Crowdfunding, the new charitable donating? an empirical analysis of the impact of crowdfunding on private donations to development aid.

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Crowdfunding, the new charitable

donating?

An empirical analysis of the impact of crowdfunding on private donations to

development aid

University of Amsterdam

MSc. Business Studies

Entrepreneurship & Innovation Track

Name: Suzanne Tholenaar Studentnumber: 5729645

First Supervisor: Dhr. Dr. G. T. Vinig Second Supervisor: Dhr. Dr. W. van der Aa Final version: 28-08-2014

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Abstract

The rise of crowdfunding increases the urge to look at its effect on giving behaviour on charitable causes. This study focused on individual donations to international development projects via Dutch crowdfundplatforms. By means of an online survey considering donation behaviour, we tested whether crowdfunders that donated to development projects, gave more often or higher amounts than donors using traditional routes. Crowdfunders inclined to give more often to development aid, thereby referring to the impact of their donation as the main reason to participate. However, no difference was found in amount donated when comparing crowdfunding and conventional routes of giving. Although older generations were more likely to be involved in giving to development aid, we did not find generation cohorts to have an effect on either the likelihood, the donation frequency or donation amount of via crowdfunding. Likewise, internet use and social media activity were no indicator of making a donation via crowdfunding. For crowdfunding, being an innovative way for donating money to charitable causes, it is too early stating it transforms donation behaviour. Crowdfunding should be part of longitudinal tests examining charitable donation patterns in order to determine if this phenomenon is developing to become a conventional route for charitable donating.

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Introduction

Young entrepreneur Luc, planned his adventure carefully. After months of preparation, he took off silently in the morning of June 10th 2014. Six months of collecting money via his peers and sponsors, organizing professional photo-shoots, benefit dinners and the daily blog he kept about his experiences, contributed to the one goal: raising awareness for his special project in Africa. Biking his way from Nijmegen to Nigeria, makes the trip for him the experience of a life time.

Practices concerning social awareness are a trending topic in the Netherlands. Terms such as social engagement [sociale betrokkenheid] and participation society [participatie maatschappij], are becoming common language now that people are seemingly more active in taking responsibility for their surroundings and beyond. Whether this is influenced by the financial crisis, high unemployment figures or distrust in Governmental support and the Welfare State, people are trying to generate an impact their selves. By directly contributing to social issues offering time and skills, or by making donations, they are enhancing their environment together. Currently, the internet enables anyone to raise awareness for projects, connect to an audience and start improving current issues, as new types of philanthropic practices emerge. Sharing meals [thuisafgehaald], products [peerby] or assests [asset sharing] are happening on a local scale (Thuisafgehaald, 2013; Peerby, 2013; Asset sharing, 2013). On a global scale people help each other by starting initiatives that involve the housing of tourists [air bnb], empowering the poor [microfinance] or connecting the unconnected [text to change] (Airbnb, 2013; Microfinance, 2013; Text to change, 2013).

In addition to these developments, the Netherlands already has a cutting edge position in charitable giving (Bekkers, 2013). However, since the total sum donated to charity organizations dropped in 2012, first signs of a changing philanthropic environment become evident (CBF, 2012). Technological and social developments spur fundamental change in philanthropic practices. As the outcomes of charity organizations are hardly ever transparent, and the effect of donations is criticised (De Volkskrant, 2014), these organizations are being forced to open up and consider new strategies for their fundraising activities, dealing both with transparency and improving trust.

Web 2.0 offers extensive opportunities for philanthropy to evolve, now that collecting money moves from streets to virtual space (Wojciechowski, 2009). The rise of crowdfunding platforms marks such an opportunity, receiving worldwide notice, now the phenomenon passes through different stages of Gartner’s hype cycle (2013). Crowdfunding facilitates in collecting money for concrete projects. Therein many contribute a little, as costs are spread out over the crowd

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4 (Crowdfunding.nl, 2013). Projects in crowdfunding contain concrete and transparent projects (Crowdfunding.nl, 2013). Whereas the concept is a social act in itself, crowdfunding may put emphasis on social issues too (Wojciechowski, 2009). Get it done, the 1% Club and Pifworld, are crowdfunding platforms targeting on international development projects and are becoming convenient ways to support social causes. Since its founding in 2009, the 1% Club raised over 1 million euro and realised 459 projects in 68 countries, demonstrating that many small projects were successfully realized (marketing online, 2013). Examples of projects involve building schools in Bangladesh and providing solar lights in the jungle of Guatemala (marketing online, 2013).

During the last three years the use of crowdfunding has grown exponentially (Bronzwaer & Hijink, 2013; in Bekkers, 2013; Crowdfunding.nl, 2013). With these developments, questions rise how new technologies and fundraising manners shape charitable giving. Now that people raise awareness for their own project and could report their act of giving directly on social media, giving seems to become an open, social process.

From a business perspective, research focusing on the impact of crowdfunding is relevant, as it offers new pathways for the philanthropic sector to enhance profitability and to thrive disruptive change. One stunning example is the Ice Bucket challenge, wherein a massive amount of people made a donation to ALS after pouring ice water on their head asking friends and family to do the same (ALS, 2014). As the challenge went viral, 100 million dollar was raised for ALS research. Integrating smart marketing, fun, online opportunities and philanthropy, turns out to be effective. In a digital age, do non-profit organizations need remarkable or appealing campaigns to motivate donors? By considering the rise of crowdfunding platforms this study may produce valuable insights into the position of existing players such as non-profit organizations. Now that new initiatives are emerging how would that affect donation manners to a charitable cause? What is the value of crowdfunding for business in philanthropy?

Since many alternative explanations may influence charitable behaviour, it is impossible to identify the impact of crowdfunding exactly. Being a relatively new phenomenon, few academic studies have yet empirically tested the factors making crowdfunding a success, let alone the effect that it breeds. This study contributes to academic literature in constructing a first analysis of the impact of crowdfunding, focusing on charitable donations to development aid in particular. Herein we elaborate upon the findings of Bekkers & Wiepking (2011), Bendapudi, Singh and Bendapudi (1996), examining the influence of various determinants on giving behaviour. Now that the field of philanthropy is changing rapidly, we are curious if the outcomes of these studies still hold.

Will the next decade wherein crowdfunding is developing to become a convenient way for financing international development projects, have an effect on charitable giving? Does this affect

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5 donation patterns of generations, raised either in an offline or online context? The present study concentrates on this issue, testing charitable giving. The central question of this study is the following:

“What is the influence of the recent rise of crowdfunding on charitable giving on development projects and could this be explained by belonging to a certain generation?”

In order to provide an overview of relevant academic literature and to define the concepts that are important in this study, the first section provides an overview of existent research. The theoretical framework wherein the concepts are embedded, contains a brief explanation of the field of philanthropy, the rise of crowdfunding, factors of charitable giving and generation cohorts, eventually leading to the conceptual model for this study. On the basis of this conceptual model the relations between the concepts are tested empirically by means of an online survey. The approach chosen will be discussed in the methodology section. Followed by an analysis of the empirical data, we offer an explanation of the impact of crowdfunding on donations frequency and the amount of donations. Thereby we are exploring the effect of promising opportunities on the philanthropic domain. On this ground suggestions will be provided for further research.

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Literature review

The following section considers existent literature on philanthropy and crowdfunding relevant for this study.

Philanthropy

Worldwide philanthropy is serious business, being a 4.2 billion dollar industry in the Netherlands alone (Bekkers, 2013). However, not only money flows from funder to recipient; people offer goods, services and helping hands directly to those in need (Andreoni & Payne, 2013). As these manners are all part of philanthropic practices, the definition adopted is of Bekkers and Schuyt (2009) stating that philanthropy entails: “Voluntary contributions (money, goods, time/expertise) to the public good,

given by individuals and organizations and dominantly benefitting the public good” (Giving in the

Netherlands, 2009: 18). In addition, Bekkers (2013) distinguishes three levels of philanthropy of which the macro level concerns society, focusing on themes such as inequality and democracy. The meso level involves the fundraising of charity organizations and non-profits, whereas the micro level concerns individual charitable decision making and helping behaviour.

Various disciplines focus on the concept of philanthropy, all taking a different stance on the subject (Bekkers, 2013). Gathering information about fundraising and the positioning of causes for instance concerns communication and marketing disciplines. Decision making processes, charitable intentions and altruism are psychological themes, whereas neuroscience determines what part of the brain controls for philanthropic behaviour. Furthermore, sociological studies take a holistic stance, explaining how external factors affect philanthropic behaviour. Combining these different approaches, leads to new insights and an interdisciplinary perspective on philanthropy (Bekkers, 2013).

Philanthropy involves both local matters and global issues. On a local level charity organizations focus on social cohesion in communities, playing outside or sponsoring National Art and culture (Stichting voor Kennis en Sociale Cohesie, 2014; Jantje Beton, 2014; Bank Giro Loterij, 2014). Innovative ways to fight world’s most urgent issues, are all based on collaboration to support philanthropic aims; providing drinking water, sanitation needs or solving world hunger (The Economist, 2014). International development organizations offer foreign aid to developing countries to structurally lifting them out of poverty, by providing money, knowledge, assets in education, health care, economy and infrastructure (Thomas,2000).

Although publicity surrounding philanthropy revolves around positive connotations such as helping, problem solving, generosity and emergency aid, negative exposure results from discussions

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7 about the spending of donations for the purpose communicated and concerns issues of effectiveness and trust (Bekkers, 2013). In 2011 the overall trust in charity organizations decreased (Schuyt, Gouwenberg & Bekkers, 2013). Declining confidence is partly fuelled by the media reporting on the negating of donations, for instance by revealing human mistakes in case of Greenpeace (De Volkskrant, 2014) or ineffectively spent governmental development aid (De Volkskrant, 2014). Suggestive headers in national newspapers such as ‘all for nothing?’ (De Volkskrant, 2014b) and ‘squandered millions’ (Volkskrant, 2014a) confound trustworthiness. Counter arguments state small organizations are not necessarily more effective, as they lack critical analysis of their own performance. Moreover, their impact is not as structural as that of NGOs, Government or large non-profit organizations (Schulpen, 2007).

Philanthropy involves many parties such as charity organizations, lotteries, NGOs, Government, households and individuals (Bekkers, 2013). These parties all directly or indirectly provide resources to a targeted cause. On account of new technologies, new parties enter the philanthropic field and notions of fundraising evolve. This transition of alternative pathways concerning the support of projects, is blurring boundaries that once marked philanthropic possibilities: Doing good is no longer preserved of non-profit organizations (Filanthropium, 2014). With the rise of social entrepreneurship, business and philanthropy are not mutually exclusive anymore (Filanthropium, 2014). Development projects can have both philanthropic and for profit ambitions. By distributing shoes to the poor, TOMs (2014) is combining philanthropic aims with for profit business in order to remain viable as a company. In this respect, MacLaughlin, former Idea Lab director of Blackbaud, declares philanthropy 2.0 to require a multi-channel, multi- generation and multi strategy approach (Filanthropium, 2014).

Conditions affecting Charitable Giving

The devotion of the Dutch population to philanthropic practices is shown by the country taking in a top position on every global index on charitable giving (Bekkers, 2013, World Giving Index, 2013). On the Commitment to Development Index, on which developed countries are ranked on the quality of their development policies, The Netherlands invariably takes in one of the highest positions (CGDEV, 2014). Every single year reaching the OESO norm of 0.7% GDP, devotes to development aid, characterizes Dutch Development spirit (The Guardian, 2014). However, not in the year 2013: For the first time since 1974, The Netherlands dropped below its set target (The Guardian, 2014).

Understanding Dutch generosity requires a closer look at empirical data regarding charitable giving. Charitable giving is different from helping in that the recipient inclines to be absent from the context in which a donation is made (Bekkers & Wiepking, 2006). The longitudinal research project

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8 ‘Giving in the Netherlands, known as GINPS, biennially reports on charitable giving in the Netherlands (Schuyt, Gouwenberg & Bekkers, 2013). Since 1995, this research project collected piles of data regarding the state of philanthropy, parties involved and forces driving philanthropic action. Besides of directing this panel study, Bekkers and Wiepking (2011) conducted a meta-analysis of over 500 articles on charitable giving in order to define factors that influence charitable giving. Findings mark eight mechanisms that affect pro-social behaviour (Bekkers and Wiepking, 2011). Covering the whole process of charitable giving, people make a donation: when perceiving the costs to be reasonable for the benefits it provides, when there is a need, when they are solicited to make a contribution, when it matches their altruistic and personal values, when it adds to one’s reputation, when it is rewarding and delivers a visible impact (Bekkers & Wiepking, 2011 in; Srkoc & Zarim, 2013).

Studies examining these mechanisms focus both on the likelihood, frequency and height of a donation. Some conditions affect only the likelihood of making a monetary donation, some are concerned with the amount that is donated. Leading both to a significant increase in the likelihood and the height of a donation, trust is an important factor as it comes to charitable giving (Bekkers and De Wit, 2013). In that sense, perceived risks regarding the effectiveness of a donation, as it may not reach the intended recipient, is negatively related to charitable giving to development aid (Beldad, Snip & Van Hoof, 2014).

Personal conditions of donors regarding charitable giving, show a correlation with gender, age, educational level and income (Bekkers, 2006). A multivariate analysis conducted by Bekkers and Ruiter (2009) shows a declining effect in educational level, and a consistent effect in age (Bekkers & Ruiter, 2009), both having a significant positive effect on the height of a donation, how people are willing to donate and their self-informing practices about the cause of preference (Bekkers & DeWit, 2013; eNonProfit, 2013). As personal, external and organizational characteristics are expected to interact with one another and differ among charitable sectors, it is difficult to determine the effect of conditions separately.

Focusing on international development causes only would drastically narrow our focus and is beneficial for generalizing the conditions (Kinsbergen & Toslma, 2013; Bekkers & Wiepking, 2011). In 2011, private donations have led to €281 million regarding international development projects (Schuyt, Gouwenberg & Bekkers, 2013). Who gives to development aid? Do general findings also hold for donations to international development aid? According to Kinsbergen and Tolsma (2013) trustworthiness matters even more in development projects. As the cause of the donation is geographically dispersed, the feasibility of poverty reduction is doubted and the lack of visible impact of the money spent may negatively affect charitable giving intentions (Bekkers & Boonstoppel, 2011, Carabain et al., 2012 ; Council on foreign relations, 2012; European Commission, 2010, Gijsbers

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9 & van der Lelij, 2010, Hento, 2011, Lindstrom & Henson, 2011, Pollet, 2012, Partners in Quality Research, 2010; Ravelli & Verhoeven, 2008 in; Kinsbergen & Tolsma, 2013). Being familiar with the charitable organization, its experience in the international development field (10-20 years) and its activity in different countries, are important factors affecting charitable giving (Kinsbergen & Tolsma, 2013).

Generational Giving

With a percentage of 98%, nearly all 18 to 24 year olds are active online (CBS, 2011). This is happening on the background of the digitization megatrend, of increased connectedness of people due to mobile and smart internet devices. Researchers assume that by the year 2020, an entire generation will have grown up in a digital world. Members of such a generation are said to transform the way we currently work and consume (PWC, 2014).

Most individuals feel besides of being unique, to belong to a certain group. Such a group might be family, country- or religion-based (Bontekoning, 2012). In line with this urge of belongingness, 80% of the Dutch population feel to make part of a generation (Bontekoning, 2012). Generation theories assume individuals to share common traits and experiences when growing up in a specific period (Becker, 1992; Bontekoning, 2010). According to Becker (1992), these traits, beliefs and values are of permanent influence on how people live. Whereas characteristics attributed to these generations are generalised, these traits often hold on an individual level (Bontekoning, 2012). Although there is no consistency in the allocation of age categories, what theories have in common is that generations cover 15 years (Becker, 1992; Bontekoning, 2010).

Whereas generation X, born between 1955-1970 is known for its sober and no-nonsense character, the pragmatic generation, born between 1970-1985, is known for its self-deployment, solution focused attitude and networking skills. The pragmatic generation is followed by a generation characterized by its focus on authenticity, generation Y. Raised in times of big technological innovations, those born between 1985-2000, aim to generate an impact (Bontekoning, 2010). Nearly 55 percent of young generations and 44 percent of Generation X mention the ability to directly see the impact of their donation, would have an effect on their decision to give, confirming the demand for openness and effectiveness (Nextgendonors, 2014). Only few studies conducted research on generation cohorts and their preferences in charitable giving (Gajda & Walton, 2013; Srkoc & Zarim 2013; Bekkers & Ruiter, 2009). Group characteristics, in combination with emerging social trends and the rise of the internet, may lead to substantial differences in [online] consumption- and donation patterns (Nextgendonors, 2014).

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Changing preferences of giving

The digitization shaping the behaviour of all generations, affects the nature of philanthropy too, bypassing or transforming traditional channels (Desai & Kharas, 2009; Wochisjencko, 2009). Now the internet reduces donations to a few clicks, the relationship between donors and charity organizations is expected to transform (Nextgendonors, 2014). A reduction in transaction costs, could as well lead to severe depersonalization of the donation experience, undermining some of the key motivators of the donation process, such as trust and commitment. Still, Blackbaud (2013) notes that online giving increased by 10.7% in 2012, covering 7% of the market in fundraising in the US. Likewise online giving in the Netherlands is expected to increase rapidly in the coming years, as those making an online donation report higher amounts than in previous years (Bekkers & DeWit, 2013; WWAV, 2011).

However, several studies neutralise the effect of online fundraising. According to Blom (2012; in; NDP, 2013) giving cash money remains prevailing, as it still is most controllable. Similarly, according to Bekkers (2013) raising funds online for specific projects shares important commonalities with offline fundraising. Furthermore, Bekkers (2013) finds that what makes people give online is similar to what makes them give offline.

Nevertheless, empirical data about fundraising via social media shows that online fundraising differs from traditional giving in that online donors belong to younger generations, giving larger gifts (Flannery et al, 2009 in; Saxton & Wang, 2013). According to Ricciardi (Nextgendonors, 2014) new generations are shaping fundraising practices if it comes to preferences and manners of giving. Whereas loyalty and long-term commitments are in decline, donors prefer being updated about the progress of a project (Nextgendonors, 2014; Gajda & Walton, 2013; NDP, 2013). What is more, updates lead to recurrent donations and to higher amounts contributed per donor (Gajda & Walton, 2013). Charity organizations are under increased public scrutiny, forced to report about project developments on which donors base their decisions to give (Nextgendonors, 2014; Webb, Green & Brashear, 2000). As the spending of funds for international development issues is concerned, Bouzoubaa and Brok (2005) notice the Dutch population to become increasingly critical, self-aware and assertive to both Government and charity organizations.

In addition to these changing preferences innovative initiatives emerge: Whydonate, a mobile application attracting people having charitable intentions only occasionally (Mobile Fundraising, 2014). Whydonate launched an alternative system for flexible donations, meeting those refusing a monthly contribution that charitable organizations [still] demand from their members. On the other hand, the call for impact is translated into practice as people start their own projects to raise funds, for instance by making an effort in sports, like running a marathon or biking to Africa

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11 (Srkoc & Zarim, 2013). Travelling to development regions for distributing and providing cell phones or shoes, fades layers between supplier and recipient (Text for change, 2013; TOMS, 2014).

Projects such as WhyDonate (Mobile Fundraising, 2014) make giving more flexible, fast and transparent, bypassing traditional manners of charitable giving (Srkoc & Zarim, 2013). In order to take advantage of notions shaped through online opportunities, the field of philanthropy is seriously accessing new approaches.

Crowdfunding

Emerged out of Web 2.0, crowdfunding embodies the most successful method to bask for money (Wojciechowski, 2009). Belleflamme, Lambert and Schwienbacher (2010) established a common used definition of crowdfunding: “..Crowdfunding involves an open call, essentially through the Internet,

for the provision of financial resources either in form of a donation or in exchange for some form of reward and/or voting rights” (Belleflamme, Lambert & Schwienbacher, 2010, p.6). In the first years of

its existence the market potential for crowdfunding exploded, with a growth potential of over 460% in the Netherlands alone (Crowdfunding.nl, 2013). Hence, the crowd gathered 2.7 billion dollar through one billion campaigns (Crowdfunding.nl, 2013).

Rather than depending on investments from business angels or bank loans, crowdfunding enables entrepreneurs to raise funds by means of the crowd (Belleflamme, Lambert & Schwienbacer, 2010). Where funding once comprised of large-commitments by a few funders, crowdfunding intends to achieve the opposite: many funders contribute a small amount for kick starting a certain project, usually taking place via an internet-based crowdfunding platform (Wheat, Wang, Byrnes & Ranganatha, 2013; von Ritter & Black-Layne, 2013).

Generally four types of crowdfunding could be distinguished: donation-based, reward-based, loan-based, and equity crowdfunding (Frankwatching, 2011). While funders participating in donation based crowdfunding do not expect a valuable return for their donations, reward-based crowdfunding offers participants something in return. On a worldwide scale most money is concerned with loan-based payment systems in crowdfunding, in which participants provide the recipient or entrepreneur with a loan to start their own business (Frankwatching, 2011). Equity based crowdfunding promises participants a share of the success of the start-up or the seed-stage company, entailing a long term relationship between investor and entrepreneur (Stiernblad & Skoglund, 2013). While some platforms only back successful projects by remunerating when a project has reached a set target, some platforms chose to remunerate funds raised no matter the set target (Crowdfunding,nl, 2013).

As crowdfunding relies on principles that are in line with a contemporary [online] focus on information sharing, connecting, ease and transparency, by providing information about the

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12 entrepreneur, the purpose of the project and the progress made. Crowdfunding directly connects participant and entrepreneur, supporting trust and efficiency (Crowdfunding.nl, 2013). Moreover, the online context enables projects to go viral, [only] requiring a few mouse clicks.

Being a new phenomenon, research on the impact of crowdfunding is limited (Ordanini, 2011; Lehner, 2013). Best practices are yet to be explored. Although philanthropic crowdfunding projects realize considerably lower amounts compared to equity based crowdfunding, cooperative projects turn out to be a great success in the Netherlands: A windmill project [de Windcentrale] raised 7 million euro for building two windmills providing electricity for 5500 households (crowdfunding.nl, 2013). This raises questions on how this new approach would affect donating behaviour.

Donations via crowdfunding

Recent empirical data on conditions influencing donations via crowdfunding, indicate that these share important commonalities with offline charitable giving (Bekkers, 2013; Van Vliet, 2011). In qualitative research among Dutch crowdfunders. Van Vliet (2011) found that conditions as distinguished by Bekkers and Wiepking (2011) are applicable on charitable donations via crowdfunding in the cultural sector. Van Vliet (2011) in exploring mechanisms responsible for participating in cultural projects via crowdfunding, found several conditions to affect the likelihood and the height of a donation. Whereas the likelihood of participating in crowdfunding is affected by the awareness of needs and personal norms and values, the height of a donation was determined by personal commitment to the cause, the amount targeted for, the reward offered and risks involved. As this study is about the role of crowdfunding in donation manners to international development projects, the following section will examine recent research on philanthropic crowdfunding.

Crowdfunding International development projects

Philanthropic crowdfunding emerged out of trends related to online opportunities, the recent rise of crowdfunding and changing preferences concerning participating in charitable causes.

In 2011 crowdfunding made up 294 million of a total sum of 4.3 billion donated to philanthropy (Schuyt, Gouwenberg & Bekkers, 2013). Enabling anyone to start their own charitable project, crowdfunding offers a promising contribution to philanthropy, even as it comes to missions that are geographically dispersed: it enlarges the reach for participants and increases the spread of development projects.

Crowdfunding platforms could empower those in need by providing an open call for ideas and projects aiming to generate a positive change, and at the same time meeting contemporary preferences of private initiatives (One percent club, 2014; Kinsbergen & Tolsma). Most of these

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13 platforms rely on donation-based payment structures (Gajda & Walton, 2013). Pifworld, Get it Done and the 1% Club provide a platform for funding projects without expecting any valuable return. Organizing projects by country, subject and progress made, grants the potential funders the opportunity to deliberately select a project.

Other crowdfunding platforms rely on reward- or loan based financing (Gajda & Walton, 2013), of which Kiva (2014) as a loan based platform finances projects for expanding business assets, hereby supporting people in their daily practices. By assuring investors to receive a return on their investment, recipients are being motivated to enhance their own situation (Karnani, 2010).

In practice this direct way of contributing leads to declining overhead costs, less sensitivity to corrupt practices, and the fact that aid is allocated according to need on the ground with very little of the money funnelled back to consultants and contractors in donor countries, leaves more for the beneficiaries in developing nations (Axel Dreher et al, 2009; in Desai & Kharas, 2009). Whereas online giving still represents a small fraction of private aid, platforms have been able to expand in scale, increasing the number of donors, as well as the amount distributed to developing countries (Desai & Kharas, 2009).

Conceptual model

Existent literature reports about the numerous opportunities crowdfunding offers to financially support projects in a broad range of sectors. We found out that many factors affect charitable giving. For instance, people participate in charitable giving based on trust, visible impact and affinity with the cause (Bekkers & Wiepking, 2011).

We wonder how this holds for new donation routes. Is crowdfunding causing any differences in donation behaviour? Focusing on crowdfunding, Van Vliet (2011) discovered the very same conditions as with charitable giving to affect if people participate, as well as the amount of their donation. Crowdfunding directly links the crowdfunder and the entrepreneur behind the project. As the entrepreneur tries to realize a concrete project, donors are updated about the progress of the project. These distinctive characteristics of crowdfunding are expected to increase trust, engagement and effectiveness. In addition, Gajda and Walton (2013) found out that engaging donors in a project, leads to recurrent donations and higher amounts per donor.

Based on these findings, we aim to test whether crowdfunders of development projects via crowdfunding indeed donate more often, and donate a higher amount than donors giving via traditional routes. In this regard, the following hypotheses have been formulated:

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H1: Donors that participate in the crowdfunding of development projects give more often than people giving to development aid via traditional routes

H2: Donors that participate in the crowdfunding of development projects give higher donations than people giving to development aid via traditional routes

Growing up in a digital age, internet activity and social media use of young generations may generate substantial differences in [online] consumption- and donation patterns (Nextgendonors, 2014). Donors via social media are younger and give higher donations (Flannery et al, 2009 in; Saxton & Wang, 2013). Additionally we expect younger generations to be involved in new [online] manners of giving, bypassing traditional routes of supporting development aid. What is more, young generations report the impact of a donation positively affects their decision to make a donation (Nextgendonors, 2014). Do these distinctive characteristics of crowdfunding attract younger generations and lead to higher donations and giving more often? Aim is to test if younger generations indeed strengthen the effect of crowdfunding on giving to development aid. Based on these findings, we expect mainly young generations to participate in crowdfunding:

H3: Donors that participate in the crowdfunding of development projects belong to younger

generations than people donating to development aid via traditional routes

.In this study, the use of crowdfunding comprises the independent variable. As the use of crowdfunding is expected to positively affect donation frequency and the amount given, these indicators comprise the dependent variable. Generation cohorts comprise the moderating variable of this study, in order to test if young generations interact with the effect of crowdfunding on giving to development aid.

Comparing donation behaviour of crowdfunders and donors using traditional routes for supporting development aid, may render valuable insights in the new phenomenon of crowdfunding and changing preferences in the charitable domain. Figure 1 displays the visual representation of the conceptual model for this study considering concepts and how variables relate. This conceptual model is regarded as a starting point for testing our research question: What is the influence of the

recent rise of crowdfunding on charitable giving on development projects and could this be explained by belonging to a certain generation?

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Figure 1. Conceptual Model: Impact of the use of crowdfunding on donation frequency and height of donation

Independent variable Moderator Dependent variable

Use of Crowdfunding

Generations: age

internet use social media use

Donation frequency to development aid

Amount donated to development aid

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Method

The following section is considering the methodology of the proposed study. By defining the population, variables, operationalizing concepts and outlining the survey design, an overview is given on how to conduct the empirical study.

In order to analyze if crowdfunding influences charitable giving to development projects, a quantitative study is conducted, testing donation behaviour of both crowdfunders and noncrowdfunders on development projects. By means of the defined concepts I aim to test the impact of crowdfunding through an online survey, thereby testing the conceptual model that is based on related literature.

Survey Design

Due to ease of use and license agreement with the University of Amsterdam, Qualtrics online survey software is used for this study. Qualtrics facilitates in composing and distributing online surveys and to extract the obtained data easily before analysing it in SPSS. According to Saunders, Lewis and Thornhill (2009) a survey strategy is important for measuring existing mechanisms and correlations between variables, as well as for producing models of these relationships.

The survey starts with a short introduction explaining the aim of the study. Participants are being informed that their data will be used in an anonymous and confidential way. The estimated time for completing the Qualtrics survey is 5 minutes. The survey will be open for three weeks to allow the respondents time to participate in the survey. I communicated to raffle a donation of €25 to a project of choice among participants of this study. Participants could fill in their e-mail in order to receive the results of the study and to win this donation of €25.

Questions 1 till 6 consider personal conditions such as educational level, age, gender and income that may provide important demographic information, as previous studies found a significant relation of these conditions with charitable giving (Bekkers & Wiepking, 2011). Being an indicator of a generation effect, this first part of the survey also involves questions about internet use and social media activity. Questions 6 till 9 relate to development aid in general. By asking participants for if they made a donation via traditional routes of development aid funding, we aim to check for their donation behaviour. When participants made a donation to development aid via traditional routes, this question is followed by questions related to the frequency and the amount donated per type of funding (cash money, direct online, via membership or via lottery). Questions 12 till 20 relate to crowdfunding. We indicate whether participants are known with the phenomenon of crowdfunding,

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17 the phenomenon of charitable crowdfunding and we conclude by asking whether they made a donation via one of the crowdfunding platforms we selected (Pifworld, Get It Done, 1% Club, other platform). When pariticipants donated via these platforms, this question is followed by questions related to the frequency and the amount donated per platform. In case of selected ‘other platform’, the participant is asked which platform is used, to control for platforms that offer development projects only. Questions 11 and 21 indicate one’s perception of respectively development aid in general and crowdfunding platforms supporting development projects.

Operationalization

The current empirical study revolves around three variables of which the recent rise of crowdfunding comprises the independent variable. The variable of crowdfunding is binary, meaning that on the one hand we focus on participants of crowdfunding projects, and on the other hand we look at noncrowdfunders, people giving via traditional routes. Giving to development aid, is the dependent variable of this study, as the aim is to understand whether private donations on development causes are affected by crowdfunding. The dependent variable consist of two parameters: donation frequency, and amount donated to development aid. For examining if other conditions weaken or strengthen the effect of crowdfunding on the frequency or height of donations, a moderating factor is taken into account. As crowdfunding is happening in an online context, we focus on generations, whilst different generations are expected to differ in donation preferences and online presence. Generation cohorts entail one’s year of birth, internet activity and social media use.

Figure 3.2 represents the operationalization of constructs for this study.

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18

Giving to development aid via traditional routes

Being an indicator of the dependent variable, giving to development aid, we control for donation behaviour through traditional manners. The longitudinal panel research on philanthropic practices in the Netherlands provides insight into the relation of different [demographic] factors and charitable giving (Bekkers, 2013). Hence, the survey design for this variable partly derives out of the validated questionnaire of the GINPS (Bekkers & Wiepking, 2011). The participant will be informed of our definition of development projects: development aid is focusing on foreign countries, is of structural sense and contributes to human needs such as poverty, education, human rights and nature. When people made a donation to development aid in the last 12 months, we follow this question by asking how they did, allowing multiple answers and controlling for offline [cash money], online giving without membership, or donations via lotteries and memberships. Dependent on selected manners, categories of frequency (1, 2, 3-5, 6-10, >10) and amount of money donated (<€5, 5-10, 11-25, 26-50, 51-100, 101-200, 201-500, 501-1000, >1000) are given. Furthermore, we ask all participants about their perception of charitable organizations contributing to development aid. Questions 6 till 9 relate to development aid in general.

Crowdfunding

As our main topic of interest, this survey contains items related to the concept of crowdfunding. Crowdfunding being the independent variable of this study, consists of two conditions, crowdfunders and noncrowdfunders – donors via traditional routes.

Crowdfunding is part of only few empirical studies (Crowdfunding.nl, 2013; Ordanini et al, 2011). In order to test if there are any differences in giving to development aid between crowdfunders and noncrowdfunders, the questionnaire starts by making a distinction between people that donated to development projects via crowdfunding and people giving via traditional routes. Therefore I made a selection of three Dutch donation based crowdfunding platforms regarding development projects. An example item dividing crowdfunders from noncrowdfunders would be “In the last 12 months I made a donation via Get It Done.” A positive score on this item, indicates participants made use of crowdfunding to back development projects.

Participants donating via crowdfunding are directed to questions derived out of ‘Het Nationale Crowdfund Onderzoek’ and the qualitative study of Van Vliet, examining motivations to participate in crowdfunding projects (2011, Crowdfunding.nl, 2013). An example item would be “An important reason for me to make a donation via crowdfunding was my feeling with the entrepreneur behind the project.” Items will be rated on a scale ranging from 1 (disagree) to 5 (agree). These

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19 scores examine the grounds on which people decided to crowdfund development projects. Questions 12 till 20 relate to crowdfunding.

Giving to development aid via crowdfunding

As we made a distinction between crowdfunders and noncrowdfunders, our main interest lies in donation frequency and amount donated via crowdfunding. Comprising the dependent variables of this study, participants are being asked how often and how much money they donated via crowdfunding. Participant are being asked if they made a donation via Get It Done, 1% club, Pifworld or other crowdfunding platforms. For every platform we control for donation frequency (1,2,3-5,6-10,>10), and donation amount (<€5, €5-10, €11-25, €26-50, €51-100, €101-200, €201-500, €501-1000, >€1000). These categories hold the same values as for traditional routes of giving. Questions 16 and 19 relate to this dependent variable.

Donation Frequency

The variable donation frequency, indicator of the dependent variable, is the sum of the score of donation frequency via traditional routes and donation frequency via crowdfunding.

Donation Amount

The variable donation height, indicator of the dependent variable, is the sum of the score of donation height via traditional routes and amount donated via crowdfunding.

Generations

Generation cohorts comprise the moderating variable of this study. Young generations growing up using the internet, might react differently on the opportunity to make a donation via internet than older generations. Despite their lack of loyalty, young people are expected to be involved in crowdfunding projects more often, giving higher donations (Nextgendonors, 2014). As online presence and social media use may indicate generation specific traits, we included these items controlling for generation belongingness. An example item would be “I make use of Facebook.” Items will be rated on a Likert scale ranging from 1 (never) to 7 (every hour). Considering these scores for donating via crowdfunding, may indicate a positive relation between [young] generations using crowdfunding and donation frequency and amount donated. Questions 2 and 5 are concerned with generations.

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Population

The population of this study consists of Dutch residents. Whereas the entire population comprises different generations, people may differ in their preference to make a contribution via crowdfunding. Crowdfunding platforms with a focus on [international] development projects target for online participants. Thereby I will focus on three Dutch crowdfunding platforms presenting international development projects: 1% club, Pifworld and Get It Done (1%club, 2013; Get it done, 2013; Pifworld, 2014). Participants contributed to development projects via these platforms. To control whether the likelihood and the amount of charitable giving is affected by crowdfunding, the control group for this study consists of people making a donation via traditional routes of development aid.

Data was collected through non-probability sampling. Since there is no complete register of the population, chances of selection were not equal. A quota sampling was used to conduct the study on the basis of generations. The study has a cross-sectional design, meaning the empirical test is run on a subset representative of the entire population. As this study spans over a relatively short period of time, the relatedness between the variables involves a snapshot, meaning that measures are conducted only once. In reaching participants we made use of social media [Facebook, Twitter and Linkedin] and e-mail. Managers of the 1% club, Get It Done and Pfiworld, received an invitation letter by e-mail, with a request to spread the survey among members of their platform, including both a briefing and a link to the Qualtrics survey. The questionnaire was available in Dutch only, as studies we used for constructing the conceptual model, base their findings on charitable giving of the Dutch population.

Eventually, the study contains 193 participants, comprising of 89 men (46.1%) and 103 women. Table 3.1 shows the frequency table of generation cohorts. Furthermore, most participants are highly educated, as 149 participants (77.6%) obtained an academic degree or a degree in higher education. Income is less than €1500 for 29.9% of the participants, the category of €1500-3000 (65.8%) is represented most. Participants are based in the Provence of Noord-Holland (52.3%) followed by Noord-Brabant (22.3%).

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21 Figure 3.1 Frequency table of generation cohorts

Frequency Percent Valid Percent Cumulative

Percent Valid 1985-2000 97 50,0 50,3 50,3 1970-1985 60 30,9 31,1 81,3 1955-1970 27 13,9 14,0 95,3 1940-1955 7 3,6 3,6 99,0 <1940 2 1,0 1,0 100,0 Total 193 99,5 100,0 Missing System 1 ,5 Total 194 100,0

Measures

Different scales have been used to measure the variables for this study. Variables are measured on a continuous scale, as categories of frequency and categories of amount of euros are included in the questionnaire. Data on the motivations to participate in crowdfunding projects or stimuli to affect the height of the donation, have been measured on a ordinal, Likert scale. The Likert scale is used to measure the preferences of participants, as it concerns a widely employed tool for scaling responses (Norman, 2010), it is ideal for providing information on preferences. I deliberately chose to include a 5 point scale for measuring motivations.

The dependent variable, donations to development aid, is measured on both its frequency and the amount given. Five numerical categories represent frequency (1, 2, 3-5, 6-10, >10), nine categories embody the amount of euros donated (<€5, 5-10, 11-25, 26-50, 51-100, 101-200, 201-500, 501-1000, >1000). The numerical character of the variables, considers the median as a main descriptive for this study. This study aims to focus on testing the difference between groups. We aim to find out whether differences between crowdfunders and noncrowdfunders are existent. Dependent on whether the data is normally distributed with a significant level of p<.05, we run an unpaired t- test. The independent samples t-test analyzes differences between crowdfunders and noncrowdfunders. However, the independent samples t-test does not report on the size of this difference. By measuring the effect size, the exact size of the difference between groups can be calculated. The effect size measure ascertains the importance of the independent variable (crowdfunding) for the dependent variable (donation frequency and height of donation). By explaining the difference between the group means as a ratio of the standard error of the mean

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22 difference, we aim to detect the effect of crowdfunding on donation frequency and the amount given for the specific context of development aid.

In case data is not normally distributed, a Mann-Whitney U test will be conducted. This test is nonparametric, meaning the statistical procedure does not rely on restrictive assumptions of parametric tests, such as data coming from a normal distribution. The Mann Whitney U test screens for the differences between to independent samples. In order to run this test there are four assumptions to be met: the dependent variable is measured on an ordinal or continuous level, the independent variable consists of two independent groups (dichotomous) and independence of observations. Furthermore we have to determine the shape of distribution for both groups of the independent variable (Field, 2005). As the frequency and height of donations (dependent variable) is measured on a continuous level and crowdfunding (independent variable) consists of two independent (dichotomous) groups, donors via crowdfunding and donors via traditional routes only, the assumptions for the nonparametric test have been met.

Reliability and Validity

In order to ensure valid and reliable results, we consider these components thoroughly. Internal, external and construct validity are taken into consideration (Bryman, 2004). By composing the survey we considered prior literature, empirical data available of the related panel study Giving in the

Netherlands and The National Crowdfund Onderzoek, thereby contributing to internal validity.

Whereas various factors may interfere with the effect expected, several control variables are included in the survey. Furthermore we made sure to use scales consistently, i.e. ensuring all measures on perceptions and motivations to involve a 5-point Likert scale.

External validity reflects generalizability of the results (Bryman, 2004). Although the small sample size threatens the external validity of this study, we neutralise this shortcoming by stating the community to use crowdfunding specifically for development purposes is expected to be small in population size, as it represents a rather new phenomenon. General limitations concerning external validity, are found in the use of an online survey. This excludes people having no access to internet. Still, the survey is controlling for internet activity, as this condition indicated generation effects to affect participating in crowdfunding.

Construct validity for this study is expected to be high, as our main variables are measuring past behaviour rather than perceptions or motivations. Indicators of the dependent variable, giving to development aid, donation amount and donation frequency, report only actual behaviour on a dichotomous or continuous scale.

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23 Reliable studies entail firmness of results and repeatability independent of both time, procedure and researcher (Bryman, 2004). Although the questionnaire for this study derived out of validated questionnaires, it does not comprise a complete validated survey. This may have consequences for the reliability of the data. Measuring underlying constructs, the questionnaire consist of 12 questions related to the motivation of participating in crowdfunding. This scale had a high level of internal consistency, as determined by a Cronbach’s alpha of α= 0.720. Measuring for internal consistency as determined by a Lambda6, this reliability value even increased to 0.825. Likewise, underlying constructs related to the height of the donation were measured on their internal consistency. Unfortunately, the construct has a very low level of internal consistency, as determined by a Cronbach’s alpha of α= 0.099. Therefore, this scale is not considered as reliable, thus will not be used for analysing the results.

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24

Results

The following section shows the results of the empirical research conducted. In order to explain descriptive statistics, to test the hypotheses formulated and analyzing the findings, we consider the

data in detail.

Aim is to test for differences in charitable giving on both the frequency and the height of a donation, when looking at crowdfunders and noncrowdfunders. Of 204 participants starting the online survey, 11 cases were deleted due to unfinished questionnaires. A dataset of 193 respondents remained. The empirical test indicates that of 193 participants in this survey 140 (72.2%) made a donation to development aid, representing both crowdfunders and noncrowdfunders, leaving 27.8% not to make any donation in the last 12 months. Frequency scores of donating to development aid are shown in table 4.1. Respondents making a donation to development aid [i.e. both via crowdfunding or via a traditional manner] were more often woman than man, as determined by a chi square test between gender and donor: X2(1) =9.324, p = .002. The cross tabulation of these results are reported in table 4.2. More than youngest cohorts (62.9%), cohorts of older generations inclined to give (>85%), yet contributing wasn’t bound to education level or income. Comparing attitudes towards donations to development aid, show people actually making a donation to consider development aid as being more effective (M = 3.59, SD = .841) and more trustworthy (M = 3.49, SD=.740) than people who did not make any donation (Meffective =2.92, SD = .997; Mtrust = 2.77, SD =1.01).

Table 4.1 Frequency table donations to development aid

Doneren Ontwikkelingshulp

Frequency Percent Valid Percent Cumulative Percent Valid Ja 128 66,0 66,3 66,3 Nee 65 33,5 33,7 100,0 Total 193 99,5 100,0 Missing System 1 ,5 Total 194 100,0

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25 Table 4.2 Crosstabulation of generations donating to development aid

Donatie * geboortejaar Crosstabulation

geboortejaar Total 1985-2000 1970-1985 1955-1970 Donatie ja Count 61 48 23 132 % within Donatie 46,2% 36,4% 17,4% 100,0% % within geboortejaar 62,9% 80,0% 88,5% 72,1% nee Count 36 12 3 51 % within Donatie 70,6% 23,5% 5,9% 100,0% % within geboortejaar 37,1% 20,0% 11,5% 27,9% Total Count 97 60 26 183 % within Donatie 53,0% 32,8% 14,2% 100,0% % within geboortejaar 100,0% 100,0% 100,0% 100,0%

Means of traditional giving

Focusing on the routes through which participants make a donation to development projects, illustrates n= 41 to make a donation via crowdfunding, and n = 128 to make a donation via traditional routes. People making a donation, 100 gave via conventional routes alone (78.1%) of which giving cash money was the method most used, followed by 28.8% of giving via lottery or membership (26.4%). Giving only directly to a non-profit organization occurred least (19.2%). Considering the attitudes on giving via charity organizations of crowdfunders and noncrowdfunders, we find participants using crowdfunding to label charity organizations as more positive (M = 4.32, SD = .747), but less useful (M = 3.76, SD = .723) as compared to noncrowdfunders (Mpositive = 4.09, SD = .747;

Museful = 3.81 SD = .974).

Crowdfunder characteristics

Focusing on participants contributing via crowdfunding, indicates 63.3% to donate via conventional routes too. 31.7% made a contribution via crowdfunding alone. Participants making a donation via crowdfunding were more often man (51.3%), than woman (48.7%), yet no significant difference was found when running a chi square test X2(1) =3.215, p = .073. Likewise, participants were not higher educated. A chi square test for association was conducted between income level and crowdfunding. All expected cell frequencies were greater than five. There was no statistically significant association between income level and crowdfunding, X2(2) =3.806, p = .149. Participants making a contribution via crowdfunding found the ‘expected impact of the project’ the most important indicator for their decision to donate (M = 4.35, SD = .736), followed by ‘feeling with the project’ (M = 4.08, SD =.730)

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26 and ‘concreteness of the project’ (M = 3.95, SD =.815). Least important reason for participating in crowdfunding was the item ‘how I was asked to contribute’ (M = 3.08, SD = .971).

Main Analysis: Donation Frequency

The first indicator of the dependent variable involves the frequency of donations. This section tests the effect of the independent variable (use of crowdfunding), on donation frequency. Thereby examining hypothesis 1.

There were no outliers in the data, as assessed by inspection of a boxplot for values greater than 1,5 box-lengths from the edge of the box. Frequency scores did not meet normal distribution for both crowdfunders (p = 0.004) and noncrowdfunders (p = 0.000), as assessed by Shapiro-Wilk’s test (p>.5), meaning that a nonparametric test would be testing the differences in donation frequency.

A Mann-Whitney U test was run to determine if there were differences in frequency scores between crowdfunders and noncrowdfunders. Distributions of the frequency scores for crowdfunders and noncrowdfunders were not similar, as assessed by visual inspection. Therefore, we are not able to report how large the differences are in terms of the median scores. Yet, frequency scores for crowdfunders (M =83.48) were statistically significantly higher than for noncrowdfunders (M = 64.56), U = 1441, z = -2.574, p = 0.01. Table 4.5 shows the distributions of the frequency scores. This outcome is indicates that we retain H1, as p < 0.01.

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Main Analysis: Donation Amount

The first indicator of the dependent variable involves the donation amount. This section tests the effect of the independent variable (use of crowdfunding), on donation amount. Thereby examining hypothesis 2.

Whereas this part of the dependent variable was spread over nine categories, a first analysis of amount scores allowed merging these scores into 5 categories. The scores on the height of the donation show 38.4% of the people making a donation via crowdfunding, to give less than €50, whereas 25.6% gave more than €200. 44.4% of the participants making a donation via conventional routes only, donated less than €50. As we aim to test for differences in donation amount between crowdfunders and noncrowdfunders, a nonparametric test was run, as testing for normality did not show any normally distributed data. A Mann-Whitney U test was run to determine if there were differences in amount score between crowdfunders and noncrowdfunders. Distributions of the amount scores for crowdfunders and noncrowdfunders were not similar, as assessed by visual inspection. Amount scores for crowdfunders (M =68.55) and noncrowdfunders (M = 63.46) were not statistically significantly different, U = 1616, z = -.726, p =.468. Table 4.6 displays the distributions of the amount scores. The consequence of this outcome is that we reject H2, for p < 0.01.

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Generation analysis

In this section a test is conducted to examine the moderating variable, generations. Thereby considering hypothesis 3.

We expected crowdfunders to belong to younger generations (Nextgendonors, 2014; Flannery et al, 2009 in; Saxton & Wang, 2013). A chi-square test for association was conducted between generation cohort and use of crowdfunding. However, more than 30% of the expected cell frequencies counted less than five, indicating that a square test for association was inappropriate. As the generation cohorts 1940-1955 (n=7) and <1940 (n=2) concerned less than 10 cases, we chose to exclude these cohorts for this analysis, remaining three generation cohorts testing the association with crowdfunding. As both scales were measured on a dichotomous level, no t-test could determine what the effect size was among generation cohorts. Running the chi square test after exclusion of these cases, no statistically significant association between generation cohorts and use of crowdfunding among donors was found, X2 (1) = 6.835, p = .164. All expected cell frequencies were greater than five. Young generation cohorts are not significantly more involved in crowdfunding, as displayed in table 4.3.

Table 4.3 Crosstabulation (non)crowdfunders and generation cohort Donatie via Crowdfunding? * geboortejaar Crosstabulation

geboortejaar oudsten Total

1985-2000 1970-1985 1955-1970 CF? ja Count 15 20 6 41 % within CF? 36,6% 48,8% 14,6% 100,0% % within geboortejaar 25,4% 41,7% 26,1% 31,5% nee Count 44 28 17 89 % within CF? 49,4% 31,5% 19,1% 100,0% % within geboortejaar 74,6% 58,3% 73,9% 68,5% Total Count 59 48 23 130 % within CF? 45,4% 36,9% 17,7% 100,0% % within geboortejaar 100,0% 100,0% 100,0% 100,0%

When looking at the indicators of charitable giving, frequency and the height of the donation, differences in generation cohorts did not hold when conducting a Mann Whitney U test. None of the comparisons between frequency and generation cohort (cohort 1+2, cohort 2+3 and cohort 1+3)

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29 generated a significant outcome. Whereas the youngest generation cohorts reported to contribute a low amount of <€50 via crowdfunding, the cohort of 1970-1985 reported to give a high amount (68.5% gave more than €101 via crowdfunding). However, these differences in generation cohorts did not hold when running a Mann Whitney U test as none of the comparisons between amount and generation cohort (resp. cohort 1+2, cohort 2+3 and cohort 1+3) in this test generated a significant outcome.

Furthermore, we ran the same test for internet use and social media use, as these (7 point Likert) scales might indicate generation belongingness, indirectly affecting contributions to crowdfunding. Distribution of internet scores for crowdfunders and noncrowdfunders was not statistically significantly different, U=1777 z =-.933, p .351. Distribution of social media use scores for crowdfunders and noncrowdfunders were similar, as assessed by visual inspection. Median social media scores for crowdfunders (6) and noncrowdfunders (6) was not statistically significantly different either: Facebook scores reported U =1585, z= -1.630, p =.103. Median scores of social media use are shown in table 4.4.

Table 4.4 Median scores of social media use and crowdfunding Donatie via Crowdfunding? Internetgebruik:

-Ik gebruik facebook Internetgebruik:-Ik gebruik linkedin Internetgebruik: -Ik gebruik twitter ja Std. Deviation 1,618 1,692 1,748 Median 6,00 5,00 2,00 nee Std. Deviation 2,079 1,964 1,855 Median 6,00 5,00 1,00 Total Std. Deviation 1,973 1,887 1,821 Median 6,00 5,00 1,00

Additional tests

Apart from the hypotheses tested in this study, conducting empirical research led to few results worth noting. Although we find no generation effect to take place in crowdfunding, we did find more older generation cohorts to be involved in giving to development aid [in general] than younger generation cohorts.. A chi-square test was run to determine this difference, X2 (1) = 9.421, p = .009. By comparing donors and nondonors, we found a significant difference in the participation of generations. There was a moderately strong association between donating to development aid and generation cohorts, reported by Cramer’s V =.227. Table 4.5 shows involvement scores categorized per generation cohort.

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30 Table 4.5 Involvement in development aid

geboortejaar Total 1985-2000 1970-1985 1955-1970 Donatie ja Count 61 48 23 132 % within Donatie 46,2% 36,4% 17,4% 100,0% % within geboortejaar 62,9% 80,0% 88,5% 72,1% nee Count 36 12 3 51 % within Donatie 70,6% 23,5% 5,9% 100,0% % within geboortejaar 37,1% 20,0% 11,5% 27,9% Total Count 97 60 26 183

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Discussion & Conclusion

In this last section we discuss the results and draw conclusions based on theoretical exploration and empirical research. Furthermore this section concerns the limitations of this study and future research

recommendations.

Discussion

This section concerns the significance of the present study. By discussing the results in depth and involving related literature, we consider the meaning of our findings. In order to test what effect crowdfunding has on donation behaviour, we formulated the following research question: What is

the influence of the recent rise of crowdfunding on charitable giving on development projects and could this be explained by belonging? Based on empirical research we found that crowdfunding

partly affects donation behaviour, as crowdfunders donate more often to development aid in comparison to donors giving via traditional routes. However, the recent rise of crowdfunding does not affect the amount given to development aid, as there was difference no difference in amount donated between crowdfunders and noncrowdfunders. Belongingness to a generation does not explain the effect of crowdfunding on donation behaviour. Younger generations were not more involved in crowdfunding and did not report to give more often or higher amounts.

In line with our expectations, crowdfunders give more often to development aid than participants giving via conventional routes, thereby confirming H1. Crowdfunders considered impact and affinity with the project as most important reasons to participate in a project. In line with the eight mechanisms affecting charitable giving as distinguished by Bekkers and Wiepking (2011), crowdfunders mention the mechanisms of affinity and visible impact, as important factors affecting their decision to contribute to a project. In crowdfunding, as it presents concrete and transparent projects, the impact of a campaign becomes part of the funding process. I expected crowdfunding to gain ground because of the tendency of us becoming less loyal. In times of declining long-term commitments, granting donors the opportunity to choose their own projects, seems to actually pay off (Nextgendonors, 2014; Gajda & Walton, 2013; NDP, 2013). Now that crowdfunders incline to donate more often than people donating via traditional routes, this approach appears to profitable.

In this light, the Dutch population is making a statement, clearly showing that the [expected] impact of their donation regarding international development projects determines their participation (Bouzoubaa & Brok (2005). As a result, we may also have become more critical on the spending of both Government and charity organizations (Bouzoubaa & Brok, 2005). Conventional parties involved in fundraising for international development projects, may therefore well consider the urge for

Crowdfunding, the new charitable donating? an empirical analysis of the impact of crowdfunding on private donations to development aid.