Understanding the Role of Lead Organizational Donor Types in Civic Crowdfunding

Civic crowdfunding is a subgenre of crowdfunding wherein the crowd finances civic projects of value to communities. A unique aspect of civic crowdfunding is that projects regularly attract a mix of individuals and organizations, spanning the private, public, and nonprofit sectors. This diversity of stakeholders raises novel questions and challenges for platform operators and fundraisers. Here, we focus on such challenges as they relate to third-party endorsements. A lengthy literature has examined the signaling value of endorsements and prominent lead contributions, typically treating their sources as homogeneous. However, the varied backgrounds, motivations, and objectives of stakeholders in civic crowdfunding suggest that endorsers' signaling value is likely to vary. We theorize how onlookers' (potential backers' or donors') perception of lead organizational donors' motivations and fit with the project's objectives will influence the latter's signaling value, hypothesizing differences across lead donor types (i.e., businesses, governments, nongovernmental organizations [NGOs]). Leveraging data on 303 projects from a leading civic crowdfunding platform, Spacehive, we show that lead donations are significantly more beneficial when supplied by NGOs rather than businesses or government entities. Further, based on perceptual measures reported by human coders about the more than 500 organizational lead donations in our sample, we confirm our theorized mechanisms, finding that lead donor involvement is more likely to be perceived as credible, and to lead to support for a project, when the lead's involvement is believed to be a result of value motives (rather than strategic motives), and when the lead is a natural fit with the project (i.e., congruence). We discuss the implications of our work for both theory and practice.