Peers Affect Charitable Giving
When I was writing the Children’s Miracle Network Telethon, I struggled with the question of how much to ask people to give. It was received wisdom that we should ask even for small donations; $5 or less, for instance. Or as we often put it, “anything you can give.”
Fundraisers at PBS and NPR stations face much the same question, although they answer it by offering donor packages that come with member benefits and premium items.
Many years later, this received wisdom seemed to be born out in the 2009 book, Yes! 50 Scientifically Proven Ways to Be Persuasive, by By Noah J. Goldstein, Steve J. Martin, Robert B. Cialdini. The authors highlighted an experiment in which people were asked for as little as a penny in door-to-door fundraising. The result was that the average donation went up by a hair compared to a control group. Goldstein, Martin, and Cialdini concluded that asking for “even a penny,” would help many fundraising appeals.
But I can almost hear some professional fundraisers holding their nose over that idea. Almost any fundraising effort that has hard costs would be reluctant to even test such a premise. The direct mail fundraisers, come to mind, or charities that rely on events. It’s hard to imagine a charity fundraiser saying, “Please join us for our annual golf tourney. Even one penny will buy you a round!”
While donations during the Telethon had long since ceased being the raison d'être of the show when I wrote it, the money that came in during the show did represent about 12 to 14% of total intake. It was an important part of the total. Moreover, once the show had begun, it was the only variable you could still influence. But way back when, I never came to a satisfying answer over the question of how much to ask for.
Now a new study suggests some intriguing ideas for cause marketers and nonprofit fundraisers on that topic. It finds that what peers give has a strong bearing on what you and I and others will give. Think of a small town party that features a cake auction, whereby the banker, the doctor and the lawyer outbid each other for one tasty-looking cake.
The working paper, called “Peer Effects in Charitable Giving: Evidence from the (Running) Field,” comes from the Centre for Market and Public Organisation Bristol Institute of Public Affairs at the University of Bristol in the UK.
The paper’s authors, Sarah Smith, Frank Windmeijer and Edmund Wright, looked at two datasets comprised of online fundraising pages for individuals participating in the 2010 London Marathon on behalf of causes. In the UK and North America, many individuals seek pledges on behalf of charities when they attempt marathons, bike rides, and the like. In North America, charities will often offer fundraising help to participants in the form of individual pledge websites optimized for fundraising. In the UK, Justgiving and Virgin Money Giving, among others, fill that role.
The study design was elegant and simple, drawing on data from Justgiving and Virgin Money Giving, the UK’s two largest online fundraising sites. Both sites list the most recent donations made. The authors looked at a sample of 10,597 individual pages and found that large donations positively effected no fewer than 20 subsequent donations.
Indeed, the study found that a single pledge of £100 could increase subsequent donations by an average of £10.
But the reverse was true as well. Smith, Windmeijer and Wright also found that a single low donation could have the same effect. A single small donation lowered subsequent donations by about £5.
"Looking at online fundraising,” says Sara Smith, “also gives us some insight into the psychology of giving. It isn’t as simple as donors competing to be the most generous – or avoiding being the meanest. Instead, it looks like they are trying to find what they think is the right level for them personally, compared with their peers."