Real-Time Giving Together: Crowdfunding for Social Causes is Nuanced

When it comes to fundraising, conventional wisdom suggests that matching donations, such as dollar-for-dollar matching, should boost success by attracting more individual contributors. Counterintuitively, new research by Jane Tan, SMU Cox Assistant Professor in Information Technology and Operations Management, reveals more nuance. Matching strategies that work offline can actually backfire in the digital world, where every pledge and match can be visible in real time.

“For campaign creators, the most important takeaway is that matching is not always better,” Tan notes. Civic crowdfunding, a form of fundraising distinct from typical charitable campaigns, is the focus of Tan’s research. While charitable crowdfunding typically supports individual projects, civic crowdfunding targets public goods. 

Analyzing a decade of data from 2013-2024 from the civic crowdfunding platform Goteo.org, Tan uncovered insights into fundraising practices. In this setting, each project specifies two funding thresholds before launch: a minimum goal (or budget to start the project) and an optimal goal, with extra features or further project improvements. The projects supported are aligned with the United Nation’s Sustainable Development Goals, spanning ecological initiatives, democratic projects (e.g., independent journalism and citizen participation), and social programs focused on education and health. Her work is novel in connecting information systems literature to humanitarian projects’ operations.

A Transparency Paradox 

Interestingly, “dynamic matching,” like popular dollar-for-dollar matching campaigns, when contributions are visible and publicly displayed, can actually discourage giving. When prospective donors visit a project page and see numerous matching transactions, they perceive the project as already well-funded. They therefore conclude that their contribution isn't needed. This transparency doesn't really exist in offline fundraising contexts typically. 

The transparency of digital platforms can have its pros and cons. “It could be beneficial for the institutional matcher because they want the recognition for their good deeds, but it could be detrimental to individuals’ contributions,” Tan explains.  “There is an opposing effect from this transparency that the platform needs to think through more deeply.” 
Platforms, on the other hand, have an incentive to showcase every transaction. But this constant display of matched donations creates a perception of abundance that can discourage individual donors from participating. In contrast, goal matching —where a sponsor releases a lump-sum contribution once a pre-defined threshold (or minimum goal) is reached—proves more effective in online crowdfunding environments. This approach maintains donor motivation without creating the perception that a project is already over-supported. 

The Causes 

Tan's research reveals differences in how matching strategies affect different socially-significant project types as characterized above. Using social projects as a baseline, she found that democratic projects attract more donors but receive smaller individual donations. Environmental projects draw fewer backers, but they contribute larger amounts. When goal matching enters the picture, these patterns shift dramatically. Democratic projects suffer when goal matching is present, becoming less effective at fundraising. Ecological projects, however, thrive with goal matching, attracting significantly more support. 

A mixture of motives to give were considered in the research. They include "warm glow" (the joy derived from giving itself), identity or expressions of values, and a sense of achievement which collectively shape donor responses. For democratic project donors, giving is an act of personal expression and opinion. Goal matching dilutes this self-expression, making donors feel their individual contribution receives less personal credit. Ecological project donors may experience a heightened joy derived from giving together as a collective. When a matcher is involved, these donors feel they're empowering the matcher and making the gift larger by enabling additional contributions. This sense of collaboration amplifies their happiness rather than diminishing it. 

Strategic Recommendations

For platform designers and project creators, Tan proposes a sophisticated hybrid approach. Before reaching a minimum funding goal, platforms should use dynamic matching without displaying individual transactions to avoid discouraging donors. After reaching the minimum goal, they should switch to goal matching, which increases contribution sizes even though it reduces donor numbers. 

Project creators must think carefully before implementing dynamic matching offers, Tan says. Goal matching is generally beneficial and should be part of a civic crowdfunding design. Dynamic matching, however, requires careful consideration based on expected fundraising performance and project stage, as it can hurt campaigns in their critical early phases. Importantly, platforms should align matching strategies with project types. Ecological initiatives benefit strongly from goal matching, while democratic projects may be better served without it. 

While beneficial, the transparency of digital platforms creates new dynamics that demand strategic approaches tailored to both fundraising stage and project type. Tan's research demonstrates that successful online fundraising, and civic crowdfunding specifically, requires more than simply importing offline strategies. 

The paper “Can Kindness be Matched? Dynamic Matching and Goal Matching in Civic Crowdfunding” by Xue (Jane) Tan, Cox School of Business at Southern Methodist University, Haoyan Sun of Lehigh University, and Yuliang (Oliver) Yao of University of Delaware, is under revision.

Written by Jennifer Warren.