Crowd-Funding for Research: What I Learned the Hard Way

William Fuchs

Even at an institution like Berkeley-Haas, it’s not always easy to raise money for research projects. So when two of my colleagues and I had an idea last year for a project in rural Uganda, we decided to try something new: “crowd-funding.”
Crowd-funding has grown at an explosive pace on sites like Kickstarter and Indiegogo, and some organizations have raised hundreds of thousands of dollars for their projects – charities, music albums, art installations, and business start-ups. But academic research? On how to get rural villagers to replace kerosene lamps with solar lights?

Almost to our own surprise, we succeeded.   But along the way, we learned some valuable lessons.

solar lamp uganda
First, some background. This project is a collaboration between David. I Levine, Brett Green and myself. Many rural Africans don’t have electricity and rely on expensive and dirty kerosene lamps for lighting. A $20 solar lamp can provide light as well as electricity for recharging cellphones. It can pay for itself in less than six weeks. It seems like a no-brainer for rural villagers as well as for entrepreneurs. Yet the market hadn’t taken off. What was getting in the way? The uncertainty about the product? The lack of credit?

It was an important puzzle with wider applications for development economics. We proposed a series of controlled experiments to provide answers.

It was my wife who suggested the crowd-funding. At first, I thought it was a crazy idea. But the more we all thought about it, the more it seemed worth a shot.
So we took the plunge. We created a site on Indiegogo and set a modest goal at $20,000, about one-fifth of what we would ultimately need. We gave ourselves just under two months.

We offered incentives to donors, but I have to admit the enticements were low-budget. For $250, you would get to have coffee with us and a solar light like the ones we were using for our experiment. For $2,500, we would take you to dinner.

The good news is that it worked. We raised $16,700 directly through the online platform, and off-line contributions pushed the total to more than $20,000. The contributions came entirely from non-traditional donors – individuals. Almost 90 percent of the donations were for less than $250. It was a completely new kind of support for us, and it was gratifying.
But we also learned some important lessons. (The hard way)

First, crowd-funding doesn’t run on autopilot. Once we set up the site, we had to get the word out to as many people and organizations as we could think of. And we had to keep reaching out the whole time.

Second, and probably more startling, we learned that one key endorsement can make the difference between success and failure. Our biggest break, by a wide margin, was a short but enthusiastic write-up on the Freakonomics blog by Justin Wolfers, professor of economics at the University of Michigan. Freakonomics has a big following, and its specialty has always been on concrete economic experiments aimed at discovering how incentives play out in the real world.

Wolfers loved our project, as well as our attempt at crowd-funding. “Think of it as Kickstarter for development economics,’’ he wrote. “But better. They’re letting donors into the emotional roller coaster that is economic research.”

That sparked a flood of contributions – about $9,000 in a just a few days. It was amazing, but it highlighted the importance of reaching a broad public audience.
Crowd-funding isn’t manna from heaven for research. You still need to connect with people who have a shared interest, and some types of research may be too abstract and difficult to communicate to a wider audience. We should also be mindful of ethical risks and potential conflicts of interest. We wouldn’t want to pulled toward projects that have dubious value but are “catchy’’ enough to attract public interest.

But crowd-funding is clearly a valuable tool. I suspect it could be especially useful in funding small pilot projects, which can produce some early results that strengthen the case in applying for larger grants.

Since our little experiment, Berkeley-Haas has jumped into crowd-funding on an institutional level. It has started its own crowd-funding platform, and the Center for Responsible Business launched a campaign in February to raise $100,000 in fresh money for the Haas Socially Responsible Investment Fund. At this moment, with eight days to go, the center has attracted more than $66,000 – all of which will be matched dollar-for-dollar by Berkeley alumnus Charlie Michaels (BS, ’78).

I know several colleagues are anxiously waiting for the research arm of the the Haas crowd funding platform to be up and running.  Stay tuned, and you might be able to contribute to cutting edge research.

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