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So much for altruism: Startups that are good for the world get less crowdfunding

So much for altruism: Startups that are good for the world get less crowdfunding
[Photo: Perry Grone/Unsplash]

Looking to crowdfund your brilliant idea? Downplay how wonderful it is for the environment or social good. This is the finding of a recent study of 8,631 Kickstarter projects, published in the Journal of Business Ethics. Despite the general assumption “that on digital platforms, citizens are inclined to provide more support to projects with a social benefit,” the authors found that Kickstarter projects that strongly emphasized their good-for-the-worldness frequently did not get funded.

Potential backers, it turns out, want to know that their investment will see a return. “Even the most socially conscious individuals continue to be driven by their self-interest,” says coauthor Daniela Defazio, an assistant professor of management at the University of Bath. “They appreciate products’ pro-social attributes, but only when they are provided in combination with product functionality.”

To get funded, the key is to explain how a business is good for the world, but to primarily emphasize its value, functionality, and financial return. As Defazio puts it, “a moderate emphasis on pro-social framing is beneficial, but too much emphasis can backfire.”

Much of the problem comes down to space: on Kickstarter, the title and blurb are approximately 10 words. Space limitations are typical throughout the business world, whether in pitch time or word space on a label. “Placing pro-social cues in those may overshadow other attributes,” says Defazio. For the study, Defazio partnered with a researcher from the Polytechnic University of Milan to track technology and design projects on Kickstarter for two years, measuring the correlation between funding success and good-for-the-world emphasis.

One caveat: Defazio notes that earlier studies show that backers on micro-lending platforms such as Kiva.org, which appeal to socially conscious investors, do respond more positively to socially conscious businesses.

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