Crowdfunding to Make a Difference: The Role of Choice in Funding Social Ventures

In recent years, the Internet has allowed individuals across the globe to contribute to and even actively participate in ventures influencing pressing social issues. The growing prevalence of online venues that support social issues is due in part to so-called crowdfunding organizations that use the Internet to bring together geographically dispersed individuals to make small contributions to ventures. By widening the pool of potential contributors and matching entrepreneurs with potential backers across the globe with minimal transaction costs, crowdfunding has altered the process of obtaining resources. But this model of resource acquisition comes with some significant challenges. For example, ventures must compete with numerous others from all over the world for attention. There is also greater potential for fraud because of limited regulation, a fact that makes the decision making process more difficult for potential contributors (Herzenstein, Sonenshein, and Dholakia 2011; Sonenshein, Herzenstein, and Dholakia 2011).