Crowdsourcing, the umbrella term that includes crowdfunding, was introduced as a method to generate solutions for corporate improvement by accessing the ideas of the ‘crowd’. Similarly, crowdfunding uses the crowd, but focuses on the ability to use a large quantity of individuals to generate capital needed to fund a variety of projects/organizations/businesses/ect. Since the innovation of general web-based crowdfunding began in 2008, crowdfunding platforms have expanded from the small-scale to truly massive enterprises that have seen incredible annual growth. This has paralleled the crowdfunding platforms shift from a niche idea to a mainstream funding solution.
However, despite all the hype surrounding this new means of fundraising, crowdfunding is not a cure-all funding solution when used as a funding tool. Concerns about the inability to effectively ensure quality control, enforce project deadlines, and operate transparently has acted to dissuade many from utilizing and contributing through crowdfunding platforms. However, recent research put forward (Schweinbacher et all 2010) suggests that non-profit status on individual projects provides a much higher success rate and overall funding amount than its for-profit counterparts on similar crowdfunding platforms. Individual projects convey that they do not have for-profit motives by signaling non-profit status and thereby establish both trustworthiness and confidence in relative quality with platform contributors. Building on Schweinbacher’s research, this current study on crowdfunding platforms explains the theory behind the individual project factors that make non-profits more successful than their counterparts and uses an empirical evaluation of these factors to validate their effects.
Date of Completion
Read, Andy, "Crowdfunding: An Empirical and Theoretical Model of Non-Profit Support" (2013). Economics Theses. 91.