Emphasizing rewards: An empirical analysis of backer motivations in charitable crowdfunding

Abstract

Crowdfunding provides an effective way to raise small amounts of funds from a large number of backers. This study aims to explore the impact on backer behavior and subsequent funding outcomes when tangible rewards are emphasized in charitable crowdfunding campaigns. Based on the data from a crowdfunding platform in China, we differentiate between the behavior of backers who are intrinsically motivated and backers who are (at least) partly extrinsically motivated. Our results indicate that emphasizing promised rewards plays a dual role in charitable crowdfunding projects. While it makes a project more appealing to partly extrinsically motivated backers, it simultaneously undermines the enthusiasm of intrinsically motivated backers. However, partly extrinsically motivated backers are more crucial for the success of charitable crowdfunding projects. Explicitly mentioning promised rewards in the project description increases the proportion of these backers, thereby enhancing the project's fundraising performance. Finally, we discuss the importance of the interaction of crowdfunding campaign design with backer motivation in charitable crowdfunding.