Researchers from City University of New York and University of Texas at Austin published a new Journal of Marketing study that examines the effectiveness of self-donations in achieving crowdfunding goals.
The study, forthcoming in the Journal of Marketing, is titled “Self-Donations and Charitable Contributions in Online Crowdfunding: An Empirical Analysis” and is authored by Zhuping Liu, Qiang Gao, and Raghunath Singh Rao.
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.
This new study finds that project stewards who contribute to their own campaigns on 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, the research reveals how self-donation can effectively support these efforts.
The researchers analyzed millions of donations on DonorsChoose, a well-known platform where teachers seek funds for classroom supplies, educational projects, and other instructional needs. “We discover that when teachers make visible self-donations to their projects, it strongly signals the project’s value and the teacher’s commitment,” Liu says. “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. Gao explains 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.
A Viable Fundraising Strategy
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.
The 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.
Rao concludes with, “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.”
The effects of self-donation may vary in more complex contexts where funds go directly to fundraisers and could raise moral concerns. Scholars could extend this work by examining the impact of self-donations in other contexts.
Full article and author contact information available at: https://doi.org/10.1177/00222429241260687
About the Journal of Marketing
The Journal of Marketing develops and disseminates knowledge about real-world marketing questions useful to scholars, educators, managers, policy makers, consumers, and other societal stakeholders around the world. Published by the American Marketing Association since its founding in 1936, JM has played a significant role in shaping the content and boundaries of the marketing discipline. Shrihari (Hari) Sridhar (Joe Foster ’56 Chair in Business Leadership, Professor of Marketing at Mays Business School, Texas A&M University) serves as the current Editor in Chief. https://www.ama.org/jm
About the American Marketing Association (AMA)
As the leading global professional marketing association, the AMA is the essential community for marketers. From students and practitioners to executives and academics, we aim to elevate the profession, deepen knowledge, and make a lasting impact. The AMA is home to five premier scholarly journals including: Journal of Marketing, Journal of Marketing Research, Journal of Public Policy and Marketing, Journal of International Marketing, and Journal of Interactive Marketing. Our industry-leading training events and conferences define future forward practices, while our professional development and PCM® professional certification advance knowledge. With 70 chapters and a presence on 350 college campuses across North America, the AMA fosters a vibrant community of marketers. The association’s philanthropic arm, the AMA’s Foundation, is inspiring a more diverse industry and ensuring marketing research impacts public good.
AMA views marketing as the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. You can learn more about AMA’s learning programs and certifications, conferences and events, and scholarly journals at AMA.org.
Marilyn Stone is Director, Academic Communities and Journals, American Marketing Association.