Signaling in Donation Crowdfunding

Abstract

ABSTRACT

Signaling in Donation Crowdfunding

YuJin Won College of Business Administration Seoul National University

This paper presents an examination of the effectiveness of signals that projectors use to induce donors to commit financial resources in donation crowdfunding. We study the impact of the project quality on funding success on donation crowdfunding. The project quality, research model, is organised human capital from education, human capital from experience, and social (alliance) capital. The reason of choosing donation crowdfunding, almost crowdfunding researches have been focused on directly related business types such as equity, lending, and reward based, even if donation crowdfunding is properly demonstrated original frame. In addition, the reason of looking detail at human capital and social capital, crowdfunding is essentially happened through the internet. In this meaning, anyone has willing to rely on perhaps unknown person and offering information. For that reason, to be provided information as certification and previous history is the best direct or indirect indicative factors. For the empirical test, we use the one of active donation crowdfunding Donorschoose.org. Our data highlight that retaining providing detailed information about level of education, previous projectors history with the same subject, and number of participants from other projectors and therefore strongly impact the probability of funding success. The standard of funding success is measured by full funding from all-or-nothing rule on Donorschoose. In the result of empirical test, level of education and social (alliance) capital is supported to positively affect on funding success. Unfortunately, however, human capital with experience as an earlier practice with same subject has negative impact on funding success. We discuss the implications of our results for further research and practice.