A pound for the orphans?
Monthy Python is a British comedy show which aired on the BBC in 1969. One clip (season 3, episode 4) of the show is particularly befitting of the subject described in this dissertation (click here to watch the clip online). In the clip of ‘the bank merchant and charity’, a solicitor named Mr. Ford tries to solicit a bank merchant (played by the brilliant John Cleese) for a donation to the orphanage. The clip is rather long, so I suggest we start at the point where the banker has just been asked for money. Instead of making a donation, the banker notes that he does not understand what Mr. Ford means with ‘a pound for the orphans’.
Banker: No? Well, I’m awfully sorry I don’t understand. Can you just explain exactly what you want?
Mr. Ford: Well, I want you to give me a pound, and then I go away and give it to the orphans.
Mr. Ford: Well, that’s it.
Banker: No, no, no, I don’t follow this at all, I mean, I don’t want to seem stupid but it looks to me as though I’m a pound down on the whole deal.
Mr. Ford: Well, yes you are.
Banker: I am! Well, what is my incentive to give you the pound?
Mr. Ford: Well the incentive is to make the orphans happy.
Banker: (genuinely puzzled) Happy? You quite sure you’ve got this right?
Mr. Ford: Yes, lots of people give me money.
Banker: What, just like that?
Mr. Ford: Yes.
Mr Ford tries to convince the banker to make a donation by noting that others are also doing it. By saying this Mr Ford tries to influence the behavior of the banker through the mention of social information. Social information refers to the behavior of others, in our example the donations of others.
Social information effects on charitable giving
This is a short summary of a literature review conducted by Claire van Teunenbroek, René Bekkers and Bianca Beersma. The paper is available at: https://mfr.osf.io/render?url=https://osf.io/raczh/?action=download%26mode=render
You might have seen it: a glass donation box in a store or at an airport with a note asking for a donation. Did you make a donation and how much? Research suggests that you are more likely to make a donation if you see or hear the donation amounts of others. Also, your donation amount is likely to resemble the previous donation amounts you observed or heard. Why are we influenced by the donation behavior of others?
We are often influenced by information of other people’s behavior; we call this the influence of social information. If I show you the donation amount of previous donors I am using social information in an attempt to change your donation behavior. We reviewed 31 studies that did exactly this: they presented the donation amount of previous donors. Social information is often used by practitioners, as the general assumption is that it helps them assemble more money. But will it? Is social information an effective stimulant for giving?
In general, mentioning or showing the donation amount of others ensures that donors donate higher amounts. For instance, donations to a crowdfunding project were 16% higher (€11) if they read that the average donation amount was €82 (van Teunenbroek & Bekkers, Forthcoming). However, it does not always increase the donation amount and sometimes it even decreases the donation amount. This means that using social information could be costly for practitioners. Thus, it is important to research the limitations of social information. When and why is social information an effective stimulant?
We suggest that the effectiveness of social information depends on the context: where a donor is while receiving the information. The effect also depends and on the type of donor: not every donor is affected by social information. We suggest that donors who care about social norms, helping and or contributing to good projects are more likely to be influence by social information. For example, a donor who cares about fitting in is more likely to be influence by social information as social information provides them with a norm: what is normally done in a situation. For instance, individuals prefer to donate amounts that closely resemble the suggestion amounts. In addition, if one’s behavior is observable we are more likely to follow a social norm, which means that social information is probably more effective in a public context. Also, information provided by individuals we identify with is more likely to influence us. Practitioners can use these findings to check if their donation context is suitable to use social information. Is it a public context? And can the information be connected to an individual that represents the target group?
Not all donors donate because others are doing it too, some want to contribute to a project because they think it is a qualitatively good project. Social information could provide these donors with a quality signal: if other people are donating, they must perceive this project as being a good-quality project. It could also be that social information simply increases the awareness of need: if others are donating, there must be a real need for help. Next to this, information we received prior to determining our donation amount could influence us simply because our brain uses it as a reference point. We call this anchoring, which is the human tendency (bias) to use (unrelated) information on later decisions. Thus, we might not even be conscious about social information influencing us.
On the other hand, social information could also decrease giving. Some donors want to make a personal difference with their donation: they want to have an impact. For these donors, the idea that others have already donated decreases the attractiveness of making a donation. This means that social information could have a negative effect. Also, social information can give donors the idea that their donation is less needed: if others are already donating is my donation still needed?
In conclusion, social information could be an effective stimulant for charities to increase donations, but it has several limitations. Based on the studies conducted thus far it is hard to provide charities with an exact road map to determine if social information would work for them. More work is needed to research the limitations of social information. For now we advise charities to think about their donation context and their target group. A public context is advised, as is connecting the information to an individual that resembles the target group. Also, social information could have a negative effect by giving individuals the idea that the impact of their donation is lower or their donation is less needed.
Crowdfunding: an online funding tool. There are several crowdfunding models, in this dissertation we focus on two models: reward- and donation based crowdfunding (that is philanthropic crowdfunding (van Teunenbroek et al., 2018).
Crowdfunding platform: (i.e. crowdfunding website, crowdfunding portals), which is an internet-based intermediary/website that hosts crowdfunding projects. Also referred to as a crowdfunding website or a crowdfunding portal.
Donation behavior: this refers to the donation outcome. In this dissertation we focus on monetary donations only: the individual donation amount. The individual donation amount is the main dependent variable. Next to the amount donated, we also refer to the number of donors/participation rate.
Natural field experiment: a scientific method where participants are unaware of being in an experiment.
Nudge: a term often used in behavioral economics. It refers to a discrete suggestion in order to influence an individual’s decision.
Social norm: a social norm refers to an (unwritten) rule about how to behave in a certain situation.
Initiator: the individual who launched the crowdfunding campaign, this individual is also responsible for the solicitation.
Online donations: throughout this dissertation we focus on donations that are made online.
Philanthropy: the individual voluntary contribution (money, time, goods expertise) for the benefit of the public good (Payton, 1988). In this dissertation we focus on monetary contributions only.
Philanthropic studies: combines a broad range of scientific fields: behavioural economics, social psychology, philosophy and sociology. In this dissertation I combine insights from behavioural economics, social psychology and naturally of philanthropy.
Voordekunst: a Dutch crowdfunding platform specialized in cultural and arts projects.
Social information: any information about the behavior of others. In this dissertation we focus on one type of social information, namely the donation amount of previous donors. This is our main independent variable.