Claire van Teunenbroek and René Bekkers Are we joining the crowd? A natural field experiment on the impact of social information in crowdfunding campaigns Claire van Teunenbroek and René Bekkers Philanthropic Studies, VU University Amsterdam 45th ARNOVA conference, November 17, 2016

Can we increase donations by giving social information? Philanthropic crowdfunding is an emerging instrument in fundraising. You put up a call for contributions on a webpage and reach out to a crowd of potential donors to give, often with (token) rewards of increasing value at several thresholds. Amounts raised through crowdfunding increase, but they account for <1% of giving in the US and the Netherlands. How can we use real information about the donation behavior of previous donors do increase amounts donated? In the USA and the Netherlands philanthropic crowdfunding makes up for less than 1 per cent of the total fundraising amount As a result of the absence of a financial compensation, prosocial behavior is expected to be a dominant incentive and influence in philanthropic crowdfunding Previous research: offline contexts with mainly personal contact between the solicitor and donor Mention: From now on we refer to crowdfunding instead of the full term philanthropic crowdfunding.

Previous research suggests it could work Art gallery visitors donate amounts similar to previous visitors There is overwhelming evidence for the importance of the influence of social norms on donation behaviour: donating is a form of social behaviour encouraged by social norms and social incentives (Bekkers & Wiepking, 2011). The research shows that donors adjust their charitable behaviour according to social information. Specifically, studies show that when individuals are presented with information on the donation amount of previous donors their donation amount increases. Field experiment with donations to an art gallery, Martin and Randal (2008) demonstrate that visitors prefer to donate amounts similar to the coins and bills in a transparent box at the entrance. In a field experiment with donors to a public radio campaign, Croson and Shang (2013) and Shang and Croson (2009), found that the donations are higher after potential donors are informed about the donation amount of previous donors. Shang and Croson (2009) demonstrate that individuals adjust their donation according to the reference amount, on average with $13 (12%). In their field experiment with tourists at a national park, Alpizar et al. (2008a), solicitors verbally informed potential donors about the ‘typical’ donation amount ($10) of previous donors, which increased donations with about 50 cents (18%).

Previous research suggests it could work Art gallery visitors donate amounts similar to previous visitors (Martin & Randal, 2008) Donors to a National Public Radio campaign donated 12% more after hearing that others gave higher than expected amounts (Croson & Shang, 2013; Shang & Croson, 2009) Wild park tourists in Costa Rica donate 18% more (Alpizar et al., 2008) University alumni in the Netherlands donated 12% more (Bekkers, 2012) ….the effect size hovers around 15% There is overwhelming evidence for the importance of the influence of social norms on donation behaviour: donating is a form of social behaviour encouraged by social norms and social incentives (Bekkers & Wiepking, 2011). The research shows that donors adjust their charitable behaviour according to social information. Specifically, studies show that when individuals are presented with information on the donation amount of previous donors their donation amount increases. Field experiment with donations to an art gallery, Martin and Randal (2008) demonstrate that visitors prefer to donate amounts similar to the coins and bills in a transparent box at the entrance. In a field experiment with donors to a public radio campaign, Croson and Shang (2013) and Shang and Croson (2009), found that the donations are higher after potential donors are informed about the donation amount of previous donors. Shang and Croson (2009) demonstrate that individuals adjust their donation according to the reference amount, on average with $13 (12%). In their field experiment with tourists at a national park, Alpizar et al. (2008a), solicitors verbally informed potential donors about the ‘typical’ donation amount ($10) of previous donors, which increased donations with about 50 cents (18%).

BUT…. Publication bias may have polluted the results. The devil is in the details. Context matters – big time.

BUT…. Publication bias may have polluted the results. The devil is in the details. Context matters – big time. Source: Bekkers, R. (2009). Anonymity, Social Information, and Charitable Giving. 2009 ARNOVA Conference paper A nice positive result that did not (yet) get published

Pilot study (van Teunenbroek, 2016) We stick to the rule in economics of using no deception. We use only true information. We take advantage of the fact that giving is right-skewed; the average is often much higher than the median. Students who were told that the donation amount of previous donors was € 15 donated about €3 more (12%) of their ‘house’ money. This study is a follow-up study building upon the design of van Teunenbroek (2016): providing donors with the true average donation amount of previous donors to increase the amount donated. Our methodological approach provides us with several advantages over this earlier study. First, our study uses a real crowdfunding context instead of an artificial one. Second, our subject pool consists out of actual donors instead of a students in a convenience sample. Third, we use actual house money instead of seed money. Also, we test the effect of social information over the complete life course of a large number of campaigns. Earlier research (van Teunenbroek, 2016) used a class-room experiment which did not allow for an investigation of changes in the effects of social information effects over the life course of campaigns In a class-room experiment mimicking a crowdfunding environment using a real crowdfunding project, van Teunenbroek (2016) found that displaying the average (€15) donation amount of previous donors resulted in students indicating that they would donate amounts even higher than the displayed amount: the most popular contribution was €10 in the control and €20 in the treatment condition. Overall, the suggestion amount resulted in an increase of about €3 (12%). Even though, the students only indicated the donation amount and never made an actual donation, the context was semi-hypothetical, since the students were informed that at least 10% of the indicated donations would actually be donated to the project.

Innovations in our current experiment We preregistered it, https://aspredicted.org/u5w9u.pdf It is a natural field experiment: participants did not know they were in it. The subject pool is heterogeneous: participants are actual donors at a crowdfunding platform. Donations are real, rather than house money We test the effect over a variety of crowdfunding campaigns, in varying stages of completion, at varying levels of success

http://www.giving.nl/ https://renebekkers.wordpress.com/2015/11/11/four-reasons-why-we-are-converting-to-open-science/

Open Science Framework, osf.io This new project is at https://osf.io/epuj6/

Data and Methods From September 16 to October 16, a total of 23,796 visitors to voordekunst, a philanthropic crowdfunding platform for arts and culture projects, were randomized in two groups (A/B test). Control group: the ordinary campaign + payment page. Treatment group: a yellow button was added on the campaign + payment page with the text: “Did you know that on average donors on voordekunst donate 82 euros?” The field experiment included two conditions. In the ‘reference’ condition, a reference amount was suggested to provide donors with a social norm. In this condition, participants can read that “Did you know that on average donors on Voordekunst donate 82 euros?”. The reference amount is the actual average of all individual donations on the platform (i.e. excluding donations from companies) of the last six months of the previous year. In the ‘base’ condition, no reference was suggested. The moment a participants enters the website, he or she is divided into one of the two conditions based on internet cookies. Meaning that, they are in the same condition even if they visit multiple projects or revisit the platform another day.

Amount contributed thus far Treatment Signed copy Eternal gratitude

Amount contributed thus far control Signed copy Eternal gratitude

Fewer visitors donated

But donors gave higher amounts ns ns

The influence of 12 outliers ns p = .112

UP TO 7,500 in control and 5,000 in treatment

This study was made possible by Nederlandse organisatie voor Wetenschappelijk Onderzoek

We look forward to your thoughts! René Bekkers @renebekkers r.bekkers@vu.nl Claire van Teunenbroek @PSCTeunenbroek p.s.c.van.Teunenbroek@vu.nl 19