What constitutes crowdfunding campaign success?

Specializing in public and private sector management consulting for more than 25 years, I have had the privilege of observing talented executives fundraising large amounts of money for beautiful causes, and always wondered how one are successful and others are not? 

Does success depend on a fundraiser’s personality? 

Or, maybe the cause itself motivates people to donate? 

Answering this question professionally can help future projects avoid failure by building their fundraising strategy correctly from scratch, especially in a fast changing online environment. We ask these questions, as the Non-Profit Sector contributes almost $1 trillion to the US economy, representing 5.4% of GDP, and generating over 12 million jobs in 2017. (Quevedo, F. J., Quevedo-Prince, (2019). Major attention in academic literature and organizational practice has been given to the determinants of successful charitable campaigns.  The use of social media in itself has drastically changed the industry of non-profit operation systems, especially on key factors influencing success of the campaign.

Previously we had 2 parties participating in the process- a donor and a project initiator. Their communication was bound by time and space, and information about the project was also limited to the word of mouth of nearby community. Nowadays we have a 3rdparty playing a major role in the process- a platform, which brings a project initiator and a donator together. Such platforms, as Charidy, Chuffed, Kiva provide opportunities in different ways to promote the project and call for donors from all over the world, thus breaking the limitations of time and space of previous generation projects.

Let’s try to compare determinants of success for offline and online projects, and try to see the differences. Academic research proved true for offline fundraising campaigns to depend on geographical proximity of donors, the timing of the campaign, the characteristics of the cause, and the behavior of the promoter.

1)    The geographical proximity between donors and beneficiaries includes not only physical proximity, but also social or cultural closeness between donor and a beneficiary, as people are more familiar with their environment and more willing to give there.

2)    The characteristic of the cause as one example would include that large number of beneficiaries tend to be supported quicker, as an indicator of emergency. For instance, sudden disasters.

3)    The timing of the campaign- the stage of economic cycle, and the specific time of the year have been proven to influence the success of the project. The project held in periods of economic prosperity tend to be easier funded, as well as those held at the end of the year, a lot influenced by tax-savings motivations.

4)    The behavior of the promoter as legitimate and credible makes enormous impact on donors, as well as the information accessible regarded the project and the initiator.

(Salido-Andrés, N., Rey-García, M., álvarez-González, L. I., & Vázquez-Casielles, R. (2019).

Keeping in mind that the outlined reasons are limited in scope, and there are much more factors we are unable to cover. In my personal opinion, these reasons may well sum up what was important in previous era projects. The question is what are the key factors today? The research has proved that digital transformation has changed the geographical proximity factor, and brought international projects closer to the attention of donators. Furthermore, it has also impacted the way they perceive the cause of the project. Large number of beneficiaries is not a major factor any more, micro projects have been given more attention and credibility. Timing of the campaign has also been proved not to be correlated with success of online projects. In a digital world every moment is the ‘right moment to give’. And lastly, the importance of the promoters’ behavior , information provided , legitimacy and credibility proved to be extremely important and influence the success of the project.

By correctly focusing our attention on the last factor, and expanding it further we would be able to identify valuable patterns. The results of further academic research show that organizations need to show that they are competent and accountable with their stakeholders. In crowdfunding campaign this would mean disclosing certain information, proving their credibility-such as budgeting of the project, credentials of the staff or successful past experience. This could also include providing information on legal status of the project, and information on how your organization complies with laws and regulations. (Zhou, H., & Ye, S., 2018). 

Another factor influencing the perceived credibility is the presentation of the website and the project content. The website quality including four components: security, navigability, visual appeal, and convenience of payment can significantly influence how we perceive the project. How many times have we withdrawn from donating due to the fact that it took too much time to fill in all the information about the payment? Simplified transactions boost the donations and enhance credibility (Liu, L., Suh, A., & Wagner, C., 2017, January). We can learn from this facts when building our crowdfunding campaign, and be more precise with the on ’what’ information we provide and ‘how’.

My personal encounters with many projects has also proved that the more people believe their donation will help solve the problem, the more they give. Meaning the low-risk of losing the money would encourage to participation. This has found a major response in academic literature. Efforts should be made to decrease uncertainty, and enhance the value of potential pledge. Concrete personal stories are quicker to reach the funding goal , than general problems with statistical evidence (Zhou, H., & Ye, S., 2018). Amongst the low-risk pledges are those that can be easily budgeted- for example providing books or clothing to children in need, compared to fundraising for building renovation. This information is vital when organizing a crowdfunding project. By addressing a concrete problem, and suggesting low-risk attainable solutions- it would be easier to call empathy and reach fundraising goal in the minimum time.

I would say that one of the most crucial factors is the social capital of the project initiator. With the digital transformation access to potential donors has expanded from local community to ‘no limits’, and depends a lot on viral marketing. The practice shows that what matters is not only the number of followers initially on the campaign( social capital of the project initiator), but how viral can your message go( influential people from your social capital spreading the word to their friends and family). The successful strategy implies finding people that are influential enough to convince their social capital to pledge on your project. (Zhou, H., & Ye, S., 2018). 

We therefore outlined 3 important factors – legitimacy and perceived credibility of the project, low-risk solutions, and quality of social capital as major in influencing success of the project. 

Charidy as a platform can tremendously help in attaining your fundraising goal by getting it started in the right way. 

Firstly, we work closely with fundraisers on setting the right goal, and narrowing the focus. Where the focus goes, the energy flows. By giving positive attention towards this goal, having right operational instruments in hand, we make it happen within shortest possible time. 

Secondly, we try not to fall into the pit of going around and never getting the things done. As our CEO @YehudaGurwitz says: ‘We are taught in yiddishkeit - L’tchachilerAriber, and this is what pushes us to make big things and not be drawn into continuous operational planning’. Don’t try to make all the details work perfectly. You may have a beautiful campaign, gather considerable amounts of money and at the same time not have a breakdown of milestones, time graph and project plan.

And thirdly, to quote our CIO @MosheHecht ‘It’s all about the pivot’. It’s very important to work fast, and in the momentum. We try to achieve the goals within 6 weeks-3 months, as fundraising is the opened possibility, and should be used accordingly. By reducing voices in our head, working consistently on attainable goal and thinking big, we can actually achieve our fundraising goal that offers a service that can change the world.

Salido-Andrés, N., Rey-García, M., álvarez-González, L. I., & Vázquez-Casielles, R. (2019). Determinants of success of donation-based crowdfunding through digital platforms: The influence of offline factors. CIRIEC-Espa?a, revista de economía pública, social y cooperativa, (95), 119-141.

Gleasure, R., & Feller, J. (2016). Does heart or head rule donor behaviors in charitable crowdfunding markets?. International Journal of Electronic Commerce, 20(4), 499-524.

Quevedo, F. J., & Quevedo-Prince, A. K. (2019). A Predictive Model for the US Non-profit Market; A Macro to a Micro Perspective. Advanced Journal of Social Science, 5(1), 1-9.

Zhou, H., & Ye, S. (2018). Legitimacy, Worthiness, and Social Network: An Empirical Study of the key Factors Influencing Crowdfunding Outcomes for Nonprofit Projects. VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 30(4), 849-864.