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PUBLIC RELEASE DATE:
28-May-2014

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Contact: Patricia Donovan
pdonovan@buffalo.edu
716-645-4602
University at Buffalo
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Increased social network can have big payoff for nonprofits, study shows

Even small groups can employ social media to ride the new wave of charitable giving

BUFFALO, N.Y. Charitable fundraising once depended primarily upon a charity's size, efficiency and longstanding reputation. That was before Razoo, Chipin, Facebook and Twitter came to town.

In the first academic study to look at what determines charitable giving on social-media sites, researchers found that those media have created a more level playing field in the nonprofit world, one in which successful use of technology can make up for limited organizational size.

Technology and social media, it turns out, can not only raise the online profile of even small organizations, but increase their support bases and their ability to generate donations online and off. That is among the findings of "The Social Network Effect: Determinants of Giving Through Social Media," a study by Gregory Saxton, associate professor in the University at Buffalo Department of Communication, and Lili Wang, assistant professor of nonprofit studies in the Arizona State University School of Community Resources and Development.

A photo of Saxton is available here: http://www.buffalo.edu/news/releases/2014/05/037.html.

It was published online in the current issue of Nonprofit and Voluntary Sector Quarterly.

"This paper is innovative in several ways," Saxton says. "It is the first to look at the predictors of donations in a social media setting. 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.'

"It is in analysis of these variables," says Saxton, "that the study contributes to the theoretical discussion around the determinants of donations."

"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.

"Studies that use the economic model of giving have shown that aggregate levels of charitable contributions are positively related to organizational size," says Saxton, "so our second and more minor finding was unexpected as well.

"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 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, which analyzed the fundraising activities of more than 50 organizations using Facebook for that purpose, suggests that if charities understand and cultivate this effect, they could experience a payoff in the number of donations and supporters.

Among the study's findings in that regard:

Saxton conducts research on the organizational implications of new and social media, particularly with regard to nonprofit organizations and financial markets. His studies in these areas typically touch on organizations' communication with their external stakeholders, including such issues as organizational disclosure, organizational accountability and stakeholder relations. He is interested in understanding not only why organizations are more or less successful in these areas, but also the effects of different disclosure, stakeholder relations and accountability practices on organizational success.

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