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Why do people give on crowdfunding sites?

Marketplace Contributor Jan 11, 2013
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There are more than 50 crowdfunding websites in the United States alone and they attract a lot of money from a lot of people. But why do people give on these sites and why do they support certain projects? Elizabeth Gerber, a professor at Northwestern University, has studied crowdfunding and says there are four primary reasons why people give:

1. Because of a reward system, people want acknowledgment.
2. Because they have a connection to one of the people seeking donations.
3. Because they want to be a part of something, be part of group
4. Because they want to support efforts analogous with their beliefs.

“We give a large part because of our identity and what we either vicariously either want to experience or what we already value currently. So if you had this fantasy of becoming a movie producer, but you haven’t quite made it there — you’re going to give potentially to that initiative because you can feel like you’re part of it without actually having effectively done the work of it, if you will,” says Gerber. “What’s interesting about crowdfunding is that when you give money, you’re not just giving money and the exchange is over, the relationship lasts. So the content creator will keep you engaged in a way that you wouldn’t otherwise.”


Five tips to help you succeed at crowdfunding There’s a lot more to crowdfunding than just having an idea and the Internet. Check out our 5 tips to help you succeed at soliciting online donations for your projects.


In some ways, crowdfunding sites have legitimized giving money to your friends in a way that most financial advisers never would.

“I think if we think about it as purely a financial transaction, it doesn’t always make sense. People will often earn less than minimum wage, for example, if they actually monetize the time they spend on a project. But if you think about it as more than just exchanging money, it’s actually about connecting with your social network and exploring new ideas in the public sphere,” says Gerber.

So what does the future hold for crowdfunding? Gerber says that in some circles, it’s reaching an oversaturation point. She says that crowdfunding may follow in the footsteps of charitable giving.

“[In] charitable giving, you give to certain causes at certain amounts, and my sense is that’s what going to happen with crowdfunding,” says Gerber.

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