​How Privacy Controls Can Make or Break a Crowdfunded Project

Privacy is a key concern on crowdfunding sites like Kickstarter and Indiegogo, where donors divulge personal and financial information to back projects. Letting people hide their identity and funding history could make or break DIY endeavours looking for a monetary leg up, new research suggests.

In a study set to be published in Management Science, researchers found that removing privacy controls relating to whether one's identity and donated amount are publicly available resulted in more donations overall, but in significantly smaller amounts. Scant privacy controls on crowdfunding platforms made privacy-minded donors skittish when it came to dropping the kind of money they might have otherwise, the researchers concluded.

"Online spaces are characterized by increased visibility and traceability, and crowdfunding platforms, in particular, publicly record transactions, which include the identity or dollar amounts of campaign contributions," the researchers wrote. "Financial transactions tend to be sensitive in nature, thus publicity and scrutiny may impede transactions."

In a move probably best described as "pulling a Facebook" at this point, researchers manipulated the privacy settings of "one of the largest global reward-based crowdfunding platforms" without users' knowledge for a two week period and calculated the effect on funding levels.

By moving the information settings screen to after payment has been made instead of before, the researchers engineered a cooling effect on donation amounts.

"Examining the change in dollar contributions, conditional on conversion, we found that the average contribution declined by approximately $5.81," the researchers wrote.

The researchers could not confirm to Motherboard which crowdfunding site was used for the research, although the study mentions it was founded in 2008, making Indiegogo the likely collaborator.

According to the researchers, at issue is a preemptive "priming" impulse in users that ultimately affects how much they donate. Presenting users with information controls before payment likely scared off some users not already aware of privacy issues on the web and encouraged users who were to donate more, knowing that the exact amount would remain hidden.

While privacy awareness is likely the largest factor when it comes to funding amounts in relation to control over user information, the researchers noted that it's likely not the only one.

For example, highly subjective and unpredictable variables like the desire to gain recognition from one's donation may have affected how donors reacted to privacy settings in the first place.

Or, alternatively, people were just psyched about the opportunity to fund cringeworthy projects like Zach Braff's latest quirk-tastic homage to contrived hipsterdom, Wish I Was Here, without letting the world know they helped bring it forth from the cutesy void.