Prosocial crowdfunding was originally conceived as a financial mechanism to assist vulnerable unbanked populations, typically excluded from formal financial markets. It subsequently grew into a billion-dollar scheme (Kiva 2020a, https://www.kiva.org/blog/1-billion-in-life-changing-loans ) in the multi-billion-dollar crowdfunding industry. However, recent evidence claims prosocial crowdfunding may be shifting away from its goal to support the poor and underserved. Drawing on a composite social responsibility and framing theory framework, we examine the role that vulnerability plays in successfully raising funds in a prosocial crowdfunding context. (...) We conduct multilevel logistic regressions on a sample of microloans allocated to 105,727 ventures in 64 countries. Our results indicate that applying for funds through a field partner which caters to vulnerable populations may in fact have a negative effect on the entrepreneur’s request to be fully funded. Notwithstanding, framing the entrepreneur as being female or rural as key characteristics of individual vulnerability increases the project’s likelihood to be fully funded. This conflict offers noteworthy theoretical and practical implications for ethics in prosocial crowdfunding, an understudied field of research. (shrink)

Crowdfunding has created new opportunities for poor microentrepreneurs. One crucial question is the impact that the purpose of a loan—either business investment or basic necessities—may have on the success of a campaign. Investigating a prosocial crowdfunding platform, we find that loans taken out to meet basic needs are funded faster than business-related loans, especially for small amounts, which can be explained by the prosocial motivation of microlenders. Moreover, female microborrowers are funded faster than men, especially for basic needs loans. Our (...) results therefore suggest an ethical blind spot, since prosocially motivated crowdlenders may unintentionally end up producing adverse effects, replicating gender role by supporting women to a lesser extent when they apply for business loans. This finding expands prosocial motivational theory in ethical finance. (shrink)

Based on a unique data set on US direct microloans, we study the funding determinants of interest-free peer-to-peer crowdlending aimed at borrowers in the US. By performing logistic regressions on funding success and Tobit regressions on the reversed funding time, the existence of a social underwriting by a third-party trustee and information in the description texts fostering the investors’ trust are shown to be the main predictors of successful funding. Regarding social impact, the possibility to empower women and groups of (...) borrowers appeals to the investors, whereas empowerment of the family or community beyond the borrowers themselves appears to remain unappreciated. When examining the vulnerability of the borrowers as a predictor, the results manifest differences amongst the attitudes of the investors towards social impact. In the subsample of non-endorsed loans, the investors appear to prefer to support borrowers with an immigration background. In contrast, this is not the case with endorsed loans. (shrink)