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

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