What makes a successful crowdfunding campaign?

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By Amir Sepehri, Ph.D., and Julia Smith, MSc

If you’ve been online for the past few years, chances are you’ve seen someone fundraising through a fundraising platform like GoFundMe. Now you can donate through Instagram, Facebook, on your phone, on your tablet, anywhere you have internet access. In short, peer-to-peer platforms like GoFundMe allow individuals to raise money for a cause of their choice with minimal hurdles. Usually, the creators of these fundraisers are not professionals and appeal to the heart of their network. Amir Sepehri (myself, from ESSEC Business School, formerly from Ivey Business School), Rod Duclos, Kirk Kristofferson, Poornima Vinoo and Hamid Elahi (all from Ivey Business School) explored the use of language in peer-to-peer fundraising, finding that indirect appeals – using third-person language – tend to be more effective than first-person words. Audiences tend to perceive indirect appeals as more believable. This has implications for how people can more effectively fundraise online at a time when such a practice is prevalent.

Crowdfunding or peer-to-peer platforms make it easy for anyone to raise funds, for themselves or someone else. These platforms are relatively new, as is the body of research that studies them. What makes some campaigns more effective than others? Could the type of language used play a role?

They were inspired by word of mouth advertising and marketing. In the first case, a representative identifies the product and is likely to benefit from the economic transactions: think of an Instagram influencer selling teeth whitening strips and receiving a commission when their followers buy the product. This is similar to direct fundraising, where an identified person initiates the initiative and will benefit personally. In word of mouth marketing, third parties promote a certain product that they like, such as a friend recommending a new toothpaste. It’s more like indirect fundraising, where third parties fundraise on behalf of another person. Research shows that the latter tends to be more effective because consumers view it as more credible, since the person does not benefit financially; it looks more authentic.

Positive social proof

Another factor that plays into this is social proof: when we don’t know what to do, we tend to look to others for clues, thinking they are likely to have more knowledge than us. In the case of fundraising, a third party who raises money for a friend or relative acts as a social influence. Since we are inundated with calls to donate, it helps to get some insight from the third party, someone who knows more about the situation than we do. People tend to use it to decide whether or not to donate, and this social influence lends credibility to a campaign, making people more likely to dip into their pockets.

study generosity

We have investigated the role of language in a series of studies. In the first, we looked at real campaigns on GoFundMe, looking at the wording used in over 9,000 campaigns. Indeed, we found that using third-person pronouns (he, she, her, her) resulted in more donations, averaging $620 per campaign. First-person pronouns had the opposite effect, reducing donations by an average of $682 per campaign.

Why do direct appeals solicit a more generous response? In the following study, participants randomly read one of two campaigns, illustrated in the examples below. The two campaigns were identical except for the pronouns.

Indirect appeal

This GoFundMe page was created for Brianna in honor of her mother Janice. Brianna suddenly lost her mother in a tragic death. Please continue to support Brianna as she has been playing hockey since she was 5 years old and since then her mother was her #1 fan and dedicated her life to her daughter and her love of hockey. Her mother would have liked her to continue her hockey career because she is a very promising athlete. All funds received will go towards his future studies.

Direct call

My name is Brianna and I created this GoFundMe page in honor of my mother Janice. I suddenly lost my mother in a tragic fatality. Please keep supporting me as I have been playing hockey since I was 5 years old and since then my mom was my #1 fan and dedicated her life to me and my love of hockey. My mother would have wanted me to continue my hockey career because I am a very promising athlete. All funds received will go towards my future education.

We found that the indirect campaign elicited more donations and that this was related to the public perceiving these appeals as more credible. Expanding on this, in the final study we included four different campaigns, but with a similar pattern: indirect appeals were seen as more credible, which led to more donations.

Implications for the field of fundraising

What does this mean for the burgeoning fundraising industry? These peer-to-peer platforms are everywhere, which can overwhelm an audience that is continually pressed for money. That means fundraisers need to pay attention to factors that can make their efforts more successful — and the use of language is an easy adjustment. This study shows that campaigns written in the third person tend to be more successful; they are also seen as more believable. Since both narratives are virtually equally popular, this book offers a guideline for those making an appeal: if they still wish to use the first-person narrative, they should seek to demonstrate their credibility by using other words or symbols. Given the implications of charitable fundraising – the difference between saving or losing a pet, or being saved from the brink of bankruptcy due to medical bills – it is important to continue studying the psychology of fundraising. to learn more about how to design effective campaigns.

By Amir Sepehri, Assistant Professor of Marketing at ESSEC Business School, and Julia Smith, Editor-in-Chief of ESSEC Knowledge

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