Crowdfunding Acts as a Funding Substitute and a Legitimating Signal for Nonprofit Performing Arts Organizations

Nonprofit and Voluntary Sector Quarterly, Ahead of Print. This research examines the relationship between crowdfunding campaigns by nonprofit performing arts organizations and their overall fundraising portfolio. Using a dataset compiled from the CrowdBerkeley Initiative and the Cultural Data Project, we find an important link between campaign success and organization age. For young organizations, crowdfunding success attracts funding in the subsequent year, while a failed campaign significantly hampers the organization’s ability to raise funds, suggesting that crowdfunding acts as a legitimating signal. In contrast, older organizations appear to be insulated from the negative effects of a failed campaign. In addition, higher amounts raised in the campaign are associated with a substitution or “crowding out” effect for other types of funding for young organizations, but this effect reverses for older organizations. This suggests that crowdfunding should not only be considered a tool for younger organizations, but also holds promise for established organizations.

Nonprofit and Voluntary Sector Quarterly |  

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