IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v123y2014i3p391-394.html
   My bibliography  Save this article

Non-profit differentials in crowd-based financing: Evidence from 50,000 campaigns

Author

Listed:
  • Pitschner, Stefan
  • Pitschner-Finn, Sebastian

Abstract

We use data from approximately 50,000 crowdfunding projects to assess the relative funding performance of for-profit and non-profit campaigns. We find that non-profit projects are significantly more likely to reach their minimum funding goals and that they receive more money from the average funding provider. At the same time, however, they have fewer funding providers and obtain lower total funding amounts. Our analysis shows that these results are driven by a small number of very successful for-profit projects. We argue that the findings are consistent with a simple selection mechanism in which entrepreneurs make the non-profit/for-profit decision based on expected project payoffs.

Suggested Citation

  • Pitschner, Stefan & Pitschner-Finn, Sebastian, 2014. "Non-profit differentials in crowd-based financing: Evidence from 50,000 campaigns," Economics Letters, Elsevier, vol. 123(3), pages 391-394.
    • Handle: RePEc:eee:ecolet:v:123:y:2014:i:3:p:391-394
    DOI: 10.1016/j.econlet.2014.03.022
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165176514001232
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econlet.2014.03.022?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Paul Belleflamme & Thomas Lambert & Armin Schwienbacher, 2013. "Individual crowdfunding practices," Venture Capital, Taylor & Francis Journals, vol. 15(4), pages 313-333, October.
    2. Mollick, Ethan, 2014. "The dynamics of crowdfunding: An exploratory study," Journal of Business Venturing, Elsevier, vol. 29(1), pages 1-16.
    3. Ajay Agrawal & Christian Catalini & Avi Goldfarb, 2014. "Some Simple Economics of Crowdfunding," Innovation Policy and the Economy, University of Chicago Press, vol. 14(1), pages 63-97.
    4. McManus, Brian & Bennet, Richard, 2011. "The demand for products linked to public goods: Evidence from an online field experiment," Journal of Public Economics, Elsevier, vol. 95(5-6), pages 403-415, June.
    5. Ajay K. Agrawal & Christian Catalini & Avi Goldfarb, 2011. "The Geography of Crowdfunding," NBER Working Papers 16820, National Bureau of Economic Research, Inc.
    6. Daniel W. Elfenbein & Ray Fisman & Brian Mcmanus, 2012. "Charity as a Substitute for Reputation: Evidence from an Online Marketplace," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(4), pages 1441-1468.
    7. Othmar M. Lehner, 2013. "Crowdfunding social ventures: a model and research agenda," Venture Capital, Taylor & Francis Journals, vol. 15(4), pages 289-311, October.
    8. McManus, Brian & Bennet, Richard, 2011. "The demand for products linked to public goods: Evidence from an online field experiment," Journal of Public Economics, Elsevier, vol. 95(5), pages 403-415.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Laurell, Christofer & Sandström, Christian & Suseno, Yuliani, 2019. "Assessing the interplay between crowdfunding and sustainability in social media," Technological Forecasting and Social Change, Elsevier, vol. 141(C), pages 117-127.
    2. F. Levin, 2015. "Success Determinants Of Crowdfunding Projects," Review of Business and Economics Studies // Review of Business and Economics Studies, Финансовый Университет // Financial University, vol. 3(4), pages 79-87.
    3. Angela Mariani & Simona Monteleone & Donatella Privitera, 2017. "Crowdfunding as social innovation practice: Experiences in Italy," RIVISTA DI STUDI SULLA SOSTENIBILITA', FrancoAngeli Editore, vol. 2017(2), pages 67-82.
    4. Michael Marcin Kunz & Ulrich Bretschneider & Max Erler & Jan Marco Leimeister, 2017. "An empirical investigation of signaling in reward-based crowdfunding," Electronic Commerce Research, Springer, vol. 17(3), pages 425-461, September.
    5. Armin Schwienbacher, 2018. "Entrepreneurial risk-taking in crowdfunding campaigns," Small Business Economics, Springer, vol. 51(4), pages 843-859, December.
    6. Giancarlo Giudici & Massimiliano Guerini & Cristina Rossi-Lamastra, 2018. "Reward-based crowdfunding of entrepreneurial projects: the effect of local altruism and localized social capital on proponents’ success," Small Business Economics, Springer, vol. 50(2), pages 307-324, February.
    7. Jung, Eunjun & Lee, Changjun & Hwang, Junseok, 2022. "Effective strategies to attract crowdfunding investment based on the novelty of business ideas," Technological Forecasting and Social Change, Elsevier, vol. 178(C).
    8. Hadar Gafni & Marek Hudon & Anaïs Périlleux, 2021. "Business or Basic Needs? The Impact of Loan Purpose on Social Crowdfunding Platforms," Journal of Business Ethics, Springer, vol. 173(4), pages 777-793, November.
    9. Roland Strausz, 2017. "A Theory of Crowdfunding: A Mechanism Design Approach with Demand Uncertainty and Moral Hazard," American Economic Review, American Economic Association, vol. 107(6), pages 1430-1476, June.
    10. Estrin, Saul & Gozman, Daniel & Khavul, Susanna, 2017. "Equity crowdfunding and early stage entrepreneurial finance: damaging or disruptive?," LSE Research Online Documents on Economics 86590, London School of Economics and Political Science, LSE Library.
    11. Rose, Stefan & Wentzel, Daniel & Hopp, Christian & Kaminski, Jermain, 2020. "Launching for Success: The Effects of Psychological Distance and Mental Simulation on Funding Decisions and Crowdfunding Performance," SocArXiv fqbwk, Center for Open Science.
    12. Gamble, Jordan Robert & Brennan, Michael & McAdam, Rodney, 2017. "A rewarding experience? Exploring how crowdfunding is affecting music industry business models," Journal of Business Research, Elsevier, vol. 70(C), pages 25-36.
    13. Bergmann, Ariel & Burton, Bruce & Klaes, Matthias, 2021. "European perceptions on crowdfunding for renewables: Positivity and pragmatism," Ecological Economics, Elsevier, vol. 179(C).
    14. Kukurba Maria & Waszkiewicz Aneta, 2018. "Crowdfunding as a Form of Funding for Businesses in the Culturally-Changing Global Economy: A Literature Review," Journal of Intercultural Management, Sciendo, vol. 10(2), pages 99-137, June.
    15. Saurav Chandra Talukder & Zoltán Lakner, 2023. "Exploring the Landscape of Social Entrepreneurship and Crowdfunding: A Bibliometric Analysis," Sustainability, MDPI, vol. 15(12), pages 1-22, June.
    16. Stanko, Michael A. & Henard, David H., 2017. "Toward a better understanding of crowdfunding, openness and the consequences for innovation," Research Policy, Elsevier, vol. 46(4), pages 784-798.
    17. Carvajal, Andrés & Rostek, Marzena & Sublet, Guillaume, 2018. "Information design and capital formation," Journal of Economic Theory, Elsevier, vol. 176(C), pages 255-292.
    18. Elitzur, Ramy & Solodoha, Eliran, 2021. "Does gender matter? Evidence from crowdfunding," Journal of Business Venturing Insights, Elsevier, vol. 16(C).
    19. Hans Peter Grüner & Christoph Siemroth, 2019. "Crowdfunding, Efficiency, and Inequality," Journal of the European Economic Association, European Economic Association, vol. 17(5), pages 1393-1427.
    20. Borello, Giuliana & De Crescenzo, Veronica & Pichler, Flavio, 2019. "Factors for success in European crowdinvesting," Journal of Economics and Business, Elsevier, vol. 106(C).

    More about this item

    Keywords

    Crowdfunding; Non-profit; Entrepreneur; Startup;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolet:v:123:y:2014:i:3:p:391-394. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.