Friends Asking Friends for Charity: The Importance of Gifts and Audience

40 Pages Posted: 11 Sep 2015  

Marco Castillo

Department of Economics, Texas A&M University

Ragan Petrie

Texas A&M University - Department of Economics; University of Melbourne - Melbourne Institute of Applied Economic and Social Research

Clarence Wardell

tinyGive, Inc.

Date Written: September 1, 2015

Abstract

Friends can influence many aspects of one’s life, including giving behavior. Using data on 10,000 donors from a field experiment with an online giving community, we examine the effectiveness and underlying motivations for donors to ask friends via social media to give to a charity. Asking a friend in front of his friends is the most effective way to fundraise. Our results suggest that offering a small monetary incentive to donors to ask a friend this way pays for itself by returning about $2 for every $1 spent and could be a potential new fundraising tool for charities. Social pressure, rather than information efficiency, appears to be an important mechanism behind the success of social media in fundraising. However, social pressure is costly and donors are reluctant to use it on their friends. Providing donors with a “gift” for the friend increases solicitation rates.

Keywords: fundraising, peer-to-peer solicitation, field experiment, online giving, social pressure, audience

JEL Classification: D64, C93

Suggested Citation

Castillo, Marco and Petrie, Ragan and Wardell, Clarence, Friends Asking Friends for Charity: The Importance of Gifts and Audience (September 1, 2015). Available at SSRN: https://ssrn.com/abstract=2658294 or http://dx.doi.org/10.2139/ssrn.2658294

Marco Castillo

Department of Economics, Texas A&M University ( email )

Langford Building A
798 Ross St.
College Station, TX 77843-3137
United States

Ragan Petrie (Contact Author)

Texas A&M University - Department of Economics ( email )

5201 University Blvd.
College Station, TX 77843-4228
United States

University of Melbourne - Melbourne Institute of Applied Economic and Social Research ( email )

Level 5, FBE Building, 111 Barry Street
Parkville, Victoria 3010
Australia

Clarence Wardell

tinyGive, Inc. ( email )

419 7th Street NW
Suite 200
Washington, DC 20004
United States

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