Working paper, under 2nd round review at Information Systems Research
Most crowdfunding sites rely on a single funding scheme (e.g., donation, reward, or equity) on their platform, while existing research on backer motivation suggests that backers can be motivated in multiple ways, through intrinsic and extrinsic rewards. Thus, a natural question pertains to whether the use of multiple funding schemes could enhance crowdfunding outcomes. This question critically depends on the interplay between extrinsic and intrinsic motivations. We provide empirical answers to this question by leveraging a natural experiment that took place on a leading reward-based crowdfunding platform that added a new donation option for all reward-based campaigns. Our results indicate that the addition of the donation option to reward-based campaigns has the impact of increasing their success relative to a control group of campaigns. This effect is observed even after accounting for inter-campaign differences via matched samples. To further account for inter-campaign differences, we track campaigns that experienced the site change during the fundraising process, and found that these campaigns gained more funds in the periods after the donation option was introduced. In addition, we find that the heightened crowdfunding success comes from an increase in the number of backers contributing to the campaigns. A finer analysis indicates that the increase in donations has a positive spillover effect on the reward-based contributions, leading to a better crowdfunding outcome. Theoretical and practical implications of our findings are discussed..