People are spending lots of time in online social networks and many nonprofit organizations are looking for ways to engage those networks. Nonprofits know that they can help with advocacy efforts; can they also support the organizational fundraising? A recent study using Facebook and Harvard undergraduates explored financial altruism behaviors within existing social networks. The results may not surprise you: people are more altruistic to those closer to them in the network, and friends who cluster together tend to have the same relative level of altruism.

In the study, Directed Altruism and Enforced Reciprocity in Social Networks, a group of researchers from Harvard , Iowa State University, and Singapore Management University (Leider, Möbius, Rosenblat, & Do), engaged Harvard undergraduates, examined their online social network (to decipher how near or distant they are were to friends), and then engaged them in a number of games. Surprisingly, a total of 5,576 out of the 6,389 undergraduates at Harvard participated, either by being a player in a given task or in being named by a participant. In these online games, subjects made unilateral allocation decisions for several types of named partners and one anonymous partner (a randomly selected participant from the subject’s dormitory).

These experiments with real subjects in their own social network were conducted solely online. All communication with the subjects was by email and they submitted all of their choices to a password protected website through their own web browsers.

Here is how one of the games went:

In the helping game, each decision-maker was endowed with $45, and each partner was endowed with $0. The decision-maker was asked to report the maximum price that she would be willing to pay in order for the partner to receive a gain of $30. A random price between $0 and $30 was determined, and if her maximum willingness to pay was equal or greater than the random price the partner received $30 and the random price was deducted from the decision-maker’s endowment. Otherwise, the decision-maker’s payoff equaled her endowment of $45, and the partner’s payoff equaled his endowment of $0. Effectively, the decision-maker revealed how much she valued a $30 gain for the partner.

Results:

• Close social ties induce directed altruism (toward someone you know). Allocations to friends are substantially higher (on average 52 percent more money) than allocations to distant partners/strangers.
• Giving is motivated by the prospect of future interaction. The data showed that future interaction effects increase giving by an additional 24 percent. This implies that the partner would rather repay the favor than damage the friendship.
• Baseline altruism and directed altruism are correlated, that is subjects with higher baseline altruism have friends with higher baseline altruism. Subjects who give more to nameless partners also give more to specific named partners, and are treated more generously by their friends. However, the data shows that friends do not reward intrinsic kindness, but rather, that kind people tend to have friends who exhibit greater baseline altruism themselves.

Using online methods, the researchers are able to document and distinguish altruism to close friends, more distant acquaintances, and strangers. However, the results correlate with what traditional fundraising experience and donor studies in other formats document. That is, people tend to give more to people they know, that the idea of future engagement also increases giving, and that if there is no personal connection, giving can be expected to be low. What is true in traditional methods of personal interaction is mirrored on line. What is not studied here is how easy or difficult it is to create social closeness online as compared to developing social closeness in live meetings, phone calls, and other formats. That is where many nonprofits see the advantage of online relationships lies, and where, since the phenomena is so new, not as much is known.

Our result that friends cluster by baseline altruism raises another interesting question for future
research: do our friends shape our social preferences (treatment effect), or do we seek out friends with similar social preferences (selection effect)?

Often people attempt to live their lives backwards;
they try to have more things, or more money,
in order to do more of what they want, so they will be happier.
The way it actually works is the reverse.
You must first be who you really are,
then do what you need to do,
in order to have what you want.
– Margaret Young

This is another posting about how our social networks affect our financial generosity. In this case, a study was done at a large US bank organization and analyzed giving to the United Way, which allowed the researcher to track giving behaviors based on where someone worked (and who worked near them), by the team she/he was assigned during the United Way campaign, and by demographic factors.

The researcher, Katherine Grace Carman is an economics professor at Tilburg University in the Netherlands. She did the study while she was at Harvard University as a health policy research fellow.

Carman found that the individuals in the study were strongly influenced in their decision to give or not give based on the participation of their colleagues.  She also found that when workers were deciding what amount to give, they were also influenced by both the people that worked near them (mail code in the building where they worked) and by the people on their United Way team:

A $100 increase in the mean contribution of the mail code is associated with a $1.70 increase in individual contributions, and a $100 increase in the mean contribution of the team is associated with a $7.00 increase in individual contributions.

Carman also found that people with the same salary range tended to have more influence on each other’s giving behavior; this also held true for people of the same gender. However, interacting with people in the same age did not seem to influence giving behavior.

Most interestingly, Carman actually tracked individuals when they changed physical office locations to work around a new set of people. What she found that when these people moved from an office area where people did not contribute as much to an area where people gave more, that their giving increased toward the giving of the new work group they joined. Her study might lead us to conclude that not only is our giving behavior influenced by the people who we interact with on a regular basis, but that our friends shape our social preferences (sometimes called treatment effect), more than our social preferences being determined by the people we seek out (sometimes called the selection effect).

You may know a man by the company he keeps
- Proverb

Halton Region Employees, Ontario, Canada