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Crowdfunding in the Netherlands
In 2018, the total amount raised through crowdfunding increased with 18%, compared with 2017. However, I argue that crowdfunding in the Netherlands still has a long way to go, since only one out of ten households gives to crowdfunding campaigns on a yearly basis, the average amount is only €43 and most donate only once a year (van Teunenbroek & Bekkers, 2020). In comparison, about 80% of the Dutch household give to charities, with an average of €373 on a yearly basis. Thus, the limited popularity of crowdfunding in the Netherlands is not the result of the Dutch being ungenerous. On the contrary, the Dutch can be described as generous, since most people give: young or old, married or unmarried, male or female, religious or non-religious (Bekkers & van Teunenbroek, 2020; van Teunenbroek & Bekkers, 2020).
Motives for giving
Research indicates that the relationship with the project initiator is essential (van Teunenbroek & Bekkers, 2020). The researchers state that 34% of the participants indicated that they mainly gave because they knew the project initiator (see Figure 1). Next to this, the project itself, such as the intended goal, is essential. The researchers state that 22% of the participants indicated that they mainly gave because they thought the project was important.
Figure 1. Motives for giving to crowdfunding (in%). Source: van Teunenbroek & Bekkers (2020)
Surprisingly, only a select group (10%) mainly donated because they wanted to receive a reward. A key characteristic of crowdfunding is that donors can opt to receive a reward. It seems that the reward is not an essential for donors. In addition, only 10% of the participants indicated that they gave mainly because they knew the organization behind the project. This indicates that for crowdfunding to work, maintaining a personal relationship is more important than a professional relationship.
Crowdfunding on the rise?
While crowdfunding has yet to find its crowd in the Netherlands, I do expect its popularity to increase, for two reasons: (1) the regular updates fit the demands of younger generations and (2) the online nature fit within the recent COVID-19 crisis.
Regular updates
First, regular updates are key for crowdfunding projects. For the Dutch, it is important to receive updates after giving, they expect information about how their donation amount was used and the impact of their gift. Crowdfunding does just that. The importance of updates is even more visible under younger generations, which could indicate that crowdfunding could be used to include younger generations as well. Recent studies indicate that charities need to consider tactics to attract new donors from generation Y (born between 1977-1999), since they are less generous than older generations (Bekkers & van Teunenbroek, 2020).
Crowdfunding during the COVID-19 crisis
Second, the online nature makes crowdfunding an attractive fundraising method during the COVID-19 crisis. As a result of the recent COVID-19 crisis, charities cannot rely on door-to-door collections. This is unfortunate, since door-to-door solicitations are the key method for charities to reach potential donors (van Teunenbroek & Bekkers, 2020). In addition, there is a good possibility that contacting a donor by phone will be banned soon. Leaving only one option: the internet.
With crowdfunding, fundraisers can contact potential donors online through for instance social media outlets. However, remember the main reason for giving to crowdfunding, which is being familiar the initiator, while being familiar with the charity is less important. This indicates that charities might have to change their strategy and focus more on personal contact with their donors. This is of course very time-consuming. However, I expect that a personal approach is essential for crowdfunding to work for charities.
A virologist of the Leiden University Medical Center started a crowdfunding project (#Wakeuptocorona) to collect donations to research the COVID-19 virus. Thus far, they collected €634,800 in less than a month. More than 5 thousand people contributed. Giving to the #Wakeuptocorona project makes sense, there is a clear need for help and giving it gives people the feeling that they contributed to a solution. It makes them feel useful, which is very important in these uncertain times. The success of the project gives hope, but can crowdfunding also be used for other disciplines, such as the cultural sector? The cultural sector has been hit hard by the crisis, just like during the previous financial crisis. We know from the previous crisis that in the two years after the crisis there was a clear increase in the number of foreclosures. Alternative financial sources, like crowdfunding, are essential to support the cultural sector.
In sum, with physical distancing and an increasing need for donations to for instance the culture sector, there is a growing need for an online solution. Crowdfunding could be part of the solution for charities, since it is an online fundraising tool. However, recent findings of the Giving in the Netherlands Panel Studies show that crowdfunding has a limited influence. The percentage of households giving to crowdfunding projects is low, as are the average amounts. However, several key characteristics of crowdfunding make it a viable option. I do argue that for crowdfunding to work for charities, they will need to focus (even more) on personal contact, since the relationship between the project initiator and donor are essential.
References
Bekkers, R. & van Teunenbroek, C. (2020). Generatieverschillen in geefgedrag in Bekkers, R., Schuyt, T. N. M., & Gouwenberg, B. M. (Ed.), in Geven in Nederland 2020: Huishoudens, nalatenschappen, fondsen, bedrijven, goede doelenloterijen en vrijwilligers. Lenthe Publishers.
►Wilt u het gedrukte boek Geven in Nederland 2020 bestellen? Klik hier.
Claire van Teunenbroek werkt sinds 2014 als promovendus voor het Centrum van Filantropische Studies bij de Vrije Universiteit Amsterdam en is aangesloten bij de werkgroep Geven in Nederland van prof dr. René Bekkers. Haar (Engelstalige) blogs kunt u regelmatig lezen op De Dikke Blauwe.
