many projects competing for donations, it can be hard for any one campaign to stand out. Platforms like Indiegogo, GoFundMe, and DonorsChoose offer donors a wide range of choices. So how can campaigns attract enough support to succeed?
Research from the University of Texas at Austin’s McCombs School of Business suggests that one strategy works especially well: organizers giving to their own campaigns early on. “Self-donations speed up donations from others, bringing in more money overall,” the study’s authors explain.
Successful campaigns
The researchers studied 465,530 campaigns on DonorsChoose, a crowdfunding site for classroom projects that has raised $1.7 billion to date. They found that projects with an early self-donation moved faster. The next donation came nearly ten hours sooner—15% faster than for campaigns without a self-donation. A meaningful self-donation, between 15% and 35% of the total goal, brought in more supporters than either a token donation of $1 or none at all. Timing also mattered: a self-donation at launch drew more donors than one given later.
Why does this help? “Self-donations ease doubts,” the authors explain. They signal that the organizer is committed to the project, has ‘skin in the game,’ and is likely to follow through.
The effect wears off as organizers complete more successful campaigns. Once an organizer has proven trustworthy, donors feel less need for reassurance. And self-donations don’t work everywhere: platforms like Indiegogo prohibit them due to concerns about misleading donors. Anonymous self-donations also don’t help, since the organizer’s commitment is invisible to other donors.
“I want my donation to have an impact, so it helps to see that the organizer has committed too,” the lead researcher says. “It’s a powerful signal of sincerity.”
