Why Don’t More People Give to Charity via Facebook?

Facebook Causes seems like it should be a great way of encouraging charitable giving. Since social pressure increases contributions to charity, we might expect that making your donations visible to your friends would prompt more giving.  Unfortunately, it doesn’t seem to have worked very well.

Only a tiny fraction of the 179,000 nonprofits that have turned to Causes as an inexpensive and green way to seek donations have brought in even $1,000, according to data available on the Causes developers’ site. The application allows Facebook users to list themselves as supporters of a cause on their profile pages. But fewer than 1 percent of those who have joined a cause have actually donated money through that application. (…)

Since it was launched in 2007, Causes on Facebook has become the leader among a growing number of social networks — including Twitter, MySpace and Gather — used by nonprofits, which have been forced to find new ways of developing resources as contributions from wealthy donors and foundations decline during the recession. Causes is free for nonprofits but it costs them staff time to develop and maintain.

Data available from the Causes developers on Facebook show the application’s meteoric rise since its founding. More than 25 million of Facebook’s 200 million worldwide members have signed on as supporters of at least one cause, making it the third-most popular of the more than 52,000 applications on the site.

But just 185,000 members have ever contributed through the site, which sends credit card transactions on Facebook to the Bethesda-based Network for Good to distribute. The median gift through Causes is $25. The majority of Causes’ participants have received no donations through the site.

The median charitable donation through more traditional means is $50, according to the Center on Philanthropy.

My guess is that Causes would prove very successful if it managed to get off the ground, but group dynamics make that unlikely. If you can see all your friends donating to charity, there would indeed be a strong social incentive to make a contribution yourself. At present, though, very few people give through Facebook and the social pressure might run in the opposite direction. People often have a strong drive to conform. Perhaps we have something similar to the bystander effect: the absence of others visibly donating makes it socially risky to do it yourself. People don’t want to seem like they’re trying to show up their friends and are therefore reluctant to be one of the first few visible givers in their network. Since nobody wants to be the one to begin the self-reinforcing norm of open charitable giving, everyone gives in private or not at all.

Both the private-giving and public-giving equilibria seem pretty stable. I’m not too confident that many networks will escape from the private-giving equilibrium anytime soon, but I assume most will eventually (i.e. there is a nonzero chance of escape, which over an infinite length of time produces certainty). There are also ways for individuals to actively try to shift things to a new equilibrium. Taking the leap unilaterally may be too risky, but collusion among a small group of charity-loving friends could reduce the individual risk and increase the likelihood of success.

Beggars as Producers

Neat argument from Justin Ross at The Perfect Substitute: 

The jeweler is productive because they take this shiny rock out of the ground, polish it up, and sell it to consumers for an amount that covers their time and resources. They are productive because they satisfy a consumer demand, and as any economist will tell you, we do not pass judgment on consumer preferences. When you think of it this way, someone devoting resources to increase their appearance of desperation in order to be given a handout, is no less “productive” than the jeweler. They are simply trying to satisfy the consumer’s demand to reduce neediness. You can think, if you must, of beggars as suppliers of satiable neediness, and charity-givers as consumers of satiating neediness. In which case, every dollar you choose to hand out is not wasteful or even unproductive outcome of some signaling game with unintended consequences, but another example of gains from trade that maximizes the well being of society.

I basically agree, but it depends on whether the relevant argument in the giver’s utility function is ‘giving to the needy’ or ‘not refusing to give to the needy when the needy are before me’. I suspect it’s a little from column A, a little from column B. If the good is simply not refusing (i.e. beggars make us feel guilty so we would prefer to give than ignore, but would prefer to not be confronted at all), begging should be seen as a threat in Nozick’s sense of an offer we would rather not receive. I tend to think charitable giving does produce utility above the hedonic baseline: Justin’s argument is a good, though very counterintuitive, one.  We should note that beggars needn’t really be poor, but merely appear so. 

Some on the Left really are against anything voluntary…

Holy crap:

The Alliance Party [a socialist party which was once a significant force but is now, thankfully, irrelevant] says that New Zealand doesn’t need the “American culture of giving” promoted by the Prime Minister.

Alliance Party spokesperson Victor Billot says New Zealand already has its own culture of giving – where the people collectively provide for their social wellbeing through public goods such as health, education and welfare.

I like to give people the benefit of the doubt whenever possible, but it’s hard not to reach the conclusion that the Alliance is much more concerned with empowering the state for the state’s sake than with the welfare of the poor.