The Effects of Capital Campaigns on Other Nonprofits’ Fundraising

When charities launch capital campaigns, they hope to attract large amounts of resources in a relatively short period of time; however, other charities in the area are likely to see such campaigns as disruptive to the natural distribution of resources to area nonprofits by disproportionately directing area donations to a single organization. This study seeks to understand the effects capital campaigns have on both the fundraising performance of other nonprofits and the makeup of a local nonprofit ecology. The analysis uses data from a randomly sampled set of nonprofit arts organizations that had capital campaigns for facilities projects between 1994 and 2007 and Internal Revenue Service Form 990 data on 501 (c) (3) nonprofit organizations in each county. The results illustrate that a capital campaign positively affects the fundraising performance of other charities in a local nonprofit ecology, but that campaigns decrease the size of a local nonprofit ecology.

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Capital campaigns and the new charitable investors

New Directions for Philanthropic Fundraising ◽

10.1002/pf.3202 ◽

2001 ◽

Vol 2001 (32) ◽

pp. 25-46 ◽

Cited By ~ 1

Author(s):

Marianne G. Briscoe ◽

Barbara H. Marion

Keyword(s):

Capital Campaigns

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Checking the numbers Capital campaigns

Fundraising for Schools ◽

10.12968/fund.2010.1.117.81366 ◽

2010 ◽

Vol 2010 (117) ◽

pp. 13-15

Author(s):

Andrew Maiden

Keyword(s):

Capital Campaigns

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Capital Campaigns Do More Than Raise Money

Successful Fundraising ◽

10.1002/sfr.30076 ◽

2015 ◽

Vol 23 (4) ◽

pp. 5-5 ◽

Cited By ~ 1

Keyword(s):

Capital Campaigns

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Tips to Remember Regarding Capital Campaigns

The Major Gifts Report ◽

10.1002/mgr.30020 ◽

2014 ◽

Vol 17 (1) ◽

pp. 6-6

Keyword(s):

Capital Campaigns

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Library Capital Campaigns

Journal of Library Administration ◽

10.1300/j111v12n04_07 ◽

1990 ◽

Vol 12 (4) ◽

pp. 89-101 ◽

Cited By ~ 1

Author(s):

Dwight Burlingame

Keyword(s):

Capital Campaigns

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Pleasing the crowd: the determinants of securities crowdfunding success

Review of Behavioral Finance ◽

10.1108/rbf-07-2019-0096 ◽

2020 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Elena Smirnova ◽

Katarzyna Platt ◽

Yu Lei ◽

Frank Sanacory

Keyword(s):

Small Businesses ◽

Small Firms ◽

Securities And Exchange Commission ◽

Lower Probability ◽

Securities Markets ◽

Small Data ◽

Content Type ◽

Capital Campaigns ◽

The Us ◽

Probability Of Success

PurposeSince May 2016, small firms have been able to issue debt and equity securities in accordance with the Securities and Exchange Commission's “Regulation Crowdfunding”. This regulation provides unsophisticated investors a chance to participate in the securities markets, and it gives small businesses an opportunity to raise funds. This paper investigates the determinants of crowdfunding success, security design in a crowdfunding setting, the amount of crowdfunding campaign proceeds and campaign duration.Design/methodology/approachThe sample used in this study is based on 750 completed securities crowdfunding offerings that were launched between May 2016 and May 2018. The data on crowdfunding issues were webscraped from Form C filings available through SEC EDGAR filing system. Additional data were hand-collected from a variety of platforms that list and aggregate crowdfunding offerings.FindingsWe show that relatively larger and more profitable companies have a better chance to achieve crowdfunding success. We find that the issuance of equity results in a lower probability of success compared to issuing debt. In addition, the issuance of equity is negatively correlated with the amount of proceeds from a crowdfunding campaign. A novel finding is that a choice of a funding instrument has a negligible impact on the amount of proceeds. This finding, combined with reduced probability of success for equity issuers, can be interpreted as a signal to rely more on debt and convertibles when designing crowdfunding campaigns.Research limitations/implicationsOrganized under “Regulation Crowdfunding,” the US securities-based crowdfunding market has been operating for several years. Relative to other securities markets it is still considered to be in its infancy. Given a relatively small data sample, the results have to be interpreted with caution.Practical implicationsThe paper shows that small businesses and unsophisticated investors can benefit from securities-based crowdfunding, which is subject to oversight of the Securities and Exchange Commission (SEC). Although the mission of the regulator is to protect investors, the SEC took on a rather relaxed approach in regulating types of instruments used in crowdfunding. Our paper shows that equities, including “Simple Agreements For Future Equity” (SAFEs) might not be the best choice for crowdfunding success. This sentiment is mirrored in law literature which considers securities known as SAFEs more suitable for venture capital campaigns rather than for crowdfunding.Originality/valueThe paper adds value to the novel field of securities-based crowdfunding by testing several hypotheses on the crowdfunding success, the amount of proceeds and campaign duration.

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