The amount of money other people give to charity has a big impact on our own charitable giving, according to research by Jen Shang and Rachel Croson, published in the October 2009 issue of the Economic Journal.
Their study of donations to an American public radio station finds that people give more when
told that another donor had contributed more. The effect is particularly powerful for new donors, who don’t know what an ”appropriate” gift amount might be.
In times of economic crisis, charitable giving is often the first budget item individuals cut – and
this is just when the need for charitable donations increases. This study examines what influences how much individuals give to non-profit organisations.
Donors called into the public radio station during a fundraising drive. Some callers were simply
asked to make a contribution. Others were told how much another donor had contributed, before being asked for their own contribution. The amount the other donor had contributed was then varied.
The research finds that:
- On average, donations increased by $13 (about 12%) when callers were told that another donor had given a large amount ($300) than when they were told nothing. So providing high ”social information” increased donations.
- The effect was strongest for new donors, who were likely to have little idea of what an ”appropriate” gift amount might be. There was no effect of high social information on renewing donors.
- The effect of social information on new donors was long-lasting. In addition to giving more, individuals who were told that another donor had contributed $300 were almost three times as likely to renew their membership in the station one year later than those who were given no social information.
The researchers conclude:
”The impact of social information on charitable giving has the potential to reap large benefits for non-profit organisations.
”For example, consider the public radio industry in the United States. Individual donations yield about $650 million per year. An increase of 12% using the social information described in our research would increase donations by $78 million.”
”A Field Experiment in Charitable Contribution: The Impact of Social Information on the Voluntary Provision of Public Goods” by Jen Shang and Rachel Croson is published in the October 2009 issue of the Economic Journal.
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