More Than Double Your Impact: An Empirical Study of Match Offers on Charitable Crowdfunding Platforms

43 Pages Posted: 9 Apr 2021

See all articles by Zhen Fang

Zhen Fang

University of Washington, Michael G. Foster School of Business, Students

Xue (Jane) Tan

Indiana University - Kelley School of Business

Shengsheng Xiao

Shanghai University of Finance and Economics

Yong Tan

University of Washington - Michael G. Foster School of Business

Date Written: April 8, 2021

Abstract

To promote charitable giving, donation-based crowdfunding platforms adopted match offers, whereby leadership donors commit to matching the contribution of other donors at a given rate. While match offers have great potential to improve fundraising performance, a lot remains unknown about how and when match offers work. Leveraging the data from a donation-based crowdfunding platform, our study seeks to understand (1) how the suppliers of funds (donors) evaluate charitable projects with and without match offers differently, (2) how these donors’ preferences toward match offers vary with their donation experience, and (3) how the demanders of funds (fundraisers) react to the introduction of match offers. At an individual level, we find that, on average, donors derive a higher utility when contributing to charitable projects with match offers than without them. Specifically, warm-list donors (recently active donors) are three times more likely to contribute to matched projects than unmatched projects, while cold-list donors (dormant donors) are twice more likely to do so. However, new donors, who have no historical donation records on the platform, are more interested in unmatched projects. At a market level, we focus on the ratio of matched projects over all the projects and find that a 1% increase in the matched project ratio leads to a 1.34% increase in funds asked by demanders and a 0.854% increase in the funds supplied by donors. Finally, we demonstrate the robustness of our findings in a transactional analysis with fine-grained controls at the project level. Our work is one of the first studies that connect micro-level data patterns with macro-level market evidence to disentangle the impact of match offers systematically.

Keywords: crowdfunding, match funding, charitable giving, crowding-in effect

JEL Classification: A13

Suggested Citation

Fang, Zhen and Tan, Xue and Xiao, Shengsheng and Tan, Yong, More Than Double Your Impact: An Empirical Study of Match Offers on Charitable Crowdfunding Platforms (April 8, 2021). Kelley School of Business Research Paper No. 2021-36, Available at SSRN: https://ssrn.com/abstract=3822051 or http://dx.doi.org/10.2139/ssrn.3822051

Zhen Fang (Contact Author)

University of Washington, Michael G. Foster School of Business, Students ( email )

Box 353200
Seattle, WA 98195-3200
United States

Xue Tan

Indiana University - Kelley School of Business ( email )

1309 East Tenth Street
Indianapolis, IN 47405-1701
United States

Shengsheng Xiao

Shanghai University of Finance and Economics ( email )

No. 100 Wudong Road
Shanghai, Shanghai 200433
China

Yong Tan

University of Washington - Michael G. Foster School of Business ( email )

Box 353226
Seattle, WA 98195-3226
United States

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