Social media has leveled the playing field for small nonprofits competing with large nonprofits in looking for dollars. Formerly, big charities had the advantage because of their efficiency, reputation and size.
However, Facebook, Kickstart, Razoo and Twitter have changed the fundraising game, according to a 2014 study.
“Donors on social media and crowdfunding sites do not seem to care how efficient the organization is or how large it is,” says Gregory Saxton, associate professor of communication at the University at Buffalo.
Instead, they are swayed by what we called the ‘social network effect,’” he adds.
“Professor Saxton co-authored “The Social Network Effect: Determinants of Giving Through Social Media,” with Lili Wang, assistant professor of nonprofit studies in the Arizona State University School of Community Resources and Development.
First study of its kind
The research is innovative in the determinants of fundraising.
Effective use of social media enhances the online profile of small organizations.
It strengthens their support bases, and complements offline fundraising, too.
“It is the first to look at the predictors of donations in a social media setting,” says Professor Saxton. “It also appears to be the first study of donations on a crowdfunding platform. Furthermore, it examines variables the ‘traditional’ studies have ignored — the size of the organization’s social network and the organization’s ‘Web capacity.’”
“The first, and major, unexpected finding,” he says, “was that financial ratios, especially the level of a charity’s organizational efficiency, were simply unimportant in online giving, although they are known to be prominent determinants of off-line charitable giving.”
A second surprise
“It was that the size of an organization (measured as total financial assets) did not have a significant positive effect on the number of donations received,” he says.
“This led us to surmise that donors on social media and crowdfunding sites do not seem to care how efficient the organization is or how large it is. Instead, they are swayed by what we called the ‘social network effect,’” says Professor Saxton, “which is an effect provoked by the size of an organization’s network of followers; that is, the number of online ‘friends’ or fans it has.”
The study analyzed the fundraising efforts of more than 50 nonprofits using Facebook.
“The first, and major, unexpected finding,” he says, “was that financial ratios, especially the level of a charity’s organizational efficiency, were simply unimportant in online giving, although they are known to be prominent determinants of off-line charitable giving.”
The study’s key findings:
1. Online donations are driven by the number of ‘friends’ that a cause elicits through online sites. Friends often recommend a cause to other friends, which extends the reach the cause or group has.
2. Donations are also influenced by the Web capacity attached to the charity, which is measured by the number of users reached by the organization’s website.
3. A nonprofit looking for success in social media fundraising should increase the quality and reach of its Web site, the latter measured by the size of its online constituencies, and encourage its supporters to promote the cause online.
4. To accomplish this, the organization needs to have the appropriate level of “tech savvy.” Having employees who strategically deploy social media strategies can be just as important to their success as having adequate financial resources.
5. Nonprofits in some fields are more likely to succeed in social media fundraising than others. Especially successful are those that support health-related causes and, in particular, present an immediate need or benefit to the public — treatment for a sick child, a home for a wounded soldier, a campaign to save a life.
6. Social factors may be pushing donors to give more to popular and socially acceptable causes. This has implications for organizations whose efforts are less well-known than others or do not focus on popular “warm and fuzzy” social issues.
7. Online donors appear to be more willing to fund specific and new projects, rather than pre-existing programs, especially those that offer tangible deliverables like a clubhouse or a new film.
8. Attention-getting organizations and projects are more likely to receive funding than those that are more passive in their approach to donors.
9. Such practices as crowdsourcing and mobile donations, which represent a major change in the way individuals donate to charities, offer new ways for nonprofits to generate greater donations.
10. Online and traditional fundraising methods complement one another. Large numbers of “fans” generated by a good website and social media outreach can be approached using traditional methods as well.
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“You have not lived today until you have done something for someone who can never repay you.”
-John Bunyan
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