Disclaimer: I am not a psychologist, anthropologist, or even much of a proper scientist (computer scientists don’t count, ology or not). I am a monkey with a magic typewriter that makes my words appear on your screen. Read on.

In my last few blog posts I’ve taken a look at crowdfunding efforts that have failed and measured some of the fallout from these. The conclusion that I’ve come to so far is that whilst funding a project isn’t the same as buying a thing, a lot of people don’t understand that. People are putting money into projects because they expect to get something out, and they cry foul when they don’t. I consequently don’t believe the crowdfunding platforms do enough to ensure that backers understand the risks and I think they should shoulder some of the responsibility when a project fails.

I’ve had a lot of interesting responses to these blog posts, especially when they have been linked to from Reddit and a few other online forums and social networks. One of the recurring themes in the responses is that “funding” a projectused to be just that – funding. Not buying a level of reward or investing in the hope of some future gain (which is how I think crowdfunding is best described today).

It’s indicative of the speed at which things evolve and change on the internet that just a few years after the launch of Kickstarter (April 2009), people are referring to the “good old days” of crowdfunding in the same warm and nostalgic tones that people normally use when talking about the cartoons of their youth or the pretty girl in school that they never kissed but always loved.

That made me wonder – if we could get back to the original crowdfunding, the pure “giving” without promise or guarantee of reward, what would motivate people to give in the first place? Is this even possible?

That question was the start of an interesting journey. It turns out that I’m not just a horrible old sub-human cynic. According to anthropologists, giving is hard-wired right into our brains… but so is receiving in return.


The Tiv and Gift Giving

In his book “Debt: The First 5,000 Years,” anthropologist David Graeber examines our history of money and debt. He concludes, in part, that humans do not naturally tend toward impersonal, reciprocal exchange. Instead, exchange usually develops in cultures first as a part of a larger social and cultural ritual.

One of the examples that matches most accurately our idealised concept of the crowdfunding “gift culture” is the culture of the Tiv of West Africa. The Tiv have very specific societal rules regarding commerce and exchange, believing that bringing any transaction to full completion (e.g. nobody owes anyone anything) is an immoral act. The reasoning is remarkably simple; if a Tiv man or woman gives you a gift, you are supposed to respond with another gift of slightly greater or lesser value. The outstanding debt between the two of you is a signal that your relationship is going to continue. By contrast, to respond with a gift of equal value implies that you want to settle things between you and bring your relationship to a close.

Kickstarter follows a similar logic.

  1. I provide something of little or no value – a video of me talking about my great idea.
  2. You give money – the first gift
  3. I send you something with a retail value normally quite less than what you gave me

The italicised retail above is crucial – it’s normal, for example, to fund a graphic novel with an amount of money that is actually higher than the cost of buying a graphic novel if you want to actually get a graphic novel at the end of the process.

Pragmatically, this is because we know that part of our contribution is going to be used up in production costs outside of basic printing and shipping. We’re paying for the book to be made, before we pay for it to be printed and shipped.

On an emotional level, however, things are operating differently. Like the Tiv, we are engaging in a relationship and by giving more in exchange for less we are signalling that we want that relationship to continue. Backing a Kickstarter fulfils our very basic psychological need to belong to something, even if it is just a list of strangers who all thought the same things as you was a “cool”. We become a part of the life of the project as a “backer” and thus gain a new“relationship”.

All art is a gift

In 1983 Lewis Hyde’s book “The Gift” was published. An examination of the nature of the creative impulse and its links to the “gift economy”, Hyde emphasised the “forward motion” of the gift and argued that all artistic endeavour was essentially gift giving and therefore impossible to subsume into simple free market economics.

In Hyde’s view whilst art may be bought and sold, the drive to create new art is inherently social. Art is created because of the need to share something with the world and this drive exists as a cross cultural phenomenon.

Does crowdfunding’s combination of creativity (or art) and social networking plug directly into this need? It seems plausible. If we are all, to some degree or another, fundamentally driven to create and to share these creations, then putting your money into a crowdfunding campaign, and creating by proxy, may be the emotional equivalent of grabbing a double shot espresso at the drive through – a quick, efficient boost for a reasonable price.

The downside, like a coffee comedown, is when a project fails. If our investment is not just monetary but emotional, then the failure of the project will hit us on an emotional level. It is not the project that failed, but our project that failed. If you are the person who is going to be held accountable for a failed crowdfunding campaign, that could mean a lot of broken hearts to mend.

When giving goes bad

One of the major complexities in the gift economy model is the notion of reciprocity or, to give it its more common name, “debt”. Reciprocity is the form of gift exchange were a gift is given in the expectation of a later gift in return. In the example of the Tiv, above, relationships are maintained by the requirement for reciprocity. In Western cultures, birthday presents are a typical example of reciprocity in gift exchange. In the crowdfunding world however, reciprocity is where things go bad even if your project is a success.

Going Bad Version 1: You Didn’t Do That Thing You Said You Would Do.

“If I pledge to Level X, I’m going to get boon Y.”

“Oh, shoot. The project collapsed. Now I’m not getting boon Y.”

Except, it’s not a case of “oh shoot” but more like “oh, how do I shoot the guys who started this Kickstarter and get away with it?”

Some anthropologists write that unfulfilled reciprocity can create new hierarchy – e.g. the person owed the debt is elevated in status over the person who owes it. This phenomenon can certainly be seen in some of vitriolic comments posted on projects that have failed “owing” the backers something. There is no horse high enough for some people when these projects go bad.

According to anthropologists Maurice Bloch and Jonathan Parry, it is the unsettled relationship between market and non-market exchange that attracts the most attention. Gift economies are said to build communities, but the market economy serves as an acid on those relationships. 

To paraphrase: If you make good on your commitment then my brain stays in “gift mode” and I will ignore the disparity between what I paid and what I got. If you fail to deliver on your commitment then my brain will shift to “market mode” and I will expect a full refund and probably some form of bloody revenge.

Going Bad Version 2: You Didn’t Say “Thank You” Enough (or “Stretching the Reciprocity Limit”)

There is another curious phenomenon that actually affects successful crowdfunding campaigns, and that is our requirement to see thankfulness and gratitude. This perceived thankfulness seems to bridge the gap between the value of the boon we receive in return for our pledge and the pledge itself. In fact, for it to really work, it actually seems to need to exceed that value.

Unfortunately, humans are pretty bad at expressing gratitude, especially men apparently. (Thanks for reading this blog post by the way. God, that was awkward.)

Amanda Palmer fell prey to this after her wildly successful Kickstarter campaign that raised over £1,000,000 dollars to fund a new album and tour. During the tour itself, Palmer solicited the free help of local musicians at a variety of gigs, something she had done many times before. However, this time it drew criticism. Why? Well, perhaps because by asking for more “free stuff” she created a gift/boon/gratitude imbalance that tipped the balance in some brains away from the gift economy and back into market mode. We no longer felt like our gift had been valued, and so the “acid” was poured onto the relationship.

So, what does all this mean?

It seems that crowdfunding is successful because it taps into some very fundamental psychological machinery. We want to create. We want to give gifts. We want to receive something in exchange for those gifts, we want to see gratitude, and we want to build relationships based on these exchanges.

However, this mechanism is clearly fragile and when it breaks it seems to break in a way that means broken exchanges, and broken crowdfunding projects, are suddenly held up to the harsh light of market economics that they had previously been spared.

What works? Well, the magic formula would seem to be

  1. Deliver
  2. Be grateful

and, if you can’t do these things, be prepared to shift out of “humble indie creator” mode and into “hard nosed business person” mode fast… because your backers will.