University of Isfahan Journal of Asset Management and Financing 2383-1189 10 3 2022 09 23 Factors Affecting the Interest of Individuals to Participate and Invest in Social Crowdfunding Projects Factors Affecting the Interest of Individuals to Participate and Invest in Social Crowdfunding Projects 95 118 27357 10.22108/amf.2022.132608.1722 FA Seyed Mohammadbagher Jafari Associate Professor, Department of Industrial and Technology Management, Faculty of Management and Accounting, College of Farabi, University of Tehran, Tehran, Iran 0000-0003-2042-2756 Pegah Poor Zanjani M.A., Department of Industrial and Technology Management, Faculty of Management and Accounting, College of Farabi, University of Tehran, Tehran, Iran Journal Article 2022 05 07 Crowdfunding has become a modern and favorite financing channel worldwide. Crowdfunding is a new financing method that helps entrepreneurs acquire the financial resources needed for their projects. This study aimed to investigate the factors affecting individuals' interest in participating and investing in social crowdfunding projects. Using the Structural Equation Modeling (SEM) technique, the developed model was tested with the help of Amos software via the data obtained from 318 individuals. This paper examined the direct and indirect contextual variables: awareness of need, altruism, reputation, psychological benefits, efficacy, funder’s trust, and institution-based trust in the investment intention. Finally, it was observed that awareness of need, altruism, values, reputation, psychological benefits, efficacy, funder’s trust, and institution-based trust were the factors influencing people's intention to invest in social crowdfunding projects. Keywords: funding, crowdfunding, social crowdfunding. Introduction Crowdfunding is considered a new source of funding and is becoming an increasingly employed tool by entrepreneurs seeking financing for their ventures and investors and searching for non-traditional alternatives of investment. It can be a crucial alternative financing method, especially for micro-entrepreneurs, new ventures, and nonprofit associations (Ferreira, Papaoikonomou & Terceno, 2022). Traditional forms of philanthropy and methods of giving are in the throes of change; with the emergence of crowdfunding, a new rapidly expanding source of innovative financing has emerged that has enabled entrepreneurs to forego traditional financiers, such as venture capitalists, and instead target a geographically dispersed 'crowd' of consumers, lenders, and small investors (Mollick 2014). The term 'social crowdfunding' was applied here to denote online raising of money for social causes by using the 'crowd'. In social crowdfunding, the projects have a social aspect and financial support is aimed at helping to reduce the society's problems and altruistic goals, while investors do not expect a direct return from their support. Social crowdfunding projects reduce social problems of the society, such as employment of unmarried women, environmental protection, printing of useful books, entertainment projects, and similar cases. It is typically classified into 4 models of financing, i.e., donation-based, reward-based, lending-based, and equity-based crowdfunding (Belleflamme et al., 2014). Method and Data This study investigated the mechanisms identified by Bekkers & Wiepking (2011), Srkoc, Zarim, & Hockerts (2013), and Liang, Wu, & Huang (2019) and applied them in the context of social crowdfunding. The sample of this study consisted of the people, who participated in social crowdfunding projects, and the sampling method was a randomized mixed method. The conceptual model of this research and the relationship between the variables and their effects on each other were tested via a survey method by using an online questionnaire. For this purpose, the data of 318 individuals were collected. The Structural Equation Modeling (SEM) technique was utilized for the analysis with the help of Amos software. Findings Social crowdfunding, which individuals and investors manifest without financial incentives, plays an important role in the development of the economy and reduction of poverty, thus increasing the country's welfare. This study found that awareness of need, altruism, reputation, psychological benefits, efficacy, funder’s trust, and institution-based trust influenced the studied people's intention to invest in social crowdfunding projects. Moreover, values, reputation, psychological benefits, efficacy of the factors influencing the funders' trust, reputation, psychological benefits, and efficacy of the factors affecting trust in the institution-based trust-building process were identified. The funding level also moderated the relationship between the funders' trust and investment intention. Conclusion and discussion Crowdfunding is a new phenomenon that has grown tremendously in recent years. In this paper, the factors affecting the individuals' interest in participating and investing in social crowdfunding projects were investigated. Based on the findings, 11 mechanisms were identified as the most important factors influencing the individuals’ interest to participate and invest in social crowdfunding projects: (1) awareness of need, (2) solicitation, (3) altruism, (4) costs and benefits, (5) values, (6) reputation, (7) psychological benefits, (8) efficacy, (9) funder’s trust, (10) institution-based trust, and (11) investment intention. These mechanisms can provide a basic theoretical framework for future research to explain social crowdfunding. Thus, the important roles of awareness of need, altruism, psychological benefits, efficacy, reputation, values, funder’s trust, and institution-based trust were discussed as the key variables affecting investment intention. Crowdfunding has become a modern and favorite financing channel worldwide. Crowdfunding is a new financing method that helps entrepreneurs acquire the financial resources needed for their projects. This study aimed to investigate the factors affecting individuals' interest in participating and investing in social crowdfunding projects. Using the Structural Equation Modeling (SEM) technique, the developed model was tested with the help of Amos software via the data obtained from 318 individuals. This paper examined the direct and indirect contextual variables: awareness of need, altruism, reputation, psychological benefits, efficacy, funder’s trust, and institution-based trust in the investment intention. Finally, it was observed that awareness of need, altruism, values, reputation, psychological benefits, efficacy, funder’s trust, and institution-based trust were the factors influencing people's intention to invest in social crowdfunding projects. Keywords: funding, crowdfunding, social crowdfunding. Introduction Crowdfunding is considered a new source of funding and is becoming an increasingly employed tool by entrepreneurs seeking financing for their ventures and investors and searching for non-traditional alternatives of investment. It can be a crucial alternative financing method, especially for micro-entrepreneurs, new ventures, and nonprofit associations (Ferreira, Papaoikonomou & Terceno, 2022). Traditional forms of philanthropy and methods of giving are in the throes of change; with the emergence of crowdfunding, a new rapidly expanding source of innovative financing has emerged that has enabled entrepreneurs to forego traditional financiers, such as venture capitalists, and instead target a geographically dispersed 'crowd' of consumers, lenders, and small investors (Mollick 2014). The term 'social crowdfunding' was applied here to denote online raising of money for social causes by using the 'crowd'. In social crowdfunding, the projects have a social aspect and financial support is aimed at helping to reduce the society's problems and altruistic goals, while investors do not expect a direct return from their support. Social crowdfunding projects reduce social problems of the society, such as employment of unmarried women, environmental protection, printing of useful books, entertainment projects, and similar cases. It is typically classified into 4 models of financing, i.e., donation-based, reward-based, lending-based, and equity-based crowdfunding (Belleflamme et al., 2014). Method and Data This study investigated the mechanisms identified by Bekkers & Wiepking (2011), Srkoc, Zarim, & Hockerts (2013), and Liang, Wu, & Huang (2019) and applied them in the context of social crowdfunding. The sample of this study consisted of the people, who participated in social crowdfunding projects, and the sampling method was a randomized mixed method. The conceptual model of this research and the relationship between the variables and their effects on each other were tested via a survey method by using an online questionnaire. For this purpose, the data of 318 individuals were collected. The Structural Equation Modeling (SEM) technique was utilized for the analysis with the help of Amos software. Findings Social crowdfunding, which individuals and investors manifest without financial incentives, plays an important role in the development of the economy and reduction of poverty, thus increasing the country's welfare. This study found that awareness of need, altruism, reputation, psychological benefits, efficacy, funder’s trust, and institution-based trust influenced the studied people's intention to invest in social crowdfunding projects. Moreover, values, reputation, psychological benefits, efficacy of the factors influencing the funders' trust, reputation, psychological benefits, and efficacy of the factors affecting trust in the institution-based trust-building process were identified. The funding level also moderated the relationship between the funders' trust and investment intention. Conclusion and discussion Crowdfunding is a new phenomenon that has grown tremendously in recent years. In this paper, the factors affecting the individuals' interest in participating and investing in social crowdfunding projects were investigated. Based on the findings, 11 mechanisms were identified as the most important factors influencing the individuals’ interest to participate and invest in social crowdfunding projects: (1) awareness of need, (2) solicitation, (3) altruism, (4) costs and benefits, (5) values, (6) reputation, (7) psychological benefits, (8) efficacy, (9) funder’s trust, (10) institution-based trust, and (11) investment intention. These mechanisms can provide a basic theoretical framework for future research to explain social crowdfunding. Thus, the important roles of awareness of need, altruism, psychological benefits, efficacy, reputation, values, funder’s trust, and institution-based trust were discussed as the key variables affecting investment intention.

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