Impact of new forms of philanthropy on civic engagement and NGOs René Bekkers Philanthropic Studies

This talk is not about Global Giving – cross-national differences in philanthropy Genetic and environmental influences on prosociality Social innovation in the nonprofit sector in Europe The health benefits of volunteering Integration of refugees in the Netherlands through volunteering The declining generosity of the Dutch population If you want to know more, follow @renebekkers or visit https://renebekkers.wordpress.com

“Stuyvesant called upon the 43 richest residents of New Amsterdam to provide funding to fix up the ailing Fort Amsterdam and to construct a stockade across the island to prevent attacks from the north, while it took New Amsterdam's most oppressed inhabitants -- slave labor from the Dutch West India Company -- to actually build the wall.” Russell Shorto – The Island at the Center of the World

Science of Philanthropy

Why do people give? People give more (often) when There is a clear need need They are being asked solicitation Costs are lower, and benefits are higher costs/benefits They care about the recipients altruism They receive social benefits reputation They receive psychological benefits self-rewards The cause matches their values values Donations are perceived to be efficient efficacy Source: Bekkers, R. & Wiepking, P. (2011). ‘A Literature Review of Empirical Studies of Philanthropy: Eight Mechanisms that Drive Charitable Giving’. Nonprofit and Voluntary Sector Quarterly, 40(5): 924-973. Available at www.understandingphilanthropy.com

Can we increase donations by giving social information? Philanthropic crowdfunding is an emerging instrument in fundraising. You put up a call for contributions on a webpage and reach out to a crowd of potential donors to give, often with (token) rewards of increasing value at several thresholds. Amounts raised through crowdfunding increase, but they account for <1% of giving in the US and the Netherlands. How can we use real information about the donation behavior of previous donors do increase amounts donated? In the USA and the Netherlands philanthropic crowdfunding makes up for less than 1 per cent of the total fundraising amount As a result of the absence of a financial compensation, prosocial behavior is expected to be a dominant incentive and influence in philanthropic crowdfunding Previous research: offline contexts with mainly personal contact between the solicitor and donor Mention: From now on we refer to crowdfunding instead of the full term philanthropic crowdfunding.

Previous research suggests it could work Art gallery visitors donate amounts similar to previous visitors There is overwhelming evidence for the importance of the influence of social norms on donation behaviour: donating is a form of social behaviour encouraged by social norms and social incentives (Bekkers & Wiepking, 2011). The research shows that donors adjust their charitable behaviour according to social information. Specifically, studies show that when individuals are presented with information on the donation amount of previous donors their donation amount increases. Field experiment with donations to an art gallery, Martin and Randal (2008) demonstrate that visitors prefer to donate amounts similar to the coins and bills in a transparent box at the entrance. In a field experiment with donors to a public radio campaign, Croson and Shang (2013) and Shang and Croson (2009), found that the donations are higher after potential donors are informed about the donation amount of previous donors. Shang and Croson (2009) demonstrate that individuals adjust their donation according to the reference amount, on average with $13 (12%). In their field experiment with tourists at a national park, Alpizar et al. (2008a), solicitors verbally informed potential donors about the ‘typical’ donation amount ($10) of previous donors, which increased donations with about 50 cents (18%).

Previous research suggests it could work Art gallery visitors donate amounts similar to previous visitors (Martin & Randal, 2008) Donors to a National Public Radio campaign donated 12% more after hearing that others gave higher than expected amounts (Croson & Shang, 2013; Shang & Croson, 2009) Wild park tourists in Costa Rica donate 18% more (Alpizar et al., 2008) University alumni in the Netherlands donated 12% more (Bekkers, 2012) ….the effect size hovers around 15% There is overwhelming evidence for the importance of the influence of social norms on donation behaviour: donating is a form of social behaviour encouraged by social norms and social incentives (Bekkers & Wiepking, 2011). The research shows that donors adjust their charitable behaviour according to social information. Specifically, studies show that when individuals are presented with information on the donation amount of previous donors their donation amount increases. Field experiment with donations to an art gallery, Martin and Randal (2008) demonstrate that visitors prefer to donate amounts similar to the coins and bills in a transparent box at the entrance. In a field experiment with donors to a public radio campaign, Croson and Shang (2013) and Shang and Croson (2009), found that the donations are higher after potential donors are informed about the donation amount of previous donors. Shang and Croson (2009) demonstrate that individuals adjust their donation according to the reference amount, on average with $13 (12%). In their field experiment with tourists at a national park, Alpizar et al. (2008a), solicitors verbally informed potential donors about the ‘typical’ donation amount ($10) of previous donors, which increased donations with about 50 cents (18%).

Why it would work Social information induces Conformity: a norm that people follow Especially when they are uncertain about the norm, when donations are made public and when they identify with the actor in the lead example Status: a minimum that you need to ‘outgive’ in order to be noticed Prestige motive in a community of art lovers Sexual selection processes

Why it may not work Social information May not be noticed May not be perceived as relevant for the donation decision – if donors already know what they want to give, e.g. when donations come from strong ties May be setting the bar too high – reducing the number of donors

AND…. Publication bias may have polluted the results. The devil is in the details. Context matters – big time.

Quality indicators Published in a top journal Passed peer review Significant effects

Quality indicators - revised Published in a top journal Passed peer review Significant effects Preregistered High power (large n)

Behavioral Economics and Philanthropy Conference These did not work. Picture recipients on fundraising letters (-€40k). Calling alumni by current fraternity members. Reminding people of an event that made them feel grateful. Reminding people of an event that made them feel happy. Giving people more positive social information. Giving students the names of charity ambassadors. 3-4 November 2014 Behavioral Economics and Philanthropy Conference

Published - Unpublished Picture recipients on fundraising letters (-€40k). Calling alumni by current fraternity members. Reminding people of an event that made them feel grateful. Reminding people of an event that made them feel happy. Giving people more positive social information. Giving students the names of charity ambassadors. 3-4 November 2014 Behavioral Economics and Philanthropy Conference

These did not work either. Reducing the anonymity of donations. Giving the option of forfeiting anonymity. Switching the default label from ‘giving’ to ‘keeping’. Telling people they are a helpful person. Telling people the government lowered its subsidy, increasing the need for donations. Showing students stylized eyespots. 3-4 November 2014 Behavioral Economics and Philanthropy Conference

But real watching eyes…. 3-4 November 2014 Behavioral Economics and Philanthropy Conference

“Vreemde ogen dwingen”

So…. Publication bias may have polluted the results. The devil is in the details. Context matters – big time. Source: Bekkers, R. (2009). Anonymity, Social Information, and Charitable Giving. 2009 ARNOVA Conference paper A nice positive result that did not (yet) get published

Suggesting a €35 contribution 3-4 November 2014 Behavioral Economics and Philanthropy Conference

Claire van Teunenbroek and René Bekkers Are we joining the crowd? A natural field experiment on the impact of social information in crowdfunding campaigns Claire van Teunenbroek and René Bekkers Philanthropic Studies, VU University Amsterdam

Pilot study (van Teunenbroek, 2016) We stick to the rule in economics of using no deception. We use only true information. We take advantage of the fact that giving is right-skewed; the average is often much higher than the median. Students who were told that the donation amount of previous donors was € 15 donated about €3 more (12%) of their ‘house’ money. This study is a follow-up study building upon the design of van Teunenbroek (2016): providing donors with the true average donation amount of previous donors to increase the amount donated. Our methodological approach provides us with several advantages over this earlier study. First, our study uses a real crowdfunding context instead of an artificial one. Second, our subject pool consists out of actual donors instead of a students in a convenience sample. Third, we use actual house money instead of seed money. Also, we test the effect of social information over the complete life course of a large number of campaigns. Earlier research (van Teunenbroek, 2016) used a class-room experiment which did not allow for an investigation of changes in the effects of social information effects over the life course of campaigns In a class-room experiment mimicking a crowdfunding environment using a real crowdfunding project, van Teunenbroek (2016) found that displaying the average (€15) donation amount of previous donors resulted in students indicating that they would donate amounts even higher than the displayed amount: the most popular contribution was €10 in the control and €20 in the treatment condition. Overall, the suggestion amount resulted in an increase of about €3 (12%). Even though, the students only indicated the donation amount and never made an actual donation, the context was semi-hypothetical, since the students were informed that at least 10% of the indicated donations would actually be donated to the project.

Innovations in our current experiment We preregistered it, https://aspredicted.org/u5w9u.pdf It is a natural field experiment: participants did not know they were in it. The subject pool is heterogeneous: participants are actual donors at a crowdfunding platform. Donations are real, rather than house money We test the effect over a variety of crowdfunding campaigns, in varying stages of completion, at varying levels of success

http://www.giving.nl/ https://renebekkers.wordpress.com/2015/11/11/four-reasons-why-we-are-converting-to-open-science/

Open Science Framework, osf.io This new project is at https://osf.io/epuj6/

Data and Methods From September 16 to October 16, a total of 23,796 visitors to voordekunst, a philanthropic crowdfunding platform for arts and culture projects, were randomized in two groups (A/B test). Control group: the ordinary campaign + payment page. Treatment group: a yellow button was added on the campaign + payment page with the text: “Did you know that on average donors on voordekunst donate 82 euros?” The field experiment included two conditions. In the ‘reference’ condition, a reference amount was suggested to provide donors with a social norm. In this condition, participants can read that “Did you know that on average donors on Voordekunst donate 82 euros?”. The reference amount is the actual average of all individual donations on the platform (i.e. excluding donations from companies) of the last six months of the previous year. In the ‘base’ condition, no reference was suggested. The moment a participants enters the website, he or she is divided into one of the two conditions based on internet cookies. Meaning that, they are in the same condition even if they visit multiple projects or revisit the platform another day.

Amount contributed thus far Treatment Signed copy Eternal gratitude

Amount contributed thus far control Signed copy Eternal gratitude

Payment page

Social information: fewer visitors donated

But donors gave higher amounts ns ns

The influence of 12 outliers ns p = .112

UP TO 7,500 in control and 5,000 in treatment

Social ties and donations to the arts Results from a paper in progress with Irma Borst We looked at donations to 5 successfully completed projects at Voordekunst and 5 unsuccessfull projects Initiators were asked whether they knew donors

Number of conations Number of projects Days after 1st donation Number of donors per project

Timing of donations: Strong ties

Timing of donations: weak ties

Timing of donations: latent ties

Donations after 7 weeks

Amount donated per day

From guilt to impact Traditionally, nonprofit organizations have appealed to awareness of need and guilt as a motive for donations Large fundraising charities have been slow to adopt crowdfunding Crowdfunding forces organizations to think about specific propositions What is the result you want donors to pay for? Why would Monty Python’s Merchant Banker give? https://www.youtube.com/watch?v=YUhb0XII93I

The impact of impact information If donors start caring about impact, nonprofit organizations will have to care as well Effective altruism movement

Condition 1: Control group “Only with your help can we prevent Ange Bella en thousands of other children dying from Malaria.”…. Condition 2: + Description of the output and prosocial impact (Experiments 1 – 5) … “You can give a long-lasting insecticide treated bed net with every 4$ you donate, which protects the child against Malaria during the night, when most infections are incurred.”… Condition 3: + Information on the effectiveness of the intervention (Experiments 4 & 5) … “Your bed nets are a highly effective way of combatting Malaria. Using the nets has been proven to halve the number of Malaria incidences and to drop the child death rate by one fifth.”

From sacrifice to investment Return Performance No Yes SACRIFICE WINDFALL DUTY INVESTMENT CONTRACT

Declining generosity in the Netherlands

Declining prosocial values

Giving as an investment – new questions What is your business case? Performance based payment to investors instead of promises to donors Financial results of investments partly accrue to investors Strategic philanthropy of philanthrocapitalists

Measuring impact Performance paradox Social impact bonds are complicated Cost reductions are not guaranteed

Sponsors Nederlandse organisatie voor Wetenschappelijk Onderzoek

Framing price reductions as matches vs. rebates 3-4 November 2014 Behavioral Economics and Philanthropy Conference

Framing price reductions as matches vs. rebates 3-4 November 2014 Behavioral Economics and Philanthropy Conference

The original paper Bekkers, R. & Wiepking, P. (2007). ‘Generosity and Philanthropy: A Literature Review’. Joint work with Pamala Wiepking, now at Erasmus University Rotterdam Background paper for the $5m ‘Science of Generosity’ Request for Proposals, sponsored by the Templeton Foundation

Three publications Bekkers, R. & Wiepking, P. (2011). ‘A Literature Review of Empirical Studies of Philanthropy: Eight Mechanisms that Drive Charitable Giving’. Nonprofit and Voluntary Sector Quarterly, 40(5): 924‐973. Bekkers, R. & Wiepking, P. (2011). ‘Who gives? A literature review of predictors of charitable giving. Part One: Religion, education, age and socialisation’. Voluntary Sector Review, 2(3): 337‐365. Wiepking, P. & Bekkers, R. (2012). ‘Who gives? A literature review of predictors of charitable giving. Part Two: Gender, family composition and income’. Voluntary Sector Review, 3(2): 217-245. www.understandingphilanthropy.com