As per Giving USA, Americans contributed a record $557.16 billion to education, religion, human services, public health, and many other causes in 2023.
Traditional charities have historically used celebrity events, galas, public service announcements, and advertisements to solicit contributions. More recently, online crowdfunding platforms like GoFundMe and DonorsChoose have taken another route: By providing a direct connection with potential donors, they have eliminated the need for expensive marketing investments.
In a new Journal of Marketing study, we find that project stewards who contribute to their own campaigns within online crowdfunding platforms are significantly more likely to achieve funding success. This practice of self-donation serves as a powerful signaling tool. It highlights the project’s quality and importance, boosts the pace of donations, increases the total amount contributed, and enhances the overall likelihood of reaching funding goals. As nonprofits and educational causes increasingly rely on crowdfunding platforms, our research reveals how self-donation can effectively support these efforts.
Our team analyzed millions of donations on DonorsChoose, a well-known platform where teachers seek funds for classroom supplies, educational projects, and other instructional needs. We discovered that when teachers make visible self-donations to their projects, it strongly signals the project’s value and the teacher’s commitment. Our findings underscore that the effectiveness of self-donation is not solely about the amount contributed but also about the timing and visibility of these donations.
By investing their own money into their projects, teachers are more likely to attract additional support. This is particularly important for early-stage projects or for teachers who are new to the platform and have yet to build a reputation. A well-timed and visible self-donation at the start of a campaign can significantly increase the likelihood of reaching the funding goal. We also find that larger self-donations prove more effective in achieving fundraising goals. Further, projects involving a self-donation are more likely to send impact letters to donors to provide additional, yet indirect, evidence of the correlation between quality and self-donation.
Platforms should encourage project stewards to make visible self-donations as a means of improving the matching efficiency between donors and high-quality projects. This could involve highlighting self-donations on project landing pages or recommending projects based on the donor’s behavior. Such strategies could boost overall campaign success rates, benefiting both teachers and the students they serve.
A Viable Fundraising Strategy
The implications of our study extend to the broader educational community. School administrators and district leaders should encourage teachers to use self-donation as a fundraising strategy. In an era of tight school budgets, empowering teachers with effective fundraising tools can significantly enhance the quality of education that students receive. From the perspective of crowdfunding platforms like DonorsChoose, supporting and facilitating self-donation could improve the overall effectiveness of their services.
Our findings extend beyond the educational sector. The principle of self-donation can be applied in various contexts, including political campaigns and corporate social responsibility (CSR) initiatives. For instance, political candidates often contribute their own funds to signal their dedication, and companies publicly donate a portion of their profits to enhance their reputations. In each case, self-contribution acts as a powerful indicator of commitment and quality and tends to influence the behavior of others.
Platforms might develop features that make it easier for project stewards to make visible self-donations or to highlight these contributions to potential donors. Additionally, providing guidelines or best practices for teachers on strategically timing their self-donations could maximize impact.
Lessons for Chief Marketing Officers
- The visibility of self-donations is crucial for fundraising. Individuals and organizations should be aware of the risks of anonymous self-donations.
- The frequency, recency, and amount of self-donations should be carefully planned to maximize their impact on fundraising success. Ideally, a single self-donation at the project’s outset can optimize its funding prospects.
- Platforms can highlight self-donations on the project landing page and encourage self-donations during the donation process to increase the project funding rate.
Our research offers valuable insights for teachers, crowdfunding platforms, and other stakeholders involved in online fundraising. By leveraging self-donation as a signaling mechanism, educators can increase their chances of successfully funding their projects, thus enhancing educational experiences for their students. Crowdfunding platforms can improve their services by supporting and promoting self-donation strategies. We encourage all stakeholders to incorporate these findings into their practices to create more successful and impactful fundraising campaigns.
The effects of self-donation may vary in more complex contexts where funds go directly to fundraisers and could raise moral concerns. We encourage scholars to extend our theory by examining the impact of self-donations in other contexts. Future research may also study the dynamic interactions among donors during the donation process.
Read the Full Study for Complete Details
Source: Zhuping Liu, Qiang Gao, and Raghunath Singh Rao, “Self-Donations and Charitable Contributions in Online Crowdfunding: An Empirical Analysis,” Journal of Marketing.
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Zhuping Liu is Assistant Professor of Marketing, Baruch College, City University of New York, USA.
Qiang Gao is Associate Professor of Information Systems, Baruch College, City University of New York, USA.
Raghunath Singh Rao is Professor of Marketing, University of Texas at Austin, USA.