Show Me the Money

As crowdfunding becomes increasingly popular, researchers explore what really compels people to give to others online.

By Elizabeth Kelsey, published January 3, 2017 - last reviewed on January 14, 2017

In June, a teenager named Chauncy Jones approached 30-year-old Matt White as he was leaving a Memphis grocery store and offered to carry White's groceries in exchange for a box of doughnuts. As White later wrote in a Facebook post, Jones looked "ashamed, hungry, and broken." Struck by the young man's obvious desperation as well as his endearing personality, White took Jones back into the grocery store and footed the bill for a cart full of food—cereal, milk, fruit, pasta, peanut butter, and frozen vegetables.

White gave Jones a ride home, went inside the apartment he shared with his grandmother, and was dismayed at what he saw. "They were sleeping on pads made out of sleeping bags, they had two lamps and nothing in their fridge," he wrote, adding that Jones's grandmother "was so sweet but very fragile. I couldn't tell what it was, but she had some sort of physical and/or mental disability that made her shake. I thought I was going to cry. As we unpacked the food into their kitchen, you could see the hope coming back into Chauncy's eyes."

White's Facebook post went viral, garnering nearly 30,000 likes. He attached it to a campaign he'd set up on GoFundMe, a crowdfunding website, with the goal of raising $250 to buy Jones a lawn mower, which the young man had said he wanted so he could earn money mowing lawns. By August, more than 14,000 people had contributed almost $345,000 to the campaign. The story made national news.

Oleg Golovnev/Shutterstock

Not every crowdfunding campaign achieves such headline-worthy success, but the practice of appealing for money in this way is becoming more and more commonplace. When funds are needed for a charitable cause or entrepreneurial effort—be it a child's cancer treatment, a family's recovery from a house fire, a shoestring-budget independent film, or supplies for schoolchildren—people increasingly turn to one of an estimated 2,000 crowdfunding websites, including GoFundMe, Kickstarter, Indiegogo, and DonorsChoose, to appeal for financial resources from a vast network of friends, family members, distant acquaintances, and strangers.

Fueled by social media, crowdfunding is celebrated for enabling huge pools of potential donors to be reached with greater ease than traditional forms of fundraising. But as much as crowdfunding is a modern economic phenomenon, it's also a social and psychological one—one that experts say is driven by some of the most fundamental human impulses.

Elizabeth Gerber, an associate professor of design at Northwestern University who has studied the motivations behind participation in crowdfunding campaigns says that beyond the most obvious reason people give—to support a cause they believe in—there is also a desire to collect rewards. Extrinsic rewards are generally straightforward—by contributing to a Kickstarter campaign for a new product, for instance, a reward may be the product itself. Intrinsic rewards, on the other hand, are less tangible but no less desirable. By giving to a GoFundMe campaign, Gerber says, "simply your name being on the site saying 'I supported this' delivers the reward of recognition, which many people find very valuable. Or it could be the intrinsic satisfaction of knowing that you gave and helped out a certain family." The sense of meaning and satisfaction that people get from giving is referred to as a "warm glow" in the study of altruistic behavior. 

A third reason people give on the sites is to reinforce relationships. "If your neighbor is running a campaign, you may not be interested in the reason for the campaign whatsoever, but you support it because you support your neighbor," Gerber says. Of course, it's always been the case that people give to each other to reinforce relationships, but the online nature of crowdfunding has expanded and accelerated the circle of relationships that subtly demand such reinforcement. "It's much easier for me to email a request to a list of 100 people than it is for me to gather that many people in a room and ask them for something. People are even more aggressive about it in some ways because they don't have the face-to-face interactions." And those who don't even donate but re-post the request on social media may be engaging in what's known as "virtue signalling"—broadcasting an altruist bent without actually doing anything.

Sonja Lyubomirsky, a psychologist at the University of California, Riverside, believes that relationship-bolstering is the most salient explanation for participation in crowdfunding campaigns. "Relationships are one of the pillars of happiness, so anything that increases the strength of our relationships makes us happier." And that  doesn't have to be only the relationship with the recipient of one's generosity. "For example, if you tell your husband that you've helped a stranger's crowdfunding campaign, his admiration may strengthen your relationship."

A fourth reason for giving online: It appeals to the essential need to feel like part of a group—something people especially crave today. "We live in very individualistic societies," Lyubomirsky says. "With something like crowdfunding where sometimes you don't even know the people you're giving to, you feel as though you're in a society that's interwoven and interconnected."

Crowdfunding platforms typically capitalize on this desire by fortifying donors' sense of interconnecteness. As Gerber notes, it's typical for funders to be updated on a campaign's progress, even after the fundraising goal is met, which bolsters their feeling of being part of a network with a shared belief. Funders also chat among themselves, affirming their mutual commitment to that belief and connection to each other. "You create community by having conversations with people who are excited about the same thing as you are," Gerber says.

The thousands of people who gave to Chauncy Jones likely reaped these social benefits, whether consciously or not. After chipping in, they learned through updates that Jones was hired full time by a lawn service company, that real estate agents came forward to help him buy his own home, and that he was flooded with gift cards, furniture, clothing, and offers of legal and financial advice. The donors got the satisfaction of knowing they had played a part in this miracle, and the feeling of bondedness to each other. As one donor wrote on the campaign's GoFundMe page, "To everybody on this comment timeline, I love y'all."

Facebook image: Stock Rocket/Shutterstock