Participatory Crowdfunding: An Approach towards Engaging Employees and Citizens in Institutional Budgeting Decisions

Governments and corporations try to engage their constituents and employees in participatory processes in order to enhance belongingness and motivation. At the same time, online-based crowdsourcing concepts have become ubiquitous. In this paper, we propose a novel concept of participatory budget allocation and sketch out an experimental design to assess different alternatives of such a mechanism. Building on the rich literature of threshold public goods and motivation theory, we investigate how different crowdfunding-like mechanisms for budget allocation affect contribution behaviour, user agency, and overall welfare. In a pilot experiment, we find that decisions on institutional budget allocation with no alternative use lead to higher overall welfare gains and more funded projects than an existing outside option (keeping budget for private use), whereas differences in subjects' perceived sense of agency were insignificant. This indicates that institutions can implement such a restricting mechanism without limiting user motivation, while maximizing welfare.