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

TL;DR

This paper investigates the impact of crypto rewards on fundraising effectiveness through real-world and experimental studies, revealing that crypto type influences donation behavior and that non-monetary NFTs can enhance donor identity and contribution size.

Contribution

It introduces a novel analysis of crypto rewards in fundraising, comparing their effects in real-world and experimental settings, highlighting the differential impact of Ethereum, Bitcoin, and NFTs.

Findings

Ethereum significantly increases donation frequency more than Bitcoin.

Crypto rewards decrease average contribution size, especially in Ethereum.

NFT rewards boost contribution size when they prime donor identity.

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.