Externalities in Charitable Crowdfunding

Abstract

This study examines how the existence of multiple charitable campaigns supporting similar causes on the same platform influence the donations received by each campaign. The existence of multiple campaigns supporting similar causes can have negative externalities as they compete for donors. However, the existence of additional campaigns can also result in positive externalities as potential donors benefit from a larger variety of projects to choose from. This study observes negative and positive externalities from the existence of multiple campaigns supporting similar causes. An increase in the number of campaigns leads to a decrease in the average donation received by each campaign, indicating that the additional campaigns do not necessarily expand the market. However, when some of the campaigns perform exceptionally well, other campaigns – including non-top performing campaigns – receive more donation, highlighting the market expansion effect of the presence of successful campaigns on a platform.