Minuscule but Impactful: The Effects of Educational Crowdfunding on Student Performance
Georgia Tech Scheller College of Business Research Paper No. 18-26, Forthcoming
52 Pages Posted: 29 May 2019
Date Written: April 30, 2019
We present the first empirical evidence of improvement in students’ academic performance after their teacher seeks and receives funding from the online donation crowdfunding platform DonorsChoose, even though such donations are small compared with the operational costs of schools. Using data on public schools in California, we report that the proportion of students in a class whose score on the California Standard Tests qualified them as at least “proficient” increased by 4.49 percentage points if their teacher benefited from donations via this site. This finding survives a large number of robustness tests. More importantly, the monetary value afforded by these donations alone does not fully explain such improvements. Two non-monetary mechanisms also play a role: (1) the act of organizing the fundraising campaign “forces” teachers to think and plan educational activities systematically and carefully to appeal to donors; and (2) the motivational effect of receiving funds from strangers. We conducted a series of additional tests to show that these factors contribute to the gain in academic performance by students. Our study contributes not only to the literature on crowdfunding and the offline impact of online platforms but also, more broadly, to discussions on financing public education.
Keywords: donation crowdfunding, donations, education, offline impact, student performance
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