Economists know very well that when individuals – abstracting from any informational or social structure issues – decide upon how much money they wish to give to charity, they consider how much that charity is likely to receive from others. If they don’t believe that their donation will make much of a difference, they might not bother donating.
Professor Kimberly Scharf
An economist from the University of Warwick suspects that having more Facebook friends might make us less likely to share charitable information. Professor Kimberly Scharf (@kimberleyscharf
) from Warwick’s Centre for Competitive Advantage in the Global Economy (CAGE) has predicted that individuals who operate within larger social networks tend to rely on others to disseminate information about charitable opportunities – a process known as ‘free riding’.
Professor Scharf, who will present her research paper at the 2012 International Institute of Public Finance Congress later this month, also hypothesises that this phenomenon could extend to a person’s tendency to donate. Conversely, Professor Scharf claims that those operating within smaller, closer-knit online communities will be more likely to share information about charitable causes and to make donations.
I spoke to Professor Scharf to find out why she believes that more online friends could spell bad news for charities.
"I was interested in understanding exactly what mechanisms were at work within these social structures," she explained. "I wanted to understand whether social structures actually have any effect on giving. It has been very difficult for economists to understand these relationships and I think that this is the first theoretical model to make a prediction in this respect.
"Consider the following scenario," Professor Scharf continued. "I might have information about a high quality charity. However, if I come to the conclusion that somebody who doesn’t yet have this information is likely to obtain it from somebody else, I might not bother passing that information on. I might reach such a conclusion if we both have a large number of online friends. If I think that one of these other friends is likely to pass the information on, I might not bother."
I asked Professor Scharf whether or not she thought that compassion fatigue – an aversion to giving brought on be exposure to a large number of worthwhile causes – might play a role in this process.
"That’s an interesting question," she replied. "My paper doesn’t actually deal with compassion fatigue but you can envisage individuals becoming overwhelmed by worthwhile causes. Perhaps there are so many being thrown at them it all becomes too much and they simply stop listening. Perhaps they make a decision to stop receiving all of this information. When you’re inundated with information about a million different things, you can have difficulty sifting through them. However, I don’t think that we really understand the mechanisms at play here. How do individuals select the issues that deserve their attention and the ones that they wish to ignore?"
Whilst the free riding discussed in Professor Scharf’s paper relates to the sharing of charitable information, she believes that the phenomenon might extend to our tendency to donate.
"Economists know very well that when individuals – abstracting from any informational or social structure issues – decide upon how much money they wish to give to charity, they consider how much that charity is likely to receive from others," she said. "If they don’t believe that their donation will make much of a difference, they might not bother donating. Essentially, they might free ride on the donations of other individuals. Whilst a person might like a charitable good or service and think that it is valuable, he or she might assume that everybody else feels the same way and that they will make a sufficient number of donations to compensate for their inactivity."
Professor Scharf is currently working to collect evidence pertaining to her predictions. The information that she collects will certainly be of interest to fundraisers. I concluded our conversation by asking Professor Scharf how charities might use her findings to more effectively target their campaigns.
"We must remember that this is a theoretical piece that I’ve written," she reiterated. "I have predicted that people with lots of Facebook friends – and friends of friends – might be less likely to share information about higher quality charitable goods or services, than those who operate within smaller, closer-knit social groups. At present, many charities use mail drops; they drop lots of pamphlets across large neighbourhoods. The impression that I have obtained through talking to people in the sector is that this approach has not been particularly effective. My advice would be for charities to create little groups with common interests, and then focus their fundraising efforts upon these groups. Charities could try to partition the market into small groups whose members all have something in common with one another. Information would then spread outside of these groups because of overlapping social connections.
"In terms of funding strategy, governments might want to consider rolling out more of the catalyst-style grants that tie government funding to charities’ fundraising efforts and the endowments that they set up. This could be a more effective approach from the perspective of policymakers because it accounts for social structures.
"Of course, we must remember that we still have no evidence about any of this. We have to start collecting data so that people like me can begin researching these questions in greater depth."