The Social Network Effect: The Determinants of Giving through Social Media

Abstract

Social networking applications such as Facebook, Twitter, and Crowdrise offer new ways for nonprofits to engage the community in fundraising efforts. This study employs data from Facebook Causes to examine the nature and determinants of charitable giving in social networking environments. Our findings suggest donations on these sites are not driven by the same factors as in “off-line” settings. Instead, a social network effect takes precedence over traditional economic explanations. Facebook donors do not seem to care about efficiency ratios, their donations are typically small, and fundraising success is related not to the organization’s financial capacity but to its “Web capacity.” Moreover, online donors are prone to contribute to certain categories of causes more than others, especially those related to health. Given the growth in social media-driven fundraising – and the increase in crowdfunding, slacktivism, impulse donating, and other new practices this entails – these findings carry notable theoretical and practical implications.

Keywords: charitable contributions, crowdfunding, donations, Facebook, fundraising, giving, Internet, small donors, social media, social networking sites, nonprofit organizations, charities

JEL Classification: L31, O33