The Role of Assurance in Equity Crowdfunding

The SEC requires equity crowdfunding (ECF) companies to provide assured financial statements. Assurance can be provided with certification by management or an audit or review by an independent accountant. We utilize the ECF setting to examine whether voluntary assurance facilitates capital formation. We find that companies that provide either reviewed or audited financial statements during a capital campaign are marginally more likely to raise their target capital. They also raise more funds and attract more investors relative to companies that only provide management-certified financial statements. However, relative to reviews, audits are not associated with a greater likelihood of success in an ECF offering other than attracting more investors. Finally, we find that assurance is indirectly associated with a company's post-ECF survival and its ability to raise future capital. This suggests that assurance at the time of ECF has implications for a company's success beyond ECF.

“Yiddish has magic”: The Yiddish Book Center (Amherst, MA)

The Yiddish Book Center (YBC) is a non-profit organization located in Amherst, Massachusetts, committed to the preservation, study and celebration of Yiddish literature and culture. Over the years, this organization has overcome many obstacles, one of the most challenging and consuming being an urgent capital campaign, launched in 1991, to raise funds for a new and permanent location. This case study recounts the inspiring story of the YBC as a niche cultural organization and dissects how they managed, in face of discouraging odds, to commit wholeheartedly to their mission and successfully reach their fundraising goals.

How Private Foundation Sophistication Affects Capital Campaign Grant Decisions

ABSTRACT We examine how charity financial information related to efficiency and financial vulnerability is used by private foundations in determining how much they grant to charities during capital campaigns. In general, private foundations are likely to be better able to evaluate charity financial information because they are sophisticated donors. They have the incentive to incur search costs, the ability to judge financial information, and are focused on grant-making. We find no evidence that efficiency measures are used by private foundations in determining capital campaign grant amounts, regardless of foundation sophistication. We interpret this result as being consistent with private foundations focusing on factors related to program accomplishments rather than on reported efficiency. We find evidence that private foundations pay larger grant amounts to less financially vulnerable charities. This effect is concentrated when grants are paid by more sophisticated private foundations (i.e., those that employ a professional staff). Data Availability: Data are available from the public sources cited in the text.