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The Effect of Crypto Rewards in Fundraising: From a Quasi-Experiment to a Dictator Game

Jane, Tan, Yong Tan

TL;DR

This study is the first work to look into crypto rewards as incentives for fundraising, and indicates that the positive effect of crypto rewards is more likely to manifest in donation count, and the negative effect of Crypto rewards isMore likely to Manifest in donation size.

Abstract

Conditional thank-you gifts are one of the most widely used incentives for charitable giving. Past studies explored non-monetary thank-you gifts (e.g., mugs and shirts) and monetary thank-you gifts (e.g., rebates that return some of the donations to the giver). Following the rapid growth of blockchain technology, a novel form of thank-you gifts emerged: the crypto rewards. Through two studies, we analyze crypto thank-you gifts to shed light on fundraising designs in the digital world. In Study I, we examine the Ukrainian government's crypto fundraising plea that accepts donations in both Ethereum and Bitcoin. We find that Ethereum is substantially more effective in enticing giving than Bitcoin, as the hourly donation count increased 706.07% more for Ethereum than for Bitcoin when crypto rewards are present. This is likely because the crypto rewards are more likely to be issued on Ethereum than Bitcoin. However, the decrease in contribution sizes is also more substantial in Ethereum than in Bitcoin in response to the crypto rewards. In Study II, we conducted a laboratory experiment following a dictator game design to investigate the impact of crypto rewards in a more general scenario, with the crypto rewards specified as non-fungible tokens (NFTs). The crypto rewards in Study II carry no monetary value but only serve to recognize donors symbolically. As such, the NFT thank-you gifts did not effectively induce people to donate; a traditional 1:1 donation matching strictly outperforms both the condition without thank-you gifts and the condition with NFT thank-you gifts. Nevertheless, the NFT thank-you gifts effectively increased the contribution sizes, conditional on the choice to give, when the NFT's graphic design primes donor identity and encompasses the charity recipient.

The Effect of Crypto Rewards in Fundraising: From a Quasi-Experiment to a Dictator Game

TL;DR

This study is the first work to look into crypto rewards as incentives for fundraising, and indicates that the positive effect of crypto rewards is more likely to manifest in donation count, and the negative effect of Crypto rewards isMore likely to Manifest in donation size.

Abstract

Conditional thank-you gifts are one of the most widely used incentives for charitable giving. Past studies explored non-monetary thank-you gifts (e.g., mugs and shirts) and monetary thank-you gifts (e.g., rebates that return some of the donations to the giver). Following the rapid growth of blockchain technology, a novel form of thank-you gifts emerged: the crypto rewards. Through two studies, we analyze crypto thank-you gifts to shed light on fundraising designs in the digital world. In Study I, we examine the Ukrainian government's crypto fundraising plea that accepts donations in both Ethereum and Bitcoin. We find that Ethereum is substantially more effective in enticing giving than Bitcoin, as the hourly donation count increased 706.07% more for Ethereum than for Bitcoin when crypto rewards are present. This is likely because the crypto rewards are more likely to be issued on Ethereum than Bitcoin. However, the decrease in contribution sizes is also more substantial in Ethereum than in Bitcoin in response to the crypto rewards. In Study II, we conducted a laboratory experiment following a dictator game design to investigate the impact of crypto rewards in a more general scenario, with the crypto rewards specified as non-fungible tokens (NFTs). The crypto rewards in Study II carry no monetary value but only serve to recognize donors symbolically. As such, the NFT thank-you gifts did not effectively induce people to donate; a traditional 1:1 donation matching strictly outperforms both the condition without thank-you gifts and the condition with NFT thank-you gifts. Nevertheless, the NFT thank-you gifts effectively increased the contribution sizes, conditional on the choice to give, when the NFT's graphic design primes donor identity and encompasses the charity recipient.
Paper Structure (23 sections, 4 equations, 5 figures, 10 tables)

This paper contains 23 sections, 4 equations, 5 figures, 10 tables.

Table of Contents

  1. Introduction
  2. Theoretical Development
  3. Self-interest and Charitable Giving
  4. Donation Matching
  5. Donor Identity Prime
  6. Study I - A Quasi-experimental Study
  7. Context and Data Collection
  8. Identification
  9. Aggregated Analysis at a Blockchain Level.
  10. Transactional Analysis at a Wallet Level.
  11. Data
  12. Results
  13. Donor Heterogeneity Analyses
  14. Ethereum Name Service.
  15. Intermediary Platform Usage.
  16. ...and 8 more sections

Figures (5)

  • Figure 1: Timeline
  • Figure 2: Donation Counts
  • Figure 3: Average Donation Size
  • Figure 4: Experimental Design
  • Figure 5: Study II - Tasks Before Income Allocation