For love or money? The effect of deadline proximity on completion contributions in online crowdfunding

Purpose: We investigate whether the individual ‘completion contributions’ that enable online crowdfunding campaigns to meet or exceed their targets tend to be larger in relative terms when made nearer to the funding deadline. As these contributions are likely to have a disproportionate impact upon the campaign outcomes, we assess whether the investment patterns we observe are consistent with the theory of impact philanthropy.

Design/Methodology/Approach: We use campaign-level data incorporating observations on campaigns from reward (both all-or-nothing and keep-it-all), donation, and equity-based platforms. To our knowledge, the coverage of our data is unparalleled elsewhere in the crowdfunding literature. Using these data, we analyze whether completion contributions tend to vary contingent upon both the proximity of the deadline and form of crowdfunding.

Findings: We find that completion contributions tend to vary significantly and positively with proximity to funding deadlines. We also find that this relationship tends to be more pronounced among all-or-nothing than for keep-it-all campaigns, as well as for donations-based platforms compared with equity-based platforms. Altogether, the patterns of behavior we observe are consistent with the theory of impact philanthropy.

Originality / Value: Our findings help develop a better understanding of the behaviors of contributors to online crowdfunding campaigns and whether those behaviors are consistent with altruistic motivations. Our study also has considerable value in understanding the non-financial factors associated with the informal financing of business startups.