Crowd Power: Digital Crowdfunding for Social Impact

Digital crowdfunding offers a transformative opportunity for social entrepreneurs to mobilize resources and harness ‘crowd power’ to address pressing social and environmental challenges. The practice of raising relatively small amounts of money from a large number of backers through online platforms has evolved from funding individual projects, often motivated by compassion, to investing in ventures with significant social and environmental impact. Digital crowdfunding serves as a vital case study for understanding how digital technology can be leveraged to address the three core societal challenges prioritized by the ESRC Digital Good Network: equity, sustainability, and resilience. Crowdfunding for social entrepreneurship is inherently a digital good.As an alternative financing mechanism, digital crowdfunding has experienced phenomenal growth, spanning over 185 countries (CCAF, 2018) and encompassing diverse models, such as reward-based, donation-based, equity-based and debt-based crowdfunding. Despite its rapid expansion, digital crowdfunding remains fragmented in access, governance and application. In particular, significant disparities persist between the Global North and the Global South. While advancements in blockchain, AI and machine learning, alongside a strong pivot towards impact-driven initiatives, present new opportunities, they also pose complex challenges. Consequently, social entrepreneurs require support to navigate the evolving digital crowdfunding landscape.Our study, which this report is based on, aims to address this issue by investigating the critical success factors of digital crowdfunding, drawing on interdisciplinary insights from entrepreneurship, computer science and finance. Specifically, we adopt signalling theory to uncover a range of factors (e.g. the social entrepreneur’s credibility, the project’s quality and the project website usability) that influence crowdfunding outcomes (crowdfunding pledged percentage and the number of backers).