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Collaborative action: Why crowdfunding is so effective for charitable causes

August 19, 2015
Technology

​​​​​​​​​​New research reveals how the affordances of online platforms can motivate behaviour



Edgar's Mission is about 70km north of Melbourne, outside the small town of Lancefield and flanked by the Macedon Ranges. It is a not-for-profit sanctuary for rescued farm animals. In 2014, when the sanctuary required funding, the small team working on the farm decided to give crowdfunding a go.

Their funding target was $50,000, which would normally take a great deal of time and manpower using traditional offline fundraising methods such as door-knocking or gold-coin appeals in shopping centres.​

But via Chuffed.org – a not-for-profit and social enterprise crowdfunding platform – Edgar's Mission hit its target within three days, going on to raise almost $163,000. Another campaign in 2015 raised a further $130,000.

"The team at Edgar's that organised the campaign are not typical candidates for who you [would] think of as professional digital fundraisers," says Prashan Paramanathan, founder and CEO of Chuffed.org. "Their main day job is to look after rescued farm animals."

"[But] what they did really well was to build a very passionate audience via social media. When they went out to that audience and told them about their project, donors came to them in droves. They are an animal sanctuary in rural Victoria and yet they attracted about 1800 donors from 17 different countries."

 

Affordances​

The fundraising was an astounding success and the type of story to attract the attention of Daniel Schlagwein​, a lecturer in the school of information systems, technology and management at UNSW Business School.

Schlagwein, with his student Katie Choy, has been looking into the effectiveness of charity crowdfunding platforms, including Chuffed.org, from an information systems perspective. Specifically, he is interested in the role of online technologies and the affordances they offer to users.

The term affordances, Schlagwein explains, comes from cognitive psychology and has been used extensively in industrial design, interaction design and many other areas.

'[Affordances] are important for crowdfunding because they socially motivate people to contribute, to come back and to invite their friends' ​

– Daniel Schlagwein


Affordances describe technology not by its technical features, but instead in terms of its action potential for users. For example, a door handle is not something that should be seen as being made of chrome with a diameter of 10cm, but instead as something that allows users to pull or push a door.

"Affordances is an interesting research perspective because it allows you to analyse technology in relation to human behaviour," Schlagwein says.

In the research, Schlagwein related the affordances of crowdfunding platforms to donor motivation.

"We found that crowdfunding platforms provide affordances that support action in both the digital and the real world. The platforms allow users to transfer money directly to the cause, or become a volunteer," Schlagwein says.

"These are affordances related to the project 'on the ground', not much different to what donors could do in other types of charity. However, crowdsourcing platforms also allow users to comment, [such as] send messages.

"So these platforms also provide affordances to interact with a community of like-minded people, which is self-referential in the digital space. The effects would immediately be lost if the platform went offline.

"Such affordances do not directly affect the project on the ground. But they are important for crowdfunding because they socially motivate people to contribute, to come back and to invite their friends."


Direct line of sight​

Crowdfunding also helps people to better understand the causes they are contributing to. Paramanathan says videos on the platform allow donors to get a far deeper understanding of a charity's work, and the problem they are hoping to solve, than any door-knocker could ever wish for.

Money is not just donated – often a 'perk' is received for a specific amount. It might be a barn named after the donor (Edgar's Mission), a rooftop garden dinner with a celebrity chef, or a gardening lesson from Gardening Australia's Costa Georgiadis (the latter two were part of a campaign by Sydney's Inside Out Organic Soup Kitchen).

Perhaps most importantly, the crowdfunding platform offers a direct line of sight to where donated money is going.

"There are a few frustrations with traditional fundraising methods," Paramanathan says.

"People often describe it as 'wanting to know what happened with my money', but it's not just about transparency. When they have given money, people want to have line of sight to the project it's going to and what it is actually doing – what effect will it have?"

A good example, Paramanathan says, is around the disaster relief campaigns after Cyclone Pam tore through Vanuatu. The High Commission of Vanuatu set up a crowdfunding page, the first of which was to fund a replacement roof for the hospital.

Once that was paid for, they moved on to the next project. Each was clearly outlined in terms of cost and necessity, and donors knew exactly what they were spending their money on. The need, the solution, the available resources and the result were all clear.

"Contrast that with Cyclone Pam fundraising appeals from any of the big charities, which were just about giving as much money as you can," Paramanathan says.

"There was no connection between how much money was needed and what the charity could actually do. Nor was it connected to their capacity to deliver anything on the ground. Nobody knew what their money was spent on. Nobody knew if there were five people or 5000 people from that charity on the ground."

 

Social currency​

According to Schlagwein, crowdfunding is not about the single point in time when a person makes a donation. Instead, crowdfunding allows the creation of an ongoing relationship, between the charity and the donor and also between the donors themselves – a gathering of people with similar interests in social responsibility.

"The crowdfunding platform becomes a social hub for people with particular interests. They are interacting in a community with a common purpose, creating collective action," Schlagwein says.

And yet, it is not all about altruism.

'People want to be an actual part of these things rather than dropping a coin into a bucket on their way to work' 

– PRASHAN PARAMANATHAN

"There is also extrinsic motivation – some donors are participating, in part, for reasons such as being able to show, for example on their Facebook timeline, that they are supporting a cause. They wish to create a certain public image, credibility and peer recognition. That, of course, is something that would not work as elegantly or at all if you gave money offline, in the shopping mall," Schlagwein says

Paramanathan agrees there is an element of social currency to giving via a crowdfunding platform. It is a signifier of the type of person you are. Plus, he adds, there is also something to be said for the fact that a donor might be the first in their social group to have discovered a certain cause to support.

 

Desire to participate​

Motivations for giving behaviour, Paramanathan believes, are many and varied.

"On the one hand there is pure shopping behaviour," he says. "Around Christmas, people buy certain perks as Christmas presents. So that is pure shopping with a philanthropic edge. At the other end of the scale is pure benevolence, which not many of our campaigns solely rely on.

"The over-riding image we see is a desire to participate in creating something bigger than yourself. That is what really drives a lot of people. People want to be an actual part of these things rather than dropping a coin into a bucket on their way to work."

Schlagwein notes that charity crowdfunding supports individual and intrinsic motivation for giving in a way that is similar to offline charity. But crowdfunding additionally supports aspects of social and extrinsic motivation.

"This is a good thing. Crowdfunding not only has less overhead costs than offline charity, it also motivates people better," Schlagwein says.

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