Research into what makes people want to contribute to social and community crowdfunding projects, and which projects are most likely to succeed, is to be undertaken by a new academic partnership based in Portsmouth.
The partnership allies Portsmouth Business School with the Crowdfunding Centre. a news, research and support organisation for crowdfunding projects. It will explore the psychology of crowdfunding for both business and social projects.
Crowdfunding is the term applied to use of the internet to find large groups of small-scale backers for individuals, companies or social projects by organisations who are unable or unwilling to source funding from traditional single sources such as banks or grants. According to the UK Crowdfunding Association more than 650,000 projects were funded in this way in the UK last year, attracting more than nine million investments or donations.
The new research is being led by Portsmouth economics lecturer Dr Joe Cox, who is working alongside a support researcher who was (naturally) expected to crowdfund his own salary on appointment last year. Cox told UKAuthority.com this week crowdfunding for social and non profit projects has been growing strongly alongside the better known crowdfunding initiatives for start-up businesses.
"At its heart, crowdfunding is about empowering people, getting them involved in things they otherwise would not have done", said Cox. "Sometimes it can be very difficult to mobilise social movements for change, but crowdfunding eliminates or reduces the costs of that, and makes it easier for people to get involved."
This, coupled with a change in the social sector meaning people have not been able or no longer want to look to big business or government to provide all their funding, means donations-based crowdfunding for charities, social movements and social enterprises is on the rise in local communities, he said.
Examples include the Community Development Foundation, a government-backed project that matches funding raised in communities; Buzzbnk, a crowdfunding platform for the social enterprise sector; and LendWithCare.org, a platform inviting people to offer "microloans" to people in the developing world, run by charity CARE International UK.
"I am very interested in the economics of altruism, volunteering and charitable giving", said Cox.
"In some respects, if you apply a conventional economic theory, people behave in a self-interested rational way, so this should not happen. So we are looking to try and understand the crowd a bit more, work out the motivations of contributors, because if crowdfunding is to really take off we need to do a better job of finding out what drives it."
One aspect the research will examine is the role of donor visibility in the process, he said. "So you try and see to what extent people do it to enhance their social standing, how they are viewed by friends and family. You may see real divergence of behaviours between people who advertise their involvement and broadcast it to wide groups of people, and those who like to keep activities anonymous.
"The theory tells us people who want to look good in front of their peers should donate smaller amounts but to more projects, so they get kudos on multiple occasions. And we suspect people who remain anonymous may be more altruistic and donate larger amounts to worthy causes."
As well as analysing donation data supplied by crowdfunding platform partners to examine issues such as donation patterns by gender or income, the new initiative will carry out donor surveys -bearing in mind people may not always be completely up-front and honest about their motivation, Cox said.
"We need a combination of data, surveys, and actual patterns of use. No-one is going to admit to us they are only supporting these projects because it makes them look good."
Pictured: UK map with markers indicating successful crowdfunded projects. Source: Portsmouth Business School / Crowdfunding Centre.
Portsmouth Business School: www.port.ac.uk/portsmouth-business-school
Crowdfunding Centre: thecrowdfundingcentre.com
Community Development Foundation: cdf.org.uk