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

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  • 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
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    References listed on IDEAS

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    1. 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.
    2. 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.
    3. Paul Belleflamme & Thomas Lambert & Armin Schwienbacher, 2013. "Individual crowdfunding practices," Venture Capital, Taylor & Francis Journals, vol. 15(4), pages 313-333, October.
    4. Ajay K. Agrawal & Christian Catalini & Avi Goldfarb, 2011. "The Geography of Crowdfunding," NBER Working Papers 16820, National Bureau of Economic Research, Inc.
    5. Daniel W. Elfenbein & Ray Fisman & Brian Mcmanus, 2012. "Charity as a Substitute for Reputation: Evidence from an Online Marketplace," Review of Economic Studies, Oxford University Press, vol. 79(4), pages 1441-1468.
    6. Othmar M. Lehner, 2013. "Crowdfunding social ventures: a model and research agenda," Venture Capital, Taylor & Francis Journals, vol. 15(4), pages 289-311, October.
    7. 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.
    8. Mollick, Ethan, 2014. "The dynamics of crowdfunding: An exploratory study," Journal of Business Venturing, Elsevier, vol. 29(1), pages 1-16.
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    Cited by:

    1. Erik Ansink & Mark Koetse & Jetske Bouma & Dominic Hauck & Daan van Soest, 2017. "Crowdfunding public goods: An experiment," Tinbergen Institute Discussion Papers 17-119/VIII, Tinbergen Institute.
    2. Michael Marcin Kunz & Ulrich Bretschneider & Max Erler & Jan Marco Leimeister, 0. "An empirical investigation of signaling in reward-based crowdfunding," Electronic Commerce Research, Springer, vol. 0, pages 1-37.
    3. repec:kap:jbuset:v:146:y:2017:i:2:d:10.1007_s10551-017-3652-x is not listed on IDEAS
    4. Janice A. Hauge & Stanley Chimahusky, 2016. "Are Promises Meaningless In An Uncertain Crowdfunding Environment?," Economic Inquiry, Western Economic Association International, vol. 54(3), pages 1621-1630, July.
    5. repec:spr:elcore:v:17:y:2017:i:3:d:10.1007_s10660-016-9249-0 is not listed on IDEAS

    More about this item

    Keywords

    Crowdfunding; Non-profit; Entrepreneur; Startup;

    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

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