Research released this month by the Indiana University Lilly Family School of Philanthropy at IUPUI provides new insights into the use of crowdfunding for charitable giving, focusing on donors who give via crowdfunding and how they differ from traditional charitable donors.
The new study, Charitable Crowdfunding: Who Gives, to What, and Why? examines who crowdfunding donors are, their motivations for giving this way, how they are different than more traditional charitable donors, and the activities they support. The report looks at how crowdfunding fits into the larger philanthropic landscape and perceptions of crowdfunding by both crowdfunding donors and non-crowdfunding donors. It also provides a glimpse into Americans’ charitable behavior during the COVID-19 pandemic and their giving for social justice.
Crowdfunding – the raising of capital from a large and diverse pool of donors via online platforms – plays a significant role in giving and fundraising, and, like other forms of online giving, has been on the rise in recent years. During 2020-2021, the COVID-19 pandemic, the racial justice reckoning and a recession accelerated use of crowdfunding by individuals to address health and economic hardships and to raise funds for a variety of racial and social justice causes.
The report uses data from a survey of U.S. households conducted in September 2020. The sample for this study is 1,535 adults. The sample was weighted to ensure results are representative of the general U.S. population. The study was conducted with support from Facebook.
“Crowdfunding has the potential to extend opportunities for generosity to a wider audience because of its digital presence, the apparent ease of using such platforms, and the ability to connect donors to both causes and individuals they wish to support,” said Amir Pasic, Ph.D., the Eugene R. Tempel Dean of the school. Moreover, as the study finds that a majority of donors to crowdfunding platforms in 2019 contributed to help a family member, close friend, or a stranger, crowdfunding amplifies traditional charitable giving beyond giving to institutions to include direct giving to individuals.”
Key findings of the study include:
• People are generally aware of crowdfunding (91.5%), but less than one-third (31.7%) typically contribute to crowdfunding projects.
• Crowdfunding donors tend to be more diverse, younger, less religious and more likely to be single, compared to traditional charitable giving donors.
• Four out of five crowdfunding/social media donors are primarily motivated to give because they believe in the organization’s mission or they believe their gift can make a difference. These motivations are similar to those of traditional charitable donors.
• Donors to crowdfunding campaigns gave an average of $189 in 2019, and most often contributed to a family member or close friend (52.5%) and to support charitable organizations (47.1%).
• Both crowdfunding donors and those who do not donate via crowdfunding have positive perceptions of crowdfunding.
• Nearly 20% of donors typically give to social justice causes. A higher percentage of those who give through crowdfunding (27.7%) or social media (28.6%) support social justice causes, compared to traditional charitable donors.
The study finds that while a majority of crowdfunding/social media donors contribute to a family member or close friend (52.5%), nearly one-third (29.3%) contribute to a stranger. However, the dollar amounts given differ; the average total donation to a family member or friend is $79, compared to a $10 average total donation to a stranger.
When asked specifically about giving generally during the COVID-19 pandemic, 38.5% of all donors said they gave to strangers and 47.2% of donors who typically contribute to crowdfunding campaigns gave to strangers.
More than half of both donors to crowdfunding campaigns and non-crowdfunding donors believe crowdfunding makes it easy for contributors to give and is a good way to highlight projects and organizations, according to the survey.
The Indiana University Lilly Family School of Philanthropy at IUPUI is dedicated to improving philanthropy to improve the world.
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