This guestblog is written by Alejandra Pereda Kappner , who wrote her Master Thesis for the University of Tilburg, like Carolina.
I had the opportunity to base my master thesis on crowdfunding for charity purposes. When I was thinking about potential topics for my thesis, I realized that a vast amount of research had examined how the promotion of offline charities encourages or discourages donations. Nevertheless, as crowdfunding is still an emerging concept, no studies had been conducted on the effects of different types of promotions on online charities. So what are the main promotional factors that result in online fundraising success? To answer this question I analyzed the differences between 161 completed projects from the 1% Club. I looked at project and promotional characteristics to try to identify those that contribute to prompt project funding.
The study revealed that a number of factors influence project achievement speed, i.e. the time it takes to complete the funding of a project. Based on my results, I have developed some recommendations for project managers in order to speed up project funding and fight world poverty.
1. Long detailed descriptions about the project accelerate project achievement speed.
A projects description can communicate the project’s benefits and increase confidence and trust. As a result, project managers should make sure they include clear and complete descriptions of the project’s plan in the ‘short description of the organization’, ‘extended project description’, ‘project planning’, and ‘project budget’ sections.
2. Projects with large request sizes take longer to complete their funding.
For prompt project funding, demand only the required funds. If possible, managers can divide the large projects into two separate projects. Projects with long detailed description collected the required funds faster than those with brief descriptions. Consequently, once funds for the first part of the project have been met, the second part could include an explanation of the success and progress of the first part of the project. Additionally, asking members who helped fund the first part of the project is likely to result in higher compliance rates.
3. When the number of project donators is too small, additional project updates slow down project funding.
Project updates include the posted messages, weblogs, replies to members’ posts, and information about added links, photos or videos that are displayed in the project ‘wall’. 1% Club members can see how many people have donated to a project. Results revealed that adding too many project updates when the number of donators is low can slow down project funding. When potential donors observe too many updates without results, they believe that the project is incapable of completing its funding. They perceive projects that post many updates without results as desperate. As a result, when the number of project supporters is low, it is advisable for project managers to post only informational and relevant project updates.
4. Once the project has sufficient donators, additional project updates will accelerate project funding.
When posting project updates, timing is important. Think about it this way. You may keep pouring water into the soil, but without a seed, a tree can never be grown. However, once you have a seed, water will help the tree grow. Online project funding has a similar effect. Once the project has sufficient project donators, additional project updates will increase the funding speed. This happens because people can see others contributing to this cause, and the project is now seen as capable. Additional project updates are now seen as updates regarding project advancement.
5. Additional visual support can encourage or discourage donations depending on the number of project donators.
Visual support has a similar “seeding” effect as project updates. Visual support refers to the project’s uploaded photos and videos. A project with little or no project donators where many visuals are uploaded is seen as incapable and desperate. Potential members observe failed marketing efforts. Here, project managers should be selective about the visual support added to their project website. On the contrary, when there are many project supporters, additional visual support enhances perceived capability and encourages viewing behavior. In cases like these, managers should continuously add visual support.
6. Member recommendations decrease the negative effect of request size.
As previously mentioned, large request sizes slow down project funding. However, results showed that if website members recommend a project to others, the negative effect of a large request size significantly decreases. Word-of-mouth acts as a powerful persuasion tool. Therefore, project managers should stimulate peer recommendations within the website of a project. They can encourage their friends and current contributors to post comments, testimonials, and rate their projects. Managers may also encourage contributors to share the cause in their social networks and highlight the importance of donating. Information coming from friends or fellow community members is more likely to motivate contributions and increase member commitment.
I am Alejandra Pereda Kappner and I have just completed a Master in Marketing Management at Tilburg University. I based my master thesis on the promotional and social effects in crowdfunding. The 1% Club kindly offered an insightful view into their company, and with the guidance of my thesis supervisor Johanna Slot, I was able to uncover how the promotion of online charities influences donations.
Guestblog by Carolina Ospina Botero, a student from Colombia. She wrote her Master Thesis at Tilburg University.
Did you know that 1%Club has been one of the first non-profit organizations that employed the concept of Crowdfunding in a new way? Originally, this concept refers to collecting money in small amounts from a large audience to create an investment. However, 1%Club aims to collect donations for charity rather than seek investments. These donations are collected from the members of their online community. Moreover, the members can use social interaction tools, which are used to communicate and to establish a social network. But let’s get back to the social interaction concept. Online members can log in to 1%Club platform, look for the projects they like, make friends, post comments, write testimonials, rate projects and so on. However, one interesting question is: does this social interaction among community members help 1%Club to achieve more donations? This has been the main research question of my marketing master thesis. In fact, this is a very interesting question to answer for 1%Club, in order to have the knowledge to positively encourage, maintain and increase the community and the donations.
How does social interaction among community members help 1%Club to achieve more donations? After analyzing the results, some interesting conclusions were revealed leaving this final summary of influences:
• People’s positive attitude towards charitable giving, change over their life time despite external factors, such as participating or not in the online community.
• Females and males do not behave differently when it comes to participating in the online community. This means that counter to expectations, females do not post more comments or testimonials, do not rate more projects, send or receive more invitations and do not link 1%Club to their facebook more than males. Moreover, there are also not differences in donors when it comes to gender. However, one unexpected result shows that people, who do not provide their gender, participate more in the online community and therefore donate more. This can be due to these members want to provide their gender information in order to signal their participation to other members, but in reality they do not participate nor donate as much as the other group. This can imply that they might be seeking reputation by being identifiable and a feeling of being collaborative. Glazer and Konrad (1996), argue that when individuals receive a warm glow from being part of charity, this generates intrinsic utility like luxury goods do. However, this can have another statistical explanation. The variable gender, contains 51,75% of missing values and that is very likely to cause statistical significance.
• With respect to country, this study found out that non-Dutch members will interact less in social networking than Dutch members and therefore, will contribute less to total donation and vice versa. This could be due to the fact that non-Dutch members are just interested in certain projects destined to their own country or origin and are predetermined to donate to them. Therefore, they might not have enough motivation to develop social relationships with the members (Rheingold, 1993). However, non-Dutch members and Dutch members do not behave differently when it comes to participating in online communication.
• In addition, it has been proven that the longer the members are subscribed in 1%Club website, the higher their participation in social interaction and as a result, the more they donate. The reason behind this could be that members that have been longer registered in 1%Club and participate in the online communication will be more committed than new members, and as such, are more likely to continue participating in the future (Moreland and Levine, 1982). Furthermore, theories of reciprocity suggest that posters with a history of contribution are more likely to receive responses, because others feel obligated to return the favor (Gouldner, 1960). Therefore, the feelings of friendship and social entity might be stronger. Consequently, they will also donate more.
• Regarding project owners, they will participate more in online communication. The reason for this could be that if project owners are more active in online communication, they will be recognized by the online community members and therefore be trusted. As a result they can request support for their projects’ basket of money collection, because of the theory of reciprocity (Gouldner, 1960). Furthermore, project owners will also be more active in social networking. If project owners are active in online communication, their names are likely to be well-known within the members of 1%Club. Consequently, they might be opinion leaders, who according to Li and Du (2011) normally have more acquaintances and higher eduation, status and social standing. Therefore, they can influence other members easier through their social network. However, it is important to mention that even if project owners participate more in social interaction; this does not mean that they will contribute more to total donation. This can be due to project owners have a more crowdsourcing (Belleflamme, Lambert and Schwiebacher, 2011) than a crowdfunding approach. If project owners are active in the online community, they have the feeling they might have contributed and helped enough with their knowledge to the online community and as a result, the do not feel obligated to donate anymore.
• Finally, when members provide more information in their 1%Club profile, they will participate more in socialinteraction, and as a result they will donate more. This should occur because members’ willingness to participate in social interaction is demonstrated by the amount of information they want to provide about their identity (Lampe, Ellison and Steinfield, 2007).
Finally, after all these interesting findings, some recommendations were done to 1%Club:
• Regarding age,
-1%Club should focus on older members when it comes to encouraging donations. This means that the communication mix should be designed in such a way that it directly encourages them to donate, instead of encouraging them to participate in social interaction activities.
-Investigate which are the year-intervals of the members of 1%Club to make more accurate communication plans.
-Make age information and obligatory field.
• With respect to gender,
-Should make gender information an obligatory field.
-After this information is complete investigate again the differences between males and females. If there is still no difference in their behavior; 1%Club should focus on unisex communication campaigns that appeal to both genders.
• Concerning country,
-1%Club can, like facebook, create a “common-friends” suggestion option for Dutch members. They are more willing to donate after they create a social network in 1%Club.
-For non-Dutch members, 1%Club could inform them of which projects are taking place in their country of origin and who is participating. As a result, non-Dutch members can make friends, and therefore donate more.
• In the case of membership duration,
-To achieve more donations, 1%Club should encourage members to participate in social interaction since the first beginning. How? 1%Club can incentivize the first participation by bonuses that members can use to support some projects. These bonuses could be obtained by points that members receive for collaborating in social interaction.
-Ask long-term members for advices, ratings and so on.
• Furthermore, it is important to be know that project owners are,
-Of relevant importance for 1%Club to influence members and encourage them to participate in social interaction. This might be the key for 1%Club members to become more active and therefore, donate more.
• Finally, 1%Club should keep in mind that for profile completion,
-members who provide more information in their profile will be more willing to interact, hence donate.
-Therefore, campaigns should treat these members more personally and try to give them motivations to interact and feel important in the community.
I am Carolina Ospina Botero and I come from Colombia, but I have been living the last 10 years of my life in Spain. Recently, I graduated from the Master in Marketing Management in Tilburg University. I had the opportunity to write my master thesis together with my supervisor Johanna Slot for 1%Club. The research purpose was to uncover how social online interaction will influence donation behavior depending on member characteristics. The findings were very interesting and could give more inside into the topic of crowdfunding for non-profit organizations
1%CLUB organised a Co-creation with ABN AMRO on March 6th. 25 trainees from the latter worked on four different cases. Fei An Tjan represented one of these cases, BARRACO #55. In this guestblog she talks about the Co-creation.
In the process of setting up a hostel, we soon realized that, as in so many cases, our biggest concern is to get our financials together. That basically means that we are relying on DINERO/MONEY/GELD to make our plans tangible once we’re in Rio de Janeiro. So we needed a plan, which was luckily supported by the people from 1%CLUB.
We had only send in our project a short while ago, when one of the organizers approached us if we were interested in participating in one of their offline events called ‘co-creations’, meaning that another group with a certain expertise would dedicate one afternoon to a problem you were facing. In our case, this was a group of ABN AMRO trainees, who would look at our project from a financial, economics and business point of view.
One day before the big event, I had a short Skype meeting with our facilitator Bart, who explained how and what we could expect and also to get a clear view of what our project was all about. I told him that, as we did not have any background in economics, we could really use some help in structuring our business plans. No experience, no background and no contacts made him conclude laughishly that we ‘must be very creative’. And although this wasn’t a nice thing to hear, I’m afraid he was painfully right…
On March 6th 2012 then, I went to ‘s Gravenhekje #1 in order to get lunch and go home with a structured financial plan. When the trainees arrived, they apparently didn’t know yet what was awaiting them. After a short introduction by moderator Marleen, we were divided into groups and I found myself explaining for the first time officially I think, what BARRACO #55 was all about. After I explained to them what we needed from them [a structured business plan] they were set to work with the information provided.
After half an hour I was called back with a rough version of their findings and brain spins, leading to a more structured version of what our finances should look like and indeed, how to structure them. To be honest, when I was sitting there at the moment I wasn’t so impressed by the new info they offered me because most of it was already written out, but when I thought of it later, I realized that the little change they made in the plan could actually make our whole project’s document a lot clearer!
In the final presentation, the trainees were given the assignment to present the final results to the case owners in a creative way. The group that treated our project came up with a role play in which they pretended to be us and future sponsors. What came out was that we should focus more on the cultural aspect and also that we would become self-sustainable and helping the community, which would be beneficial for name building of the future sponsors. They also provided us with a better version of our financial plan on a USB.
A really productive way I would say and unfortunately a whole new agenda to work on for us…
Project owner Hasan Giire joined the Co-Creation on February 22nd. He looks back on this day in this guest blog.
ExtendedBITS is a small IT company from the Netherlands owned by two Dutch citizens. The company has a local IT factory in Borama city, Awdal region of Somaliland. They work with partner foundation ADO (Awdal Development Organization) to improve the lives of the citizens of Somaliland.
ExtendedBITS is having some difficulties in getting assignments and investments to let the business grow. The directors of ExtendedBITS asked 1%CLUB to help the company achieve his goals. They took part in the 1%Co-creation on February 22nd 2012 at the office of 1%CLUB. As the director of ExtendedBITS, I was not sure what to expect because this was the first co-creation for ExtendedBITS.
The session started with an introduction by our beloved Marleen where she stated the aim of the gathering of this afternoon. She started by welcoming everyone and stated the reason. She gave an introduction of three projects, including our project.
After a short introduction of every participant, the co-creation started. The co-creation was divided in three sessions. Our group was a very interesting group with Riek as moderator. First I gave a 20-minute introduction of the company and the team. The group asked questions and most importantly: showed me the need to present the whole team in every occasion.
After the introduction, the group started working without me. After an hour and a half, the group presented a summary of the idea they got. I was asked to choose one idea and the group started developing this idea. The big challenge for us, according to the group, was how to present the company in a short amount of time. It’s called creating pitches for different groups (investor, partners and clients).
The group held a short presentation at the end of the evening. The group was very pleased to take part to this endeavor and wishes that ExtendedBITS will succeed.
After two weeks and few days, the group sends a document with the suggestion on how to present the company.
ExtendedBITS wishes to thank every participant on this co-creation. We got the support of the whole group that took part in the advisory board for ExtendedBITS. I have a great appreciation to 1%CLUB and to all the participants. Most of all I wish to express the deepest gratitude to Riek Viehoff.
ExtendedBITS has setup an advisory board for the company by creating a private group in Linkedin. Already Riek, Judith and Tabitha become members of this group. I wish and hope that all the other participants will join the group.
Many thanks to you all!
The Next Step in Coworking: Serendipity Rules!
On March 15th, the 3rd Space World Conference 2012 will start. During the 24 hour conference, 1%CLUB’s Anna Chojnacka will give a live Skype presentation on the 16th at 11.30 am. Read more on the conference in this guest blog by Vincent Ariëns!
The 3rd Space World Conference 2012 introduces you to the world of sustainable coworking! As we, as the Dutch Seats2meet.com coworking formula, believe time is the last hurdle to overcome to be able to ultimately work together globally, the 3rd Space World Conference 2012 will be a 24 hour (on & offline) co-created conference, starting on March 15th 17:00 (GMT) and ending at 17:00 the next day. During this conference speakers from across the world will share their knowledge and insights regarding the creation of sustainable (coworking) business models, the opportunities that technology offers us and prospects for the future. Knowledge sharing, serendipity and Society 3.0 are some of the key elements that will be covered! The entire conference (on & offline) is free of charge!
No matter where you are in the world, if you are connected to the internet, you will be able to attend the 3rd Space World Conference virtually through livestream! In the program you will find the current program, find out which presentations are interesting or relevant to you and join us! More information about attending the conference virtually.
Coworking spaces are popping up like mushrooms around the globe. Formally, coworking spaces do not mean much more than affordable flex-desks with corresponding WiFi, mail address and perhaps a bit of storage room. However, the success of coworking spaces is not based on the formal setup, but on the materialisation of bringing social media back from its purely virtual existence into the real physical working environment: the Third Space*.
During this 24hr conference, we will share our experiences and insights with you, but other speakers from all over the world will join in via live-stream and share their knowledge and expertise with you!
We look forward to your virtual attendance at this unique conference.
More information about the 3rd Space World Conference: www.3rdspaceconference.com.