Matching Returning Donors to Projects on Philanthropic Crowdfunding Platforms

Yicheng Song (), Zhuoxin Li () and Nachiketa Sahoo ()
Additional contact information
Yicheng Song: Department of Information and Decision Sciences, Carlson School of Management, University of Minnesota, Minneapolis, Minnesota 55455
Zhuoxin Li: Carroll School of Management, Boston College, Chestnut Hill, Massachusetts 02467
Nachiketa Sahoo: Department of Information Systems, Questrom School of Business, Boston University, Boston, Massachusetts 02215

Management Science, 2022, vol. 68, issue 1, 355-375

Abstract: We propose an approach to match returning donors to fundraising campaigns on philanthropic crowdfunding platforms. It is based on a structural econometric model of utility-maximizing donors who can derive both altruistic (from the welfare of others) and egoistic (from personal motivations) utilities from donating—a unique feature of philanthropic giving. We estimate our model using a comprehensive data set from DonorsChoose.org—the largest crowdfunding platform for K–12 education. We find that the proposed model more accurately identifies the projects that donors would like to donate to on their return in a future period, and how much they would donate, than popular personalized recommendation approaches in the literature. From the estimated model, we find that primarily egoistic factors motivate over two-thirds of the donations, but, over the course of the fundraising campaign, both motivations play a symbiotic role: egoistic motivations drive the funding in the early stages of a campaign when the viability of the project is still unclear, whereas altruistic motivations help reach the funding goal in the later stages. Finally, we design a recommendation policy using the proposed model to maximize the total funding each week considering the needs of all projects and the heterogeneous budgets and preferences of donors. We estimate that over the last 14 weeks of the data period, such a policy would have raised 2.5% more donation, provided 9% more funding to the projects by allocating them to more viable projects, funded 17% more projects, and provided 15% more utility to the donors from the donations than the current system. Counterintuitively, we find that the policy that maximizes total funding each week leads to higher utility for the donors over time than a policy that maximizes donors’ total utility each week. The reason is that the funding-maximizing policy focuses donations on more viable projects, leading to more funded projects, and, ultimately, higher realized donors’ utility.

Keywords: recommender systems; crowdfunding platforms; online philanthropy; structural econometric model; consideration set; revenue optimization (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:68:y:2022:i:1:p:355-375

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