RESEARCH NUGGET #4

1. “The Demand for Products Linked to Public Goods: Evidence from an Online Field Experiment” by Brian McManus and Richard Bennet

McManus, Brian, and Richard Bennet. “The Demand for Products Linked to Public Goods: Evidence from an Online Field Experiment.” Journal of Public Economics 95(5): 403-415. Elsevier SD Freedom Collection. Web. 17 July 2014.

Link

Main Claim:
McManus and Bennet constructed this study to analyze data from an online store of a large anonymous nonprofit organization. They observed how the consumers’ purchases were correlated with the nonprofit’s charitable mission. The study also reflects the consumers’ choices in making direct donations to the charity. McManus and Bennet argue that consumers who initially purchased under a donation plan were more likely to return to the store and order more products again or contribute a direct donation. The pledge for this study was that the nonprofit organization would receive $1 or $5 from an anonymous outside group if the consumer purchased at least $10 of merchandise. This pledge generated 20% more revenue from consumers on the online store.

Nuggets:
1. “In order to handle potential consumer confusion about the donation messages, the NPO provided a phone number for customer service. The NPO’s customer service employees were prepared to give callers additional information about the donation pledges, but the NPO reported that no consumers called to request this information. The absence of phone calls provides some evidence that consumer exposure to multiple experimental treatments is not a serious concern.”

Due to the nonprofit organization receiving no calls from consumers, the prices of products and the donation pledge did not raise concerns for individuals. Individuals figure that making these online purchases is not only gaining revenue for the organization, but that the nonprofit was also receiving anonymous donations from outside sources with every $10 purchase. It was a win-win for both parties- consumers received their products, and the organization received revenue and donations. Individuals who purchase from a nonprofit organization online store know that their contributions are going towards the cause, so why wouldn’t they contribute a little more so the organization can receive a little more?

2. “Our study also complements the substantial literature on consumers’ choices in making direct charitable donations. Recent research on donation choices, largely with field experiments, demonstrates that consumers behave in interesting and sometimes
surprising ways, especially with regard to varying information about others’ actions. Eckel and Grossman (2003) find that financially equivalent inducements for donations can bring different results depending on how the inducements are presented, with matching
pledges from other donors out-performing rebates.”

How nonprofit organizations present their pledges often determines whether or not consumers will donate to their cause. Nonprofits have to respectfully influence consumers to dictate their donation choices. If another organization that the consumer is interested in offers more pledges and products, then the consumer will more likely choose that one over the other. People want to get the most out of their buck. This also includes knowing where their money goes and what their donations support.

 

2. “Trust But Verify? Voluntary Regulation Programs in the Nonprofit Sector” by Aseem Prakash and Mary Kay Gugerty

Prakash, Aseem, and Mary Kay Gugerty. “Trust But Verify? Voluntary Regulation Programs in the Nonprofit Sector.” Regulation & Governance 4(1): 22-47. Wiley Online Library. Web. 17 July 2014.

Link

Main Claim:
Prakash and Gugerty wrote this article to argue how false information about nonprofit organizations is leaked. They identify how volunteers for nonprofits are able to provide input and shape into organizations’ functioning and that they typically don’t reveal deceitful information about the organization. Prakash and Gugerty suggest that information problems are due to agency failures and slippages. They also focus on the role of donors as principals and they identify appropriate governance mechanisms for nonprofit organizations.

Nuggets:
1. “Scandals in high profile organizations such as the United Way, The Nature Conservancy, and the Red Cross have focused policy attention on the issue of nonprofit accountability (The Economist 2003; Christensen 2004). A prominent US nonprofit scholar notes “The nonprofit sector’s claims to exist for the public good are no longer being taken on faith, and more people believe they have a stake in the accountability of nonprofits” (Brody 2002, p. 472). A number of surveys document declining public trust in the nonprofit sector across a range of settings (Salamon 2002; Light 2004). A recent global opinion survey found that in some countries the nonprofit sector is now trusted less than government or business (Edelman 2007).”

Nonprofit scandals determine trust issues by donors for all other nonprofit organizations. So how do we know which organizations are telling the truth about their cause and where our donations are going? People have to rely on actions provided by the organization instead of pathos marketing strategies. If a nonprofit can provide proof and evidence of where donations are going or how they serve their purpose, then individuals will be more willing to trust the charitable cause and donate. It is how nonprofit organizations show the information about their cause, instead of only telling it.

2. “Nonprofit donors have incentives to reduce the information deficits they face. Because gathering and processing information is seldom without cost, they may seek informational shortcuts. Alternatively, they may impose stringent reporting requirements on the nonprofits they fund. For nonprofits, these are expensive ways to respond to governance problems. Credible nonprofits may be motivated to bear the cost of information provision themselves, and in the process, differentiate themselves from the less credible organizations.”

It is better for nonprofit organizations to release all of their information, without blocks, to possible donors instead of relying on reduced information. This can only lead to misinterpretations and individuals feeling as if they are receiving half-truths. When nonprofits provide necessary and honest information, they gain respect by followers and the potential to recruit more volunteers and donations. Nonprofit organizations should aim to be nothing less than a credible organization… and in order to do this, they should reveal reliable information to the public.

 

3. “Information, Community, and Action: How Nonprofit Organizations Use Social Media” by Kristen Lovejoy and Gregory D. Saxton

Lovejoy, Kristen, and Gregory D. Saxton. “Information, Community, and Action: How Nonprofit Organizations Use Social Media.” Journal of Computer-Mediated Communication 17: 337-353. Wiley Online Library. Web. 17 July 2014.

Link

Main Claim:
Microblogging services, such as Twitter, serves as communicative functions for nonprofit organizations. Lovejoy and Saxton argue that the use of microblogging by organizations has replaced traditional websites and allows for a better engagement with stakeholders. They examined the Twitter utilization of 100 largest nonprofit organizations in the United States, and the analysis revealed that there are three functions of microblogging updates- information, community, and action. They found that the utilization of social media by nonprofits has exposed new opportunities for public engagement.

Nuggets:
1. “Prior studies (e.g., Kent, Taylor, & White, 2003; Saxton, Guo, & Brown, 2007) have shown that nonprofit organizations have not been able to use websites as strategic, interactive stakeholder engagement tools. Perhaps this was due to not having the know-how or the staff to create more interactive sites with feedback options and discussion boards. The advent of social networking sites like Facebook and Twitter have taken away this excuse. These sites are free and have built-in interactivity. Any organization big or small can create a site and start building a network of friends and followers with whom they are in almost real-time contact.”

Although personal websites for nonprofit organizations are a good tool to inform individuals about their cause and sell merchandise and accept donations, social media sites promote interactivity and communication that nonprofits need in order to gain supporters. Social media allows for endless opportunities and engagement with all ends of the world for organizations. They can receive useful feedback and build on their cause through followers, petitions, and reports. The utilization of social media can accomplish many changes and conveniences for nonprofit organizations.

2. “The advent of social media has opened up even greater possibilities for interpersonal and organizational communication. At the interpersonal level, scholars have examined the role of Facebook in building social capital (Ellison, Steinfield, & Lampe, 2007). Twitter has also been the focus of a growing body of interpersonal research (e.g., Java, Song, Finin, & Tseng, 2007; Naaman, Boase, & Lai, 2010). While they provide evidence of a connection between individual users’ tweet profiles and community formation (Java et al., 2007), these studies do not so much demonstrate the positive social effects of social media so much as the ability of Twitter to serve as a vehicle for narcissism, opinion-making, and information-sharing. By contrast, studies by Hughes and Palen (2009) and Smith (2010) have shown how Twitter can serve as a valuable communication and information-sharing resource during emergency-relief efforts.”

Many individuals use social media sites, such as Facebook and Twitter, to retrieve information and news. These sites share news from around the world, and people are able to reply and express their opinions about events. If nonprofit organizations want their cause to be exposed, the fastest way for them to do so would be through social media. This will also be the fastest way for them to gain supporters and have their information shared throughout the world. The more followers they have, the more their purpose will be leaked.

 

Synthesis:
My three sources have very little in common. My first article is about a nonprofit organization’s online store and how their pledge generated an increase in sales. My second article is about nonprofits’ information leaks and how volunteers help with the organizations’ functions. My third article focuses on the utilization of social media by nonprofit organizations and their tools for better engagement. Though these three articles differ greatly from one another, they all revolve around the internet and how they express their cause and communicate to individuals. The first source does this through their online store and pledge, the second discusses the role of donors and volunteers, and the third represents the release of information through social media.

Out of all three sources, the third article will be used the most for my inquiry project. It is easy to read and is directly related to one of main claims.

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