Crowdfunding platforms collect data and feedback from users to refine their models and policies. This feedback influences how they implement tipping and other features, but they don’t share that data publicly; it’s proprietary to the specific platform. Independent researchers have also conducted a number of studies to understand donor attitudes and behaviors regarding crowdfunding tipping or adding optional contributions when donating on crowdfunding platforms. If you’re new to the concept of tipping, check out my post on this subject.
In this blog post, I share general findings I’ve gleaned from talking to about 100 donors and nonprofits, a decent sample size of participants spread throughout the U.S. While it’s not deep research it’s more than has been shared publicly to-date on this issue.
Donation-based crowdfunding—vs general commercial crowdfunding—aims to collect revenue through the Internet for charitable reasons (Choy and Schlagwein, 2016). Internet-based crowdfunding platforms allow the initiators to reach large numbers of people (Gerber et al., 2012). In general, a charitable crowdfunding project involves three parties: the project initiator, who launches a project to be funded; supporters, whose donations and sharing support the project; and platforms like GoFundMe that bring project initiators and supporters together (Liu et al., 2018).
Here are some of the thoughts that both crowdfunding donors and the nonprofits who interact with them have shared with me:
- Mixed attitudes: Donors have mixed attitudes towards tipping. Some donors appreciate the option to tip because they see it as a way to support their cause and ensure campaign organizers can maximize their donations. Others view tipping as an extra expense and prefer not to contribute beyond their primary donation.
- Generosity and engagement: Some donors feel generous and will add a tip when they believe in the cause or campaign they’re supporting. They may also feel more engaged with the platform and the fundraising community when given the opportunity to contribute more.
- Impact on giving: The presence of an optional tip doesn’t significantly deter donors from making contributions to campaigns they care about. Donors tend to focus more on the cause or project itself and its importance to them.
- Transparency and trust: Transparency about where the tip money goes is crucial. Donors appreciate when platforms clearly state how they use tips to support the platform’s operations. This transparency helps build trust.
- Sensitivity to amount: Donors may be more willing to add a small tip rather than a large one. They perceive smaller amounts as more manageable and less likely to impact the overall donation.
- Segmentation: Donor attitudes vary based on age, income level, and familiarity with crowdfunding platforms. There’s a perception that younger donors may be more open to tipping, while older donors are not so inclined, but that conclusion requires further research.
- Awareness and understanding: Not all donors may be aware of the tip option or fully understand its purpose. Increasing awareness and providing clear explanations may persuade more donors to tip. The fact that some crowdfunding platforms obscure the location of the function that enables the user to change the tip amount doesn’t help (see Transparency and trust, above). Further, the donors need to opt-out of tipping rather than opting-in!
Compared to traditional charitable giving, donation-based crowdfunding offers a set of advantages that nonprofits generally like:
- Crowdfunding reduces the coordination and transaction costs of donation collections (Choy and Schlagwein 2016).
- Donation-based crowdfunding tends to collect small amounts from large crowds instead of seeking large amounts from a small group of affluent donors (Lu et al. 2014).
- Crowdfunding initiators can easily broadcast their campaigns to a wider range of potential donors and establish social relationships with them (Liang and Turban 2011).
- There’s greater real-time interaction—including updates, comments, and live streams between donors and project initiators throughout the fundraising process (Kuppuswamy and Bayus 2017).
- Crowdfunding helps spread information to the public in new and effective ways (Lambert and Schwienbacher 2010), as in targeted advertising, which increases the probability of successful fundraising.
- Crowdfunding provides opportunities for wider geographical reach, potentially to non-local donors with no previous connections to the fundraisers (Agrawal et al. 2015), in a cost-effective manner.
- Advanced technology can significantly reduce coordination and transaction costs associated with fundraising by enabling timely online interactions, and cost-effective digital and mobile payment systems (Choy and Schlagwein 2016).
- Crowdfunding presents opportunities to tap into new donors who may be actively seeking to contribute (Gleasure and Feller 2016) and offers a lower threshold for their involvement and activism, by making it easy for supporters to share the campaign with their own networks.
It’s important to note that donor attitudes evolve over time, and the specific findings of surveys vary depending on the sample size, demographics, and the particular crowdfunding platform being studied.
As noted, crowdfunding platforms often collect data and feedback from users to refine their models and policies, and they use this feedback to influence how they implement tipping and other features. But the platforms don’t usually share that data publicly; rather it’s proprietary to the specific platform. This is a profound limitation and prevents learning in the fundraising field.
For the most current insights into donor attitudes and behaviors regarding tipping, stay on the lookout for new surveys and research conducted by crowdfunding platforms, academic institutions, or market research organizations when publicly available. Also, if you’re using a crowdfunding platform to raise funds, incorporate a survey mechanism to learn how your donors experience the platform. That custom data is the best way for you to craft an effective fundraising program.
Have donors shared their views on crowdfunding tipping with you? If so, please let us know below.