The Art of Crowdfunding

What stops some people from giving money to projects on crowdfunding platforms and what motivates others to do so?

A report commissioned by Artsupport Australia set out to find some answers and the resulting work was published in July this year.

The Art of Crowdfunding

How to work the crowd:  A snapshot of barriers and motivations to crowdfunding” by Professor Helen Klaebe and Research Associate Rebecca Laycock, both of Queensland University of Technology

The report focuses specifically on arts projects, but most of the findings are relevant to crowdfunding projects in general.

Donor BarriersReasons Why Potential Donors Don’t

  • No tax deduction benefit – given that donors receive rewards, this one surprised me.  However, this must be a point identified by others too because in NZ, the Arts Foundation is planning to launch a crowdfunding platform in October.  One of the selling points for Boosted is that charitable status will be used so that pledges will be tax deductible.  However, rewards will not be offered to protect the charitable status.
  • Concerns about the project team – potential donors need to believe in the project creators and feel confident they will successfully deliver the project (including rewards) in a timely manner. When listing a project, creators must think about how they can build trust with potential donors.  This could be achieved by showing examples of previous work or samples such as prototypes in the video pitch and including written content about who you are, exactly how the money will be spent, awards you’ve won, relevant qualifications, etc.
  •  No ‘personal’ connection – their findings were that virtually no one pledges unless they ‘know’ the artist or know them through another person.  This finding may have come about because crowdfunding is still quite unknown in Australia and because most project creators are not running a campaign alongside their listing as is done internationally.  I doubt this would be a finding in the US.  I think we can safely say that not every one of the nearly 25,000 donors who supported Amanda Palmer raise over $1m knew her personally.    I have only ever pledged on one campaign where I knew the project creator out of all the pledges I have made so far.
  •  Donor’s reluctance to pledge on line – online payment security issues is a tricky one.  Crowdfunding takes place over the internet and online payment by way of credit cards or payment processors such as Paypal is simply how it works in most cases.

Donor Motivations Reasons Why Potential Donors Do

  • They know the person – definitely a huge motivating factor and this is one of the beauties of crowdfunding.  The crowdfunding platforms take away the discomfort of asking someone face-to-face for funding.  It is much more comfortable directing friends and family, often by way of an email or social media link such as Facebook, to your project listing.
  • The desire to help creative people – the report identified that many people have artistic talents but use other means to make a living.  These people recognise the financial struggle of artists and feel inclined to give artists a ‘break’.
  •  Creative belonging – a well-run crowdfunding campaign can create a ‘sense of belonging’ for the donors who develop a strong desire for the project to succeed.  This can lead donors to promote the project to their own network of friends and family.
  •  Engaging in cultural production – many donors wanted to connect and follow the creative process and this can be fostered by way of regular updates from the artist.
  •  Social Kudos – apparently some donors believe their friends will think they are cool by supporting an unknown talent but a parallel, more traditional view is that many people feel proud to support the arts.
  •  The rewards (perks) –great rewards are one of the best ways to get someone to part with their money.  To some extent, it is just like shopping.  Look at the rewards on this project which are ‘too delicious to miss’!

The report by its own admission, is a modest snapshot but it’s a useful and concise, eight page report.  Useful to anyone planning to launch a crowdfunding campaign.

What is preventing you from pledging?

4 thoughts on “The Art of Crowdfunding

  1. Pingback: The Art of Crowdfunding | Transmedia NZ | Scoop.it

  2. Pingback: The Art of Crowdfunding | Comunicación, Ubicuidad y Transmedia | Scoop.it

  3. Pingback: Funds with Benefits | Crowdfunding Downunder in Australia and New Zealand

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