The Effectiveness of On-line Networking For Non-Profits
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The Effectiveness of On-line Networking For Non-Profits
The Effectiveness of On-line Networking For Non-Profits (What Can Be Gained?) By Steve Feder April 30th, 2009 Haverford College Senior Thesis Abstract: The primary focus of this study is exploring whether or not to recommend on-line networking as an effective marketing tool for non-profits. Three key marketing goals are identified: donations, volunteers, and new connections. A survey containing questions involving these three goals was sent out to non-profits located on Charity Navigator and Facebook. 254 non-profits responded to the survey. Analysis of the data indicates that currently, the majority of charities using on-line networking are attracting many new connections, but are not receiving substantial numbers of donations or volunteers. Table of Contents Introduction: 1-2 Literature Review: 3-28 Implications of Literature Review: 28-30 Data Description: 30-34 Procedure: 34-37 Graphical Analysis: 37-46 Conclusion: 47-49 Bibliography : 50 Data Appendix: 51-55 Graphs and Figures: 55-66 1 Introduction: This thesis is a study of whether or not on-line social networking is effective for non-profits. Non-profits can market themselves on sites such as Facebook, MySpace, Linked In, etc. They can attract donations and volunteers through these sites as well as advertise for events. Working as an intern for Philanthropy Action, an on-line newspaper discussing current issues in charitable giving, I sent out a survey to randomly selected non-profits from two different sources. Using a list from Guidestar (a non-profit search engine), I sent the survey to all United States non-profits with revenues ranging from 1 million to 5 million dollars. I also sent the survey to a group of randomly selected nonprofits that advertise on Facebook with no specific revenue range. The survey contained questions concerning how long non-profits have participated in on-line networking, how much money they have raised, how the results of on-line networking have changed over time, and other related issues. I received 256 responses from the non-profits I surveyed, 72 from Facebook and 184 from Guidestar. The goal of my thesis is to determine whether or not I should recommend on-line social networking as a beneficial marketing method for non-profits. To accomplish this goal, I have investigated whether non-profits can effectively use on-line social networking tools to gain donations, volunteers, and new connections with the public. A new connection is defined as a member of a charity’s on-line social networking group who had no previous connection to the charity. I measure new connections as the percentage of people who join a non-profit’s on-line networking group that had no previous connection to the charity. I recognize that donations, volunteers, and new 2 connections are not the only ways to use on-line networking. However, they are the most tangible and appear to offer the most appropriate way to measure effectiveness. My preliminary analysis focuses on how much donations, volunteers, and new connections non-profits have gained from their on-line networking activities. The majority of charities gained only very small numbers of donations and volunteers. There were a wide range of responses concerning the ability to generate new connections. Some charities have generated a large proportion of new connections, while others have not. My secondary analysis focused on the different factors that influence the success at attracting donations, volunteers, and new connections. I asked each non-profit to answer such questions as how much time it spends constructing social networking profiles, when it began on-line networking, and which personnel (executives, volunteers, etc.) are doing the work. My study found that charities that began on-line networking in 2005 or earlier are considerably more successful attracting donations and new connections than charities that began on-line networking campaigns between 2006 and 2008. Furthermore, charities that update their on-line networking profiles at least an hour a week generate substantially more donations and volunteers than charities than spend less than an hour. The limited sample size of my data set prevented me from reaching stronger conclusions and I hope my study is just the beginning of the exploration of the benefits and costs of on-line networking for non-profits. 3 Literature Review: Because on-line social networking has only recently become a popular tool for non-profits, the literature that addresses its effectiveness is very limited. Therefore, to guide my study, I have reviewed articles concerning a range of different subjects including the traditional marketing practices of non-profits, how non-profits have used the internet as a whole, and politicians’ participation in on-line social networking. To provide some background, I begin my literature review analyzing articles on the economic state of non-profits and common methods non-profits use to attract volunteers and donors. It is important to discuss non-profits’ economic state because the expected funds available to organizations strongly impacts their ability to pursue and support marketing ventures on-line. Furthermore, analyzing traditional marketing methods is useful because it highlights the areas where non-profits have room for growth and improvement. The second part of my literature review focuses on articles that discuss how nonprofits have structured their operations on the internet, which contain limited but insightful data on non-profits’ on-line social networking efforts. The overall evaluation of internet marketing is helpful because it demonstrates the potential of on-line advertising and publicity campaigns and also shows the gaps in communication between donors, volunteers, and charities that social networking may be able to fill. I conclude the literature review by discussing articles on how politicians have employed social networking sites to gain publicity, popular support, donations, and votes. The political arena provides useful information because candidates have been 4 participating in on-line social networking for much longer than non-profit organizations. Many studies evaluate whether or not politicians have used Facebook and MySpace effectively. I analyze the results of candidates’ on-line efforts to see how successful they have been and see if their success can be applied to non-profits. In August 2004, a report was published on employment and earnings trends for non-profits from 1990 to 2004 (Dwiggens, Spitzberg, and Roesch, 2004). The report is particularly applicable because it discusses how non-profits fared in the recession of 2001, which can be used to predict how non-profits will be affected by the current recession. The data for the study came from the Bureau of Labor Statistics (BLS) Current Employment Statistics payroll survey. The survey is sent out monthly and comprises approximately 400,000 public and private for-profit and non-profit businesses throughout the United States. The authors used the “Membership associations and organizations section” of the survey which was designed to report earnings, employment, and other data for various types of non-profits. Traditionally, non-profits have maintained their performance despite economic downturns. The authors of the study even go so far as to say that non-profits are often asked to support the nation during recessions, and make up for job losses and decreasing opportunities in the government and private sectors. However, non-profits suffered noticeably as a result of the aftermath of September 11th. From 1990 to 2004, the average employment growth rate for non-profits was 2.4 percent. This was noticeably higher than the total employment growth rate of 1.4 percent. However, from 2002 to 2004, there was a large drop in the employment growth rate in the non-profit sector from a high of 6 percent in 2002 to .5 percent in July 2004. 5 The employment growth rate was still positive, but the earnings and hours worked by non-profit employees declined. From 1990 to 2002, the hours worked by non-profit employees remained fairly constant in the range of 30.9 to 31.7 in various years. However, after 2002, the average weekly hours worked declined by 4 percent, dropping below 30 for the first time in over a decade. The weekly earnings of non-profit workers also decreased significantly. From 2003 to 2004, weekly earnings decreased by 5.2 percent after accounting for inflation. Reductions in earnings can be caused by decreases in hours worked and by the lowering of hourly wages. As stated earlier, workers’ hours were reduced from 2002 to 2004. However, workers also suffered decreases in their hourly wages. From 2003 to 2004, real hourly wages fell by 3.9 percent. State by state analysis showed similar patterns to the national data. The authors provide two hypotheses for the reduction in wages and hours worked by non-profit employees. The good will resulting from 9/11 caused greater demand for non-profit jobs, allowing non-profits to decrease wages. Furthermore, the U.S. economy as a whole has been moving towards more part-time work and the non-profit sector could have been affected by this trend. However, neither of these hypotheses explains the drop in the employment growth rate. Non-profits have had to deal with an increase in costs due to rising health insurance premiums and the fact that their services are in greater demand because of the suffering economy. The increased costs are most likely the reason for the decreased employment growth rate. Not only do increased costs reduce the funds non-profits have available to pay their existing employees, they also limit the available income to hire new ones (Dwiggens et all., 2004). 6 Yet, regardless of the reasons for non-profits’ struggles after 9/11, the conclusions of the study are clear. Unlike in past recessions, 9/11 caused tangible negative consequences for non-profits. Whether the current recession will have a similar impact is unclear. However, one can gather from this study that it would be short-sighted to assume that non-profits will not be harmed by present economic conditions. Despite the potential of more limited funding for non-profits, there are still ways they can improve results without increasing income. The Volunteer Management Capacity Study attempted to identify how many volunteers charities need to function efficiently and the best methods to recruit these volunteers (Urban Institute, 2004). The study looked at a representative sample of U.S. charities and religious institutions. 2,993 charities were randomly selected from the 214,995 charities who filed a 990 form with the IRS. 1,003 religious congregations from varying faiths and denominations were randomly selected out of the 382,231 provided by the American Church List. Each of the organizations selected were called multiple times and asked to answer a series of questions. The response for the survey was 69 percent. The study found that four out of every five charities use volunteers in some fashion. Furthermore, nine out of ten charities reported that they have the capacity to take on more volunteers. The median of the sample could afford to take on twenty new volunteers. The charities were asked to describe the various problems they encounter in their volunteer programs. The results of the survey led the authors to identify five common problems charities face. Sixty percent of charities stated that recruiting volunteers during the workday and lack of adequate funds to support volunteers were problems. Sixty-seven percent stated recruiting a sufficient number of volunteers was an 7 issue. Sixty-two percent stated that recruiting volunteers with the right skills was problematic, and 55 percent stated that a lack of paid staff to train and supervise volunteers was a concern. Lack of funding is an issue that goes beyond the efficiency of volunteer recruitment programs. However, the study also notes that some of the problems facing volunteer programs can be improved without increases in income. The survey identified nine practices from previous literature that produce efficient and successful volunteer programs. Though on-line social networking is not related to all of the practices, it can be used as a tool to promote many of them. The survey asked the charities to describe to what degree they have implemented the recommended practices. Only 35 percent of the charities stated that they make a significant effort to recognize the contributions of volunteers. Thirty percent stated that they have methods to measure the impact and results of volunteering. Finally, only 44 percent of charities stated they had detailed written policies and job descriptions for volunteer involvement. On-line networking could potentially help solve these issues at low cost to charities. Facebook allows charities to post documents and announcements as well as directly contact specific groups of advocates. Non-profits could post job descriptions on social networking websites, leading them to attract more qualified and knowledgeable volunteers. They could also recognize volunteers’ accomplishments through group or individual messages or by announcing their gratitude for volunteer efforts through the bulletin board available on the charities’ networking homepage. Another way on-line social networking could help solve some of charities’ marketing issues is by providing background on potential volunteers. Eighty-two percent of the non-profits surveyed stated that they needed more information about the people in 8 their community who want to volunteer. Thirty-nine percent described the need for more information as great. The need for more information is a problem that the internet and specifically on-line social networking could address. Facebook, MySpace, and other social networking services offer inexpensive (even free) ways to gain information on which people are interested in volunteering, what causes and social problems they want to help solve, and some background information about them. The authors of this study do not mention the internet as a potential way for nonprofits to increase the number of volunteers. They highlight the need for the establishment of volunteer outreach centers and the need to give communities greater access to information about the charities. They also mention the importance of training staff to work efficiently with volunteers to produce the best possible results. Yet, many of their recommendations require greater income, and given the state of our economy and the previous research, we should not anticipate gains in funding. Due to the budget constraints of U.S charities, the internet and social networking could be the easiest way to act on the study’s findings by providing low cost opportunities to gain more information and effectively communicate with volunteers. (Urban Institute, 2004) On-line social networking appears to have great potential to improve the relationship between volunteers and charities. However, charities’ fund-raising problems do not seem to lend themselves to solutions through social-networking campaigns. In August 2002, a study was published describing how U.S. non-profits conduct their fundraising activities (Hagar, Rooney, and Pollack, 2002). The authors created a survey that they sent out to randomly selected non-profits obtained from the 2000 Core File, which is a list of all the non-profits in the United States created by the National Center for 9 Charitable Statistics. The authors rejected all non-profits that had less than $100,000 in gross receipts. The authors sent out their survey to 3,082 non-profits and received 1,540 responses. The authors’ survey generated some surprising results. Sixty-three percent of nonprofits responded that they had no full-time fund-raising staff. Only 14 percent reported that they had more than one full-time fund-raising staffer. Non-profits that received over one million dollars a year in grants and contributions were more likely to employ fundraising staff. However, even for that specific group, only 43 percent employed more than one full-time staff person. The survey also asked whether non-profits employed any fundraising staff part- time or full-time. The percentage of charities employing at least one fund-raising staff member increased slightly. One possible explanation why non-profits seem to have limited fund-raising staff is that they hire consultants to organize fund-raising activities. Yet, the data indicates that 92 percent of non-profits do not hire professional fundraisers. If fund-raising staffs are uncommon, someone in the non-profit’s organization must be doing the fund-raising. Executive directors seem to be bearing a significant part of the fund-raising load. Survey respondents were asked to rank executive directors, volunteers, development staff, board members, and others on a 1 to 5 scale, 5 being the most involved in fund-raising activities. Survey respondents on average gave executive directors a 4. This was significantly higher than the average rating of any other group. However, fund-raising is not these executives’ primary duty. Only 3 percent of respondents stated that executives spend more than half their time fund-raising. Though volunteers, board members, and development staff do not spend large amounts of time on 10 fund-raising, they each participate in the process. For example, three out of four organizations surveyed used volunteers in some capacity to do fund-raising. The diverse groups of people participating in fund-raising demonstrate that people with limited experience and credentials in the area are playing substantial roles. The study did not measure the success different groups have had in their fund-raising efforts. Yet, the fact that people who are predominately assigned to other tasks are involved in the fundraising process could indicate a lack of efficiency (Hagar et al., 2002). The authors formed a number of important conclusions from their data. Most non-profits do not have extensive fund-raising staff. The authors separated non-profits into two groups: those who do not rely on grants and donations to fund their operations and those who need yearly contributions to continue their work. There is a significant portion of non-profits who employ no personnel for fund-raising. These organizations most likely rely on endowments and do not need fund-raising staff. The findings of the study are more easily directed at the non-profits who need fund-raising to generate income. Relying on executives, volunteers, and other personnel who do not necessarily have experience in fund-raising is a difficult way to achieve success. Hiring fund-raising staff or pursuing the services of professional firms may be costly, but it still might lead to better results. The most recent report on non-profits’ marketing activities was published in May 2008 (The American Marketing Association, 2008). The study assessed the methods nonprofits use to market themselves and the problems they encounter. The organization surveyed 1,012 non-profits from a range of fields including health care, social services, 11 universities, professional, and arts organizations. All the participants were marketing executives and 64 percent were senior marketing directors. When asked to rate their highest marketing priorities, small, medium-sized, and large organizations were all most likely to list building awareness as their top priority. Still, only 33 percent of the total non-profits surveyed gave this response, indicating a large variety of answers. Generating revenue was the second most frequent response for non-profits’ top marketing priority and was listed by about 20 percent of those surveyed. Member acquisition and retention as well as customer engagement were the third and fourth most likely responses. When distinguishing by organization type, the patterns remained the same except in the professional association category. Forty-three percent of professional association executives described member acquisition and retention as the most important issue. Only 12 percent listed building awareness as having top marketing priority. The survey also asked participants to rate on a 1 to 5 scale how effective different methods were at building awareness, revenue generation, member acquisition, positioning and branding, and customer engagement. To build awareness and visibility, public and community relations received the highest average rating. Not surprisingly, development and fund-raising were considered the most effective at revenue generation. Participants gave only average ratings to website and digital media. According to the marketing executives, websites and digital media are most effective at positioning and branding and least effective at revenue generation. This finding was very similar to my results. 12 The survey not only investigated marketing methods, but also gathered data on non-profits’ marketing challenges and problems. Non-profits were asked to list their three greatest marketing challenges today and five years from now. Forty-four percent listed revenue generation as one of their three greatest challenges today and 41 percent stated that it will be one of their three greatest challenges five years from now. Interestingly, building awareness and visibility was the most common listed challenge today (49 percent), but only 20 percent of organizations predicted that it would be one of their three greatest challenges five years from now. The reason for this disparity could be growth through the internet. Non-profits have just begun to explore the benefits of on-line marketing and progress through this medium could improve their awareness and visibility in the future. Finally, 11 percent of non-profits described entering new markets and channels as one of the three greatest challenges today, but the percentage increased to 28 percent when non-profits evaluated challenges five years from now. The change could be explained by the fact that as the younger generation ages, non-profits will be forced to use on-line tools like social networking to recruit volunteers and donors. Problems associated with marketing are very much related to budgeting. Regardless of the methods, marketing efforts will not be successful unless non-profits have enough money to spend. On average, a non-profit's marketing budget was 2 percent to 3 percent of the non-profit's total budget. Forty-four percent of non-profits spend less than $50,000 on marketing and 56 percent spend less than $100,000. Similar to the findings of previous research (Hagar et al., 2002), not only do most non-profits spend very little on marketing, they also employ limited marketing staffs. Forty-two percent of 13 non-profits have less than two full-time marketing staff members and less than 20 percent have staffs with four or more people. The American Marketing Association’s report can help non-profits to better structure their marketing efforts. Non-profits do not have a lot of money to spend on marketing endeavors. However, many rely on their marketing departments to perform important functions. Forty-five percent of non-profits stated that their marketing department was solely responsible for building awareness. Due to the importance of marketing to building awareness and the limited funds available, the internet and social networking could be critical tools for marketing personnel of non-profit organizations. Social networking has had tangible success building name recognition and awareness for charities. Over 20 million people have joined Facebook groups sponsored by charities. On-line social networking is not currently an effective fund-raising tool, but raising money is not the primary role of most marketing staffs. Forty-one percent of non-profits stated that fund-raising was not a part of marketing department duties and only 15 percent stated that the marketing department was solely responsible for raising donations. The American Marketing Association’s findings indicate that despite budget constraints, there is substantial room for improvement in marketing operations and on-line social networking could be one way to achieve growth. (American Marketing Association, 2008) The internet provides great potential to improve donor and volunteer recruitment for non-profits. The Online Marketing Nonprofit Benchmark Index Study analyzed the prevalence and effectiveness of on-line marketing for various groups of non-profits (Bhagat et al., 2007). The survey included thirty non-profit organizations whose activities 14 were monitored from July 1, 2005 to June 30, 2006. The participants were divided into three different sizes based on the non-profits’ amount of revenue. Charities were labeled small if they had less than $5 million dollars of revenue, medium if they had between $5 and $20 million dollars of revenue, and large if they had greater than $20 million dollars of revenue. The charities were also divided into six categories based on subject matter: health, animal welfare, environmental, Christian, public affairs, and public broadcasting. The study asked participants to disclose a range of information including the organizations’ operational budgets, monthly website traffic, registration rates, and on-line donations. The authors generated notable findings from their data. The total amount of money raised on-line by non-profits grew substantially from 2005 to 2006. The median donation growth rate for non-profits was 27 percent and the median total number of donations was $362,485. The amount of money raised was directly related to the number of e-mail addresses non-profits had access to. Organizations with more than 100,000 email addresses raised two or three times the donations of those with smaller files. Motivating on-line visitors of organizations’ homepages to register e-mail addresses and other contact information appears to be highly related to fostering lasting relationships and attracting donors and volunteers. Not surprisingly, the greater the amount of web traffic (the number of people who visit your homepage), the more e-mail addresses an organization receives. Finally, the authors concluded that organizations with mid-size budgets are capable of raising significant donations. Although those with large budgets still raise the most money, the growth rate of on-line donations for mid-size nonprofits is greater than the growth rate of donations for large non-profits. Mid-size non- 15 profits experienced a growth rate of 45 percent from 2005 to 2006, compared to a 20 percent growth rate for large non-profits, and an 11 percent growth rate for small nonprofits (Bhagat et al., 2007). The Online Benchmark study evaluated whether various groups of non-profits have been able to use the internet to pursue donations, on-line traffic, and direct contact with the public. A more recent study investigated non-profits’ correspondence with a specific group of individuals (Convio Inc., 2008). The study analyzes the interactions of “wired donors” with non-profits. 23 different non-profit organizations from a variety of sectors participated in the study. These non-profits were asked to provide lists of all donors who contributed at least $1,000 on-line over the past eighteen months and who had given the non-profits access to their e-mail addresses. The non-profits provided approximately 39,000 donors’ names and all of the donors were asked through e-mail to complete an on-line survey. 3,443 people responded to the survey and the data was weighted so as not to over-represent any particular charity. The poor response rate raises concern regarding the reliability of their results. Most of the study’s participants had high incomes, gave large and consistent donations to charity, and were comfortable using the internet. More than 50 percent of respondents made over $100,000 per year. The average yearly contribution for the respondents was $10,896 and the median yearly contribution was $4,500. Finally, the wired wealthy spend on average 18 hours on-line per week. The most obvious conclusion of the findings is the “wired wealthy” are not afraid to give money on-line. Eighty percent of the wired wealthy stated that they have donated money on-line. Fifty-one percent stated that on-line giving was their preferred method to 16 contribute to charity and only 30 percent of the participants preferred to contribute through the mail. What might be even more important than the slight majority of people who currently prefer giving on-line is that 46 percent of the participants stated they are likely to make more donations on-line in the future compared to the 2 percent who stated that they will decrease their on-line donations. The reasons people preferred to give on-line were multi-faceted. Seventy-two percent of respondents agreed with the statement “On-line giving is more efficient and helps charities reduce their administrative expenses.” Seventy percent agreed that “Online giving lets you make a gift immediately when you are thinking about it, which otherwise you might forget,” and 68 percent agreed that “On-line giving lets charities respond more quickly in the event of a crisis or emergency.” What is notable about these responses is that the donors seem very concerned about how on-line activities affect the charities’ operations and the success of their missions. (Convio Inc., 2008) Participants agree that on-line contributions have clear benefits for charities. However, many express skepticism over the security of the on-line giving process. The greatest concern of participants seemed to be that charities would use their e-mail addresses in an undesired manner. Fifty-five percent were worried the charity would send them too much e-mail. 54 percent were concerned that “e-mail solicitations might be fraudulent,” (Convio Inc., 2008) and 51 percent were worried that the charity would share their e-mail and contact information with others without their permission. What is notable about these concerns is that for the most part, they are easy to overcome. Charities can regulate how much e-mail their donors receive and they can gain donors’ trust by thoroughly describing their operations and methods and keeping donors informed of the 17 results and success of their contributions. Interestingly, only 45 percent stated they were satisfied with off-line donation procedures. This significant percentage reveals that many people are looking for a better source of interaction with their charities and on-line services could fulfill that need. The study only briefly mentions the wired wealthy’s use of on-line social networking tools. The limited data indicates that on-line networking is not a strong source for marketing campaigns aimed at this sub-group of the population. YouTube is the only social networking tool that is used by a majority (51 percent) of the wired wealthy. MySpace, Facebook, Flicker, and LinkedIn are much less common. Furthermore, out of those who do use MySpace and Facebook, a significantly smaller percentage check their profiles frequently. Of the 14 percent who are on MySpace and the 9 percent who are on Facebook, 15 percent of MySpace users and 33 percent of Facebook users check frequently. The study also asked participants to describe how willing they would be to interact with their charity through social networking tools. Thirty-four percent of respondents said they would view an on-line video posted by a charity. Furthermore, 31 percent said they would forward a message from a charity to a friend or colleague. However, only 9 percent said they would join a Facebook or MySpace group related to a charity or cause. Moreover, non-profits seem to be having difficulty attracting the 9 percent who are willing to join Facebook and MySpace groups. Only 3 percent of survey participants stated that they joined a MySpace or Facebook non-profit group. These small percentages indicate that it will be difficult to connect to the wired wealthy through social networking tools. YouTube and on-line videos appear to be the most popular 18 source to gain the attention of the wired wealthy. However, YouTube is not an effective tool to recruit and organize supporters of charities because it is restricted to video viewings. Facebook and MySpace offer far greater opportunities to connect with and mobilize users, but the wired wealthy seem reluctant to use these sources to interact with non-profits. Clearly, the majority of the wired wealthy are not using social networking to connect with non-profits. Yet, homepage websites of charities do not appear to be a commonly used tool either. Only 7 percent of the wired wealthy donors visited their charities’ websites at least once a month and 61 percent visited homepages once or twice a year. Most of the wired wealthy donors were unhappy with the charities’ homepage web-sites. Less than 10 percent of participants strongly agreed with the statement that most charities’ websites are well designed and only 28 percent strongly agreed that charities’ websites make it easy to donate. The study does not explicitly ask how the wired wealthy gain information about non-profits. However, an interesting note is that it did discover that slightly less than 50 percent of participants used Charity Navigator (an independent non-profit research site) to investigate charities’ financial information. The authors reach a number of interesting conclusions based on the study’s findings. The majority of the wired wealthy expressed concern about the way charities use their e-mail addresses and the way they structure their websites. Making websites more inspiring and easy to use for donors is very important. Regarding e-mail addresses, providing donors with control over the content and frequency of the messages they receive from charities is essential. Different donors desire different levels of contact. Catering to the needs of individuals is ideal to achieving donor satisfaction. However, 19 since most charities do not have the resources to cater to individuals, dividing donors into groups by desired level of interaction could also be effective. The conclusion directly related to my study is that social networking sites do not appear to be an effective way to interact with the wired wealthy. It is a common perception that social networking sites target a younger audience and this study reinforces the opinion that those over the age of 30 are not frequent users of this method of communication. (Convio Inc., 2008) Politics provides a more detailed look at how effective on-line social networking can be at achieving tangible results. Non-profits do not appear to have mastered the internet, let alone social networking sites. On the other hand, politicians seem to have more experience and expertise with internet campaigning and have successfully used the internet to improve their chances of winning elections. A recent article published by the Pew Research Center assessed the internet’s impact on the 2008 election (Rainie and Smith, 2008). The data in the report is based on telephone interviews performed between April 8 and May 11, 2008 by Princeton Survey Research Associates International. Approximately 23,000 phone numbers were dialed, but only 2,251 complete responses were given. At least ten attempts were made to call each household. Interviewers asked to speak to the youngest male over eighteen years of age in the household. The study found that the internet had a noticeable effect on the election and political activity on the internet increased substantially from the 2004 to the 2008 presidential election. In the spring of 2008, 40 percent of Americans used the internet to receive news about the presidential campaign, compared to 31 percent in the spring of 2004. The percentage of all adults who donated on-line to any candidate increased from 2 percent in the fall of 2004 to 8 percent in the spring of 2008. Finally, out of all internet 20 users, 23 percent in 2008 looked for campaign information on a typical day compared to 13 percent in 2004. It appears that the primary way information was obtained about the campaign on the internet was through e-mail. Out of all the users of e-mail, 35 percent received emails from presidential campaigns at least once a week and 14 percent say they received such e-mails on a daily basis. However, though e-mail may have been the primary source of communication, social networking sites also played a prominent role. Thirty-three percent of all internet users have a social networking profile. Furthermore, 40 percent of these users have become “engaged in political activity of some kind” through the site. The percentages are much higher for younger age groups. Sixty-six percent of people under the age of thirty have a social networking profile and half of these younger users “get or share information about the candidates and the campaign.” The authors make very clear that the political activities on these social networking sites are not simply befriending candidates. Twenty-nine percent of social networking users found out about friends’ political viewpoints and interests. Twenty-two percent obtained information about candidates or campaigns. Ten percent recruited friends to support candidates, and 9 percent started or joined a political group. (Rainie and Smith, 2008) Smith’s study does not address in detail the effect of social networking on the outcome of political elections. In 2007, The American Political Science Association published a study on the effect of Facebook political activity on the 2006 mid-term elections (Williams and Gulati, 2007). The study accomplishes three important goals. It describes the differences between political social networking campaigns and candidates’ websites. It illustrates how candidates have used on-line social networking as an election 21 tool, and it also analyzes the results of candidates’ on-line networking efforts. Candidates have direct control of the messages and ads they show on their homepage websites. Unlike homepage websites, candidates cannot always influence the content on social networking sites. Social networking sites maintain a certain degree of power over subject matter. Sometimes, the sites will accommodate candidates’ needs. For example, You-Tube took off line a controversial video of McCain during a campaign stop. Yet, for the most part, social networking sites’ main goal is to satisfy its users. Users can comment and react to almost all of a political candidate’s activities, making it difficult for a candidate to convey a unified message or stance. Moreover, social networking sites are more willing to appease users’ wishes than candidates’ desires. When liberal activists complained about the removal of the McCain video, YouTube placed it back on-line. The study also gives the background of the progress of political on-line social networking. Before 2006, there were few effective ways for candidates to employ social networking. Candidates were not allowed to operate their own profiles. The only way they could reach users was by motivating constituents to establish profiles and groups in support of their candidacy. Furthermore, even when sites began to allow candidates to create their own profile, they were limited to interacting with 5,000 friends. In 2006, Facebook began to accommodate politicians’ needs. Facebook’s Election Pulse campaign allowed candidates to create their own profiles, post photographs, messages, and videos on these profiles, and provide access to all Facebook users. Facebook’s Election Pulse campaign attracted the attention of many politicians. Thirty-three percent of U.S. Senate candidates and 10 percent of U.S. House candidates created Facebook profiles compared 22 to the 21 percent of U.S. Senate candidates and 2.7 percent of U.S. House candidates who created MySpace profiles. Politicians clearly embraced Facebook’s new political measures. However, the authors wanted to explore whether or not Facebook had a measurable effect on election results. The authors constructed two different sets of regressions. The first regression examined the effect both the candidate and the opponent’s Facebook activity had on the candidates’ voting share. The authors created their own variable, “Facebook activity” by giving a 1 to candidates who updated their Facebook profile and a 0 to those who did not. The second regression analyzed the effect the natural log of the number of Facebook supporters registered for a candidate and the natural log of the number of Facebook supporters for the opponent had on their final voting shares. In both sets, different regressions were composed for incumbent races and open elections. The control variables included for incumbent races were party, incumbent’s voting record, the quality of the challenger, whether or not the incumbent had been involved in a scandal, and a variety of other factors. The control variables included for open seat elections were district ideology, financial advantage, and relative experience, among others. The authors focused on U.S. House races rather than U.S. Senate races because there were only 29 incumbent Senators running for re-election and 8 open seat races. They chose not to combine the Senate data with the House data because past research indicates that different models must be used for each. The authors’ initial multivariable regression analysis showed that incumbents that updated Facebook profiles did not perform any better than incumbents who did not. However, in secondary analysis, when substituting the natural log of Facebook 23 incumbent supporters and challenger supporters, the results indicate that a 1 percent increase in the number of Facebook supporters for incumbents increases their final vote percentage by .011 percent and a 1 percent increase in the number of Facebook supporters for challengers reduces incumbents winning percentage by .015 percent. These changes do not appear to be very large, but stated in a different context, the numbers prove to be important. An incumbent who increases his Facebook supporters by 100 percent would be predicted to gain a 1.1 percent greater share of votes than if he did not increase his Facebook supporters. Furthermore, a challenger who increased his Facebook supporters by 100 percent would be estimated to reduce the incumbent’s share of victory by 1.5 percent. These statistics indicate that in a close election, increasing the number of Facebook supporters could conceivably change the outcome. One important factor to note is that there are diminishing returns to increasing supporters. For example, if an incumbent increases his Facebook supporters from 10,000 to 20,000, he will be predicted to gain an additional 1.1 percent of the vote share. However, it will take an increase of 20,000 more supporters to gain an additional 1.1 percent. Williams and Gulati’s study appears to demonstrate that on-line networking efforts can lead to tangible results. However, the authors note that it is unclear whether or not Facebook activities actually caused changes in voting patterns or whether increases in the number of Facebook friends simply demonstrated that candidates were gaining more popularity outside of Facebook. One definite conclusion that can be reached from the study is that on-line social networking sites are not all the same. Facebook was clearly more useful to politicians than MySpace because Facebook catered to the needs of politicians through its Election Pulse campaign. This fact suggests that for my study, it 24 will be important to differentiate between on-line networking sites and evaluate whether each separate site is an effective marketing tool for non-profits. (Gulati and Williams, 2007) In August 2008, The Social Science Computer Review published a study on the effects of MySpace and YouTube on political elections (Gueorguieva, 2008). The author makes a number of convincing points concerning the importance of on-line social networking. MySpace, YouTube, and other social networks attract a very large audience. MySpace, created in 2003, has greater than 150 million profiles. YouTube contains more than 100 million videos. Furthermore, both MySpace and YouTube have had enormous growth. MySpace grew by 367 percent from 2005 to 2006 and each day approximately 65,000 new YouTube videos were uploaded. The large number of users and expansion of social networking sites make them ideal for influencing the public to vote for a candidate and attracting volunteers and donors for political campaigns. One concern many people have had involving marketing and publicity on social networking sites is that the users are teenagers and college students who have low incomes and little influence. Gueorguieva believes this is a misconception. Reimer concluded that between 48 percent and 65 percent of YouTube users are between 35 and 64 years of age (as cited in Gueorguieva, 2008). Furthermore, according to a 2006 MediaMetrix study, 52 percent of MySpace users are 35 or older. Moreover, the demographics on social networking sites are changing substantially. Twelve to seventeen year olds accounted for 24.7 percent of MySpace users in August 2005, but made up only 11.9 percent in August 2006 (as cited in Gueorguieva, 2008). As the United States 25 becomes increasingly technology savvy, the average age of users should continue to climb. Despite the fact that social networking attracts a vast number of people and that the older generation is becoming more comfortable using such sites, there is still skepticism whether marketing campaigns on social networking sites can generate tangible results. President Obama’s success using social networking sites is well known. Obama clearly was able to use on-line social networking far more effectively than his competitors. Gueorguieva mentions that on MySpace, as of April 30, 2007, Obama had 161,720 friends. This was close to three times as many as any other candidate. Also, as of April 30, 2007, Obama had 2,791,315 views on YouTube, almost four times as many as any other candidate. The publicity and positive media attention Obama received through social networking were clearly valuable to his campaign. However, his results are not very applicable to the non-profit world because Obama was in a very unique position. Not only was he one of a select few of presidential candidates, he also was the first strong minority candidate for President and a very charismatic leader who the younger generation could relate to. By contrast, there are thousands of non-profit organizations competing for volunteers and donors throughout the United States. Many of these nonprofits have similar missions and it is difficult for these organizations to distinguish themselves from one another. What is particularly interesting about Gueorguieva’s study is that it states that local politicians as well as presidential candidates have been able to attract donors and volunteers through social networking. This is quite different than my findings, which 26 indicate that the majority of non-profits have not been able to attract substantial amounts of donation and volunteers through on-line networking. Gueorguieva stated that on-line networking campaigns aimed at attracting volunteers have been particularly successful. MySpace users are three times as likely to interact with political candidates. In 2006, state comptroller Peter Franchot recruited 80 percent of his volunteers through MySpace and Facebook. These volunteers combined to make 15,000 phone calls and mail out 50,000 brochures, spurring Franchot to victory in a Maryland primary Social networking efforts to attract donors have had less tangible results. More than half of the contributors to the Democratic Party and a quarter of the Republican contributors have made at least one donation on-line. Yet, this statistic is not specific to social networking. Few social networking campaigns have been able to generate a significant amount of donations. One example that contradicts this lack of fund-raising success was the campaign of Chuck Poochigian, a Republican running for California Attorney General, who joined MySpace and saw his on-line donations increase by 50 percent after only two months. Gueorguieva concludes her study by discussing both the challenges and future outlook for social networking. She mentions that social networking sites are subject to selection bias. People who use social networking sites for political purposes could already be active in politics, and social networking might be simply an alternate way to participate rather than a tool to encourage growth. Another issue is that there is a limit to what can be done on social networking sites. It is difficult to form a unified campaign platform on MySpace or YouTube because of the sheer number of varying viewpoints. 27 However, Gueorguieva believes that despite these potential problems, the future outlook is good for political social networking. The expense of maintaining on-line networking campaigns is very small. Moreover, the effectiveness of social networking sites is increasing. MySpace and YouTube are both developing programs designed for helping users to organize their political activities. The popularity of social networking sites combined with the on-going efforts these sites are making to adapt to users’ political needs lead Gueorguieva to conclude that campaigning on social networking sites is becoming a necessity for the majority of political candidates. Gueorguieva’s study, along with the other political studies, combines to demonstrate that on-line social networking efforts can lead to tangible results. Politicians on the national and local level have used MySpace, YouTube, and Facebook to increase publicity for their campaigns. In some cases, on-line networking activities appear to have led to increases in votes. However, looking at these studies as they relate to non-profits, the impact on voting shares is not the critical issue. What is important is that politicians used these sites to attract volunteers and donors. By creating profiles, posting announcements on these profiles, and contacting on-line “friends,” candidates have achieved the goals many non-profits desire. (Gueorguieva, 2008) Because only limited research has been done on non-profits’ use of on-line social networking sites, it is difficult to conclude whether or not non-profits will have similar success as politicians have had. However, studies of on-line marketing efforts in general show that people are willing to interact with and donate money to non-profits on-line. Donors and volunteers have certain expectations of their non-profits. They want to know the impact of their time and money; they want their contributions to be recognized; and 28 they want non-profits’ to be well-organized so that their donations and time can be utilized as efficiently as possible. If non-profits can use on-line social networking to meet these expectations, then sites like Facebook and MySpace could prove to be inexpensive ways for non-profits to gain measureable results. Furthermore, though such sites may not be for all age groups, people of all ages are becoming more and more comfortable with on-line networking tools. Even if MySpace and Facebook are not generating significant results now, their effectiveness will only increase in the future. Implications of Literature Review: The United States’ economy is undoubtedly facing difficult times. Dwiggins et al’s., (2004) report clearly indicates that non-profits could suffer from the troubling times. With decreased revenue, non-profits will be looking for inexpensive marketing methods. On-line networking is extremely cheap and, if effective, could be a substitute for more costly ventures. This makes my examination of the benefits of on-line networking timely and appropriate. To determine whether on-line networking is an effective marketing tool, it is important to identify what non-profits hope to gain from it. The Volunteer Management Capacity Study demonstrates that recruiting volunteers is essential to non-profits’ operations (Urban Institute, 2004). 67 percent of the charities in the survey stated recruiting adequate number of volunteers was a problem, and 90 percent stated they have the capacity to take on more volunteers. Clearly, if on-line networking could be used to gain a significant number of volunteers, it would be very attractive to non-profits. 29 The American Marketing Association (2008) identified that building awareness is on average ranked as non-profits’ top marketing priority. Forming new connections with the public is a form of building awareness, and if on-line networking can attract previously unconnected people, then it will be fulfilling a recognized need. Not surprisingly, the second highest marketing priority was generating revenue. Though most organizations rely on contributions to support their activities, many lack organized donation campaigns. Hagar et al. (2002), found that 63 percent of non-profits had no fulltime fund-raising staff and that fund-raising duties were shared across departments. Online networking profiles can be created by any type of personnel, do not require extensive expertise, and are very inexpensive. If on-line networking can prove a profitable method to gain donations, it could be very useful to non-profits. Evaluations of non-profits’ marketing campaigns show that forming new connections and gaining donations and volunteers are important priorities. However, it is important to evaluate whether these tasks can be achieved through the internet. The Online Benchmark Study’s report (Bhagat et al., 2007) on the wired wealthy conclude that people are very willing to interact with and donate money to charities on-line. In fact, the younger and middle-aged generations would prefer to use the internet over other more established communication methods. In The On-line Benchmark study, the wired wealthy expressed a desire for the improvement and better organization of non-profits’ on-line activities. On-line networking could potentially play a role in this improvement. The internet appears to be an effective way for non-profits to interact with the public. However, whether on-line networking can be used to achieve non-profits’ marketing goals is less clear. Since on-line networking is such a new resource, very 30 limited literature exists to evaluate its effectiveness for non-profits. The studies by Gulati and Williams (2007), and Gueorguieva (2008) conclude that on-line networking has played an integral role in political campaigns since 2000. Both local and national politicians have used on-line networking to successfully gain donations, volunteers, and build awareness. In fact, Gueorguieva even argues that on-line networking has changed the outcomes of elections. Whether politicians’ success can be transferred to non-profits is unclear. Still, the fact that on-line networking can be employed to achieve important marketing objectives leaves room for optimism. Data Description: The majority of the analysis in my study involves seven different variables. The variable year is important to my question because it allows me to discover whether the year when organizations started on-line networking has affected their ability to attract donations, volunteers, and new connections. I hope to find out whether successful on-line networking campaigns take time to develop or whether organizations can expect to obtain immediate results. One hundred and twenty-six organizations responded to this question out of one hundred and fifty-four possible respondents. 32.5 percent of the respondents stated they started in 2008, 42.1 percent started in 2007, 18.3 percent started in 2006, and 7.1 percent started in 2005 or earlier. (Figure A) There were twenty-six missing values. The large percentage of respondents that answered that they started on-line networking ventures in 2008 or 2007 indicates that on-line networking is a very new marketing tool for non-profits. 31 The variable time measures how many hours per week an organization spends changing, maintaining, or updating its on-line networking profile. I will use this variable to discover whether or not more hours spent working on on-line social networking sites leads to a greater number of donations, volunteers, and new connections. One hundred and twenty-five organizations responded to this question out of a possible one hundred and fifty-two responses. 38.4 percent of respondents stated they spent less than an hour per week, 51.2 percent spent between 1 and 5 hours, 7.2 percent spent between 5 and 10 hours, .8 percent spent between 10 and 15 hours, 1.6 percent spent between 15 and 20 hours, and .8 percent spent 20 hours or more. (Figure B) There were 27 missing values. To some extent, on-line networking profiles sustain themselves, so the small number of hours non-profit spend updating their profiles is not surprising. However, if greater time leads to greater results, charities clearly have room for improvement. The variable staff indicates who maintains an organization’s on-line networking profile. I will use the staff variable to compare which personnel are the most successful at generating donations, volunteers, and new connections. It is important to note that respondents could select more than one answer. To make the analysis simpler, I divided the variable into eight dummy variables: executives only, volunteers only, program staff only, marketing/fundraising staff only, executives plus, volunteers plus, marketing/fundraising staff plus, and program staff plus. I describe these dummy variables in my data description because it is the dummy variables, not the actual staff variable that is used in my analysis. The plus dummy variables include all responses that contained more than one staff group. For example, executives plus contains all responses in which non-profits 32 selected executives and at least one other branch. I will compare the success of organizations that used only one type of personnel to the success of organizations that divided the work between multiple departments. In the original survey, 121 out of a possible 152 organizations gave thirteen responses. Dividing the responses into the eight dummy variables, 2.5 percent of the responses selected executives only, 6.6 percent selected volunteers only, 34.7 percent selected marketing staff only, 26.4 percent selected program staff only, 9 percent selected executives plus, 24.8 percent selected marketing staff plus, 19 percent selected volunteers plus, and 19 percent selected program staff plus. There were 31 missing values. Marketing and program staff are by far the most common personnel that participate in on-line networking maintenance. Comparing the success of marketing and program staff with the success of volunteers could help charities identify whether or not on-line networking is worth the time of paid personnel. The variable change measures how the effectiveness of on-line networking has changed over time. I will compare change to the time spent updating an organization’s on-line networking site to see whether greater time spent leads to improvement of on-line networking results. Out of the 123 responses, 59.4 percent of organizations stated that results increased over time, 37.4 percent said they stayed the same, and 3.3 percent said they decreased. (Figure D) There were 29 missing values. Clearly, it appears that the benefits of on-line networking increase the longer organizations remain on the sites. The variable donations measures the monetary contributions organizations have received from on-line networking sites. I will analyze the affects time, year, and staff have on donations in order to recommend the most effective ways for non-profits to attract donors. Respondents could choose from seven different ranges of donations (for 33 example between $100 and $500). They could also select an unknown category which is considered a missing value. To simplify the analysis, I label each category as a mean of the range. For example, I call the $100 to $500 category 300. Out of 79 responses, 58.2 percent of the respondents raised between $0 and $100, 20.3 percent raised between $100 and $500, 8.9 percent raised between $500 and $1000, 5.1 percent raised between $1000 and $5000, 1.3 percent raised between $5000 and $10,000, 3.8 percent raised between $10,000 and $50,000, and 2.5 percent raised $50,000 or more. (Figure E) There are 73 missing values. The responses suggest that the majority of non-profits have not been able to raise significant amounts of money through on-line networking. Yet, the fact that over 6 percent have raised at least $5000 is important to note. The variable volunteers measures how many volunteers organizations have attracted through on-line networking. Similar to the donations variable, I will analyze the effects time, year, and staff have on attracting volunteers. The volunteers variable is divided into five different ranges and an unknown category which is again treated as a missing value. Organizations were able to choose between 1000 and 5000 volunteers or 5000 or more volunteers, but none of the organizations chose these categories. Once again, I labeled each category as a mean of the range of volunteers. Out of 76 responses, 75 percent attracted between 1 and 25 volunteers, 7.9 percent attracted between 25 and 50 volunteers, 4 percent attracted between 50 and 100 volunteers, 9.2 percent attracted between 100 and 500 volunteers, and 4 percent attracted between 500 and 1000 volunteers (Figure F). There were 76 missing values. The vast majority of the sample attracted a very small number of volunteers, but the fact that greater than 13 percent gained at least 100 volunteers signifies that at least some charities have had success. 34 The last variable in my study is called connections. This variable measures the percentage of people who join an organization’s on-line social network that have some previous connection to the non-profit. As with donations and volunteers, I will analyze the effects time, year, and staff have on making new connections. The variable is divided into five ranges and an unknown category. Out of 95 responses, 16.8 percent stated that between 95 percent and 100 percent of the people who joined their on-line networking group were new connections, 22.1 percent selected between 75 percent and 90 percent, 8.4 percent selected between 50 percent and 75 percent, 28.4 percent selected between 25 percent and 50 percent, and 24.2 percent selected between 0 percent and 25 percent (Figure G). There were 57 missing values. Clearly, from the wide range in responses, some organizations have successfully generated a large proportion of new connections, while others have not. The fact that about 17 percent of the responses stated that their groups were made up of 95 to 100 percent of new connections shows that generating a substantial percentage of new connections is definitely a possibility. However, the 24 percent that generated groups consisting of only 0 to 25 percent new connections shows that many charities have also struggled in this area. Procedure: In the summer of 2008, I worked as an intern for an on-line newspaper called Philanthropy Action1. Started in 2007, the newspaper covers contemporary social issues related to charitable giving. My thesis began as a prospective piece for the newspaper, but became a more detailed quantitative study. I began the project by creating a survey containing 21 questions. Respondents were divided into three groups. Those who had 1 www.philanthropyaction.com 35 never participated in on-line networking were asked one set of questions. Those who previously participated in on-line networking but stopped were asked a second set of questions, and those who were currently participating in on-line networking were asked a third set of questions. As an incentive to participate in the survey, all those who were willing to provide contact information were entered in a contest to win an IPod Shuffle. I used an on-line tool called Survey Monkey2 to construct the survey, send it out, and collect results. The first group I sent the survey to was made up of non-profits that advertise on Facebook. Facebook has a special application called “Causes” that is designed to make it easy for non-profits to advertise. Facebook members can not only join non-profit groups, they can actually donate money to organizations directly through the site. Facebook’s Causes separates the non-profits into different categories. I selected eight out of ten categories to sample. The categories included Animals, Arts and Culture, Education, Environment, Health, Human Services, Public Advocacy, and International. I did not sample religion or political campaigns because it is debatable whether or not these causes can be classified as non-profits. Facebook’s Causes application is divided into pages. The pages on Facebook are separated by category. Each page contains twenty five causes for that category. Because there were too many causes and non-profits to sample all of them, I randomly selected using a random number generator3 two pages for every twenty pages of each category. Out of the causes examined, only certified American non-profits were selected. Furthermore, causes that did not seem to be operated by the non-profit the cause was 2 3 www.surveymonkey.com http://www.psychicscience.org/random.aspx 36 supporting were ignored. In other words, if I believed that no member of a certified nonprofit was involved in starting the cause, I ignored the entry. Finally, branches of national non-profits were also not examined. Before I sent out the survey, I researched all the non-profits that were randomly selected, finding the most appropriate e-mail addresses to send the inquiry. The ideal recipient was a marketing director, and the next best was a development or communications director. If none of these personnel had available contact information, I settled for an executive director or other position. In the worst case scenario, I sent the survey to the company’s general e-mail address: for example, [email protected]. All 339 non-profits randomly selected on Facebook were sent e-mails, and 72 of these non-profits responded. The survey sorts answers into two categories: those completed and those unfinished. All given responses will be included in the analysis. For my second group of analysis, an e-mail was sent to Charity Navigator requesting a list of all mid-sized non-profits with revenues between 1 and 5 million. The list contained 2,254 non-profits. The non-profits were separated into the categories Animals, Arts, Culture and Humanities, Education, Environment, Health, Human Services, International, Public Benefit, and Religion. The religion category was eliminated. I also eliminated all the branches of bigger non-profits: for example, the SPCA of Chester County. After these removals, the list was reduced to 1,657 non-profits. Out of this list, I randomly selected 339 non-profits to e-mail. The random selection process involved separating the non-profits by category, finding out what percent of the total non-profits each category contained, and then multiplying that percent by 339 to find the total number of non-profits in each category that would be randomly selected. For each non- 37 profit selected, I followed the same e-mail procedures that I did for the Facebook group. In order to separate the two different groups (Facebook and Charity Navigator), I created a second link on Survey Monkey for the Charity Navigator group. Charity Navigator nonprofits filled out the same survey as Facebook non-profits, but their answers were collected by Survey Monkey in a different group. The third analysis group included the remainder of the non-profits in the Charity Navigator list that were not randomly selected. This group was different from the second group because I did not research these non-profits to find the appropriate person to contact. The original list sent by Charity Navigator included an e-mail address for each non-profit. Most of the addresses were in the format info@non-profit, but some were personal addresses for specific non-profit representatives. Using a Survey Monkey tool, I sent out a mass e-mail to the all the non-profits in this third category. 1,298 non-profits received e-mails. Because some of the e-mail addresses were invalid and some of Charity Navigator’s non-profits did not contain contact information, 20 out of the 1,657 non-profits were not contacted from the Charity Navigator list. All of the charities’ responses were collected by Survey Monkey which automatically performed a basic analysis. Survey Monkey calculated the percentage of companies who gave a particular answer to each question. Survey Monkey also allowed me to download all of the responses into an EXCEL document. After cleaning up the EXCEL sheet, the data was transported into STATA for analysis. 38 Graphical Analysis: The fundamental goal of my study is to identify whether or not to recommend online networking as a marketing tool for non-profits. To address this main goal, I chose to test whether or not organizations can obtain tangible benefits through on-line networking and the best methods to do so. As indicated by the American Marketing Association (2008), obtaining donations, hiring volunteers, and making new connections are three of the most important goals of charities’ marketing campaigns. At first glance, it does not appear that on-line networking is an effective method for attracting donations or volunteers. Figure E demonstrates that slightly less than 60 percent of the sample generates between $0 and $100 and less than 10 percent generates greater than $1,000. Figure F demonstrates that about 75 percent of the sample generates between 1 and 25 volunteers.. The evidence on attracting new connections is less one-sided. Figure G demonstrates that about 50 percent of the sample’s on-line networking groups had a majority of members who had no previous connection to the non-profit. Furthermore, 23 percent of the sample generated between 75 and 90 percent of new connections and 15 percent of the sample generated between 90 and 100 percent of new connections. Clearly, a notable portion of the charities that responded to my survey have been successful using on-line networking tools to generate new connections. The findings are consistent with the American Marketing Association’s conclusion that websites and digital media are most effective at positioning and branding and least effective at revenue generation. Despite the fact that the preliminary analysis seems to demonstrate that the majority of charities have not been able to use on-line networking sites to attract donations and volunteers, one must consider whether the problem lies with the sites 39 themselves or non-profits use of the tools. Gulati and Gueorguieva demonstrated that politicians can use on-line networking to attract large numbers of donations and volunteers. It is therefore possible that non-profits are not spending enough time updating and maintaining on-line networking sites to reap the benefits. For this reason, I wanted to find out whether increases in time spent updating and maintaining on-line networking sites led to increases in the number of volunteers, donations, and new connections. Figures H through K evaluate the effect that the independent variable time has on the dependent variables donations, volunteers, and new connections. The majority of charities that use on-line networking tools spend between 0 and 10 hours per week updating and maintaining the site (Figure B). Since only about 2 percent of the sample spent greater than 10 hours maintaining and updating the site, I combined all charities that spent greater than 10 hours updating and maintaining their on-line networking sites into a 10 or more category. Gueorguieva (2008) mentions in her study that politicians have been especially successful at recruiting volunteers through on-line networking sites. Figure H shows that some charities have also been successful at recruiting volunteers. The graph appears to demonstrate that there is a positive relationship between time and average volunteers recruited. As time increases, the average number of volunteers increases substantially. However, this graph is somewhat misleading. To test whether the differences in average number of volunteers were statistically significant, I ran a t-test measuring the chance that the means of volunteers for two consecutive time intervals were actually different from one another. The p-values provided throughout the figures section indicate the level of 40 statistical significance. Values highlighted in bold are significant at greater than a 90 percent confidence level, while values highlighted in red are significant at greater than a 95 percent confidence level. Values that are that significant at the 90% confidence level are important to note, but should be taken with some degree of skepticism. Values that are significant at the 95% confidence level provide strong evidence of a relationship between the two variables. The only difference in Figure H that is statistically significant at greater than a 90 percent confidence level is between 0 and 2.5 hours ( p-value .089). Charities that spend 0 hours updating and maintaining their on-line networking site attract about 50 less volunteers than charities that spend 2.5 hours. This could signify that an increase from 0 to 2.5 hours will help charities attract more volunteers, but causality concerns discussed in the conclusion section of my thesis prevent me from making a strong recommendation. The relationship between time and donations (Figure I) is less clear. Not surprisingly, charities that spend 0 hours updating their on-line networking site make close to $4000 less than charities that spend 2.5 hours. This relationship is significant at greater than a 98 percent confidence interval (p-value 0.0170 ). What I found very difficult to explain is why the average number of donations decreases substantially from 2.5 to 7.5 hours (p-value .0763). Outliers in the 2.5 hour category seem to be the cause of this discrepancy. Figure J looks at the median number of donations for a given time interval. Most of my analysis does not examine medians because there is little difference between the mean and median figures. Furthermore, because the majority of the sample selected the minimum choices for volunteers and donations, the medians for groups of charities with 41 varying times, years, and personnel are often the same. Figure J is one of the few cases in which the median is important to consider. Unlike in Figure I, the number of donations is much greater for charities that spend 7.5 hours than for charities that spend 2.5 hours. However, the difference is not statistically significant. To calculate the statistical significance of the difference in medians, I performed a chi-squared test (with a continuity correction) for equality of the two independent samples. The only difference in medians that is statistically significant is between 0 and 2.5 hours (p-value .001). The mean and median graphs of the effect of time on donations demonstrate two important points. There is a clear difference between the donations attracted by charities that spend 0 hours updating their on-line networking profiles compared to charities that spend 2.5 hours. Furthermore, though the difference in mean donations between 2.5 hours and 7.5 hours is significant at greater than a 90% confidence level, the median graph shows that this is most likely the result of outliers. The relationship between time and new connections appears to reinforce the preliminary conclusions that on-line networking can effectively attract people with no previous connection to the non-profit. Figure K appears to illustrate that the greater the amount of time spent updating the on-line networking profile, the more likely a charity will be able to make new connections with people who had no previous relationship with the charity. However, none of the means are significantly different from one another. This is somewhat surprising because one would think the greater amount of time organizations spent updating their on-line networking profiles, the greater number of new connections they would make. 42 On-line networking is not simply about attracting volunteers, donors, and new connections. Publicity, posting messages, and promoting a specific event are all also other important goals of on-line networking. Because of the varying goals of on-line networking, I wanted to test whether time spent maintaining and updating a charity’s online networking increases the general effectiveness of on-line networking over time. Figure L is a bar graph with time as the independent variable and effectiveness as the dependent variable. As stated in the data description, charities could choose whether effectiveness increased, stayed the same or decreased over time. In order to make analysis easier, I assigned numerical values to these three answer choices. Increased was assigned a 3, stayed the same was assigned a 2, and decreased was assigned a 1. Figure L seems to demonstrate that the greater the amount of time spent updating on-line networking profiles, the greater the value of effectiveness. The difference in means between 2.5 and 7.5 hours is not statistically significant and the difference between the means of 7.5 and 10 hours is only significant at the 90 percent confidence (pvalue .0845). However, the fact that the difference in means between 0 and 2.5 is statistically significant at greater than a 99 percent confidence level (p-value 0.0011) gives support for the conclusion that there is some positive relationship between the two variables. The effect that the year a charity started on-line networking had on donations, volunteers, and making new connections is another important factor to consider. Politicians began using on-line networking in 2000 and have had more time than nonprofits to gain experience using such sites. Examining the impact of year will provide charities with information on whether they can expect instant results from on-line 43 networking campaigns, or whether tangible benefits increase over time. It is important to note that about two-thirds of the charities surveyed started their on-line networking campaigns in 2007 or 2008 (Figure A). This indicates that on-line social networking is a recent development. A bar graph (Figure M) with year started as the independent variable and the number of volunteers as the dependent variable appears to display a negative relationship between the two variables. Charities that started on-line networking in 2005 or earlier have generated more than double the number of volunteers as compared to charities that started on-line networking in 2006 and 2007. Yet, possibly because of the fact that only a few charities started on-line networking in 2005 or earlier, the difference in average volunteers between 2005 and 2006 is not statistically significant. The only difference in means that is statistically significant at greater than a 90 percent confidence interval is between the average number of volunteers for 2007 and 2008 (p-value .0603). Charities that started on-line networking in 2007 on average attracted about 60 more volunteers than charities that started in 2008, indicating that charities that have some experience with on-line networking seem to have more success in this area Figure N illustrates the effect of year on average donations. The bar graph indicates that organizations that started on-line networking in 2005 or earlier have been able to gain a substantial number of donations while organizations that have started online networking more recently have gained practically no donations. All the differences in means are statistically significant at greater than a 95 percent confidence level (p-values .0360, .0452, and .0425) . It is important to note that only five charities that started online networking in 2005 provided data on the number of donations attracted. Still, it is 44 interesting that both charities that attracted $50,000 of donations or more started on-line networking in 2005 or earlier and that all of the five charities raised at least between $5000 and $10,000. It would seem that these charities have benefited substantially from on-line networking experience. Surprisingly, the average number of donations increases from 2006 to 2007, but decreases from 2007 to 2008. The increase from 2006 to 2007 is difficult to account for because one would think the longer an organization participated in on-line networking the more money they would attract. However, it is important to note that the average numbers of donations for charities that began on-line networking in 2006, 2007, and 2008 are all less than $2,000, showing that in recent years on-line networking has not been an effective fund-raising tool. Examining the effect that year has on new connections (Figure O) shows that once again organizations that began on-line networking in 2005 or earlier are the most successful. On average, 80 percent of connections generated by these charities are new, compared to 40 percent for 2006 charities. This difference is significant at greater than the 99 percent confidence interval (p-value 0.0005). The percent of new connections increases from 40 percent in 2006 to slightly less than 60 percent in 2007 and the difference is statistically significant at greater than a 95 percent confidence interval (pvalue 0.0488). The difference between the means of new connections for charities that began on-line networking in 2007 and 2008 are not statistically significant. The relationship between year and new connections is similar to the relationships between year and donations and volunteers. Charities that began on-line networking in 2005 or earlier seem to benefit from the increased experience. Furthermore, at least for 45 donations and new connections, charities that began on-line networking in 2007 outperform charities that began on-line networking in 2006. I have no clear explanation for why this occurs and hope it can be explored in future research. A final important point to note is that charities that began on-line networking in 2008 are able to generate a substantial percentage of new connections. I gathered the data for this study in the summer of 2008, so charities that stated they started on-line networking in 2008 had only recently created profiles. While volunteers and donations do not appear to come quickly, new connections are a benefit charities can expect in less than a year. Another important factor non-profits must consider when starting on-line networking campaigns is who should be doing the work. Hagar et al., (2002) concluded that executives were the most effective at attracting donations. My results lead to a different conclusion. When executives maintained on-line networking sites on their own and when they combined to work with others, they generated very small average donations (Figure P). Marketing staff seem to have been considerably more successful. Compared to other personnel working alone, marketing staff raised the largest average number of donations. Still, before I recommend that non-profits allocate on-line networking maintenance to marketing staff, it is important to note that the difference between the means and marketing staff only and program staff only was not statistically significant. One statement I can make with some confidence is that the most effective way to maximize donations is to have marketing or volunteers work together with other departments. The difference in means between the Volunteers Plus category and the Program Staff category was statistically significant at close to the 95% confidence level (p-value .0562). 46 Examining median donations for a given personnel (Figure Q) reinforces the conclusion that dividing the tasks between two departments seems to be the most effective way to raise donations. However, I am somewhat cautious of the apparent differences in medians. The volunteers only category seems to have a greater median than the other three groups, but the difference is not statistically significant. Furthermore, the difference between the volunteers plus category and the program staff only category appears to be quite large, but it only significant at the 90% confidence level (p-value .081) and the difference between volunteers only and volunteers plus is not statistically significant. The relationship between staff and average number of volunteers (Figure R) is noticeably stronger. Once again when departments work together, they have greater success, but the differences in means are more statistically significant. The difference between the executives plus category and the marketing staff plus category is significant at a 95% confidence level (p-value 0.0502), indicating that out of any personnel, executives working with other departments are the most successful at attracting volunteers. If non-profits do not have the resources to allocate on-line networking maintenance to more than one department, it appears program staff are the most successful when working alone. Program staff attract on average about 50 more volunteers than marketing staff, but the difference is only significant at the 90% confidence level (p-value .0991). The relationship between staff and new connections (Figure S) is not very notable. Staff working alone appeared to be more successful that staff working together. For example, program staff generated slightly under 60% of new connections working 47 alone, but generated only 40% of new connections when combined with other departments (p-value .0287). However, most of the differences in means were not statistically significant. Conclusion: I began this project with the goal of discovering whether or not to recommend online social networking as a marketing tool for non-profits. Previous research indicated that non-profits’ top marketing priorities included increasing donations and volunteers and establishing new connections. The research also shows that politicians have successfully used on-line networking tools to achieve these goals. After analyzing the results of my survey sent out to non-profits of varying sizes and types, I find that though there is reason for optimism, there is a long way to go before on-line networking becomes a primary marketing tool. Initially, it appeared that non-profits had been generally unsuccessful gaining donations and volunteers using on-line networking tools and that some were able to gain a substantial number of new connections while others struggled. However, the relationship between time and donations and volunteers showed that non-profits may not be spending enough time to gain significant results. When organizations increased their time spent updating on-line networking profiles from less than an hour per week to between one and five hours per week, the number of volunteers and donations attracted increased substantially and the findings were statistically significant. I do recommend that non-profits hoping to increase their donations and volunteers consider spending at least an hour updating their profiles each 48 week. However, it is important to note causality concerns regarding the relationship between time and donations, volunteers, and new connections. Charities that began online networking campaigns and initially experienced success attracting donations and volunteers would likely increase the amount of time spent updating their on-line networking profiles. Therefore it could be that the number of donations and volunteers effects the amount of time spent and increases in time spent are not responsible for increases in donations and volunteers. Spending more time updating on-line networking profiles is not the only factor non-profits should consider. My comparisons of the effect year has on donations, volunteers, and new connections lead to important conclusions. Charities that started online networking between 2006 and 2008 are not gaining large numbers of donations. However, the charities that started on-line networking in 2005 or earlier, though few in number, have been very successful gaining both donations and new connections. One reason this may be is because charities that started on-line networking campaigns in 2005 or earlier that were not successful simply stopped using on-line networking as a marketing tool. Still, these charities clearly have found ways to use on-line networking tools and future research could explore what methods these charities have used to obtain their success. My data does not lead to clear conclusions concerning what departments should conduct on-line networking maintenance. A limited sample size seems to have prevented me from obtaining many statistically significant results. It is important to note that charities that allocate maintenance between multiple departments generate more donations and volunteers. However, the causality of this relationship is an issue. It is very 49 possible that organizations that experience success attracting donations and volunteers are more willing to allow personnel from multiple departments to participate in on-line networking. If a non-profit came to me tomorrow and asked me whether or not to start an online networking campaign, I would say undoubtedly yes. It is important to note that online networking is very inexpensive. The fact that non-profits can generate any tangible benefits at close to no cost is very impressive. Furthermore, the majority of organizations who spend more than one hour per week maintaining their sites describe the effectiveness of on-line networking as improving, leaving room for growth and optimism. Non-profits can certainly not rely on on-line networking as a primary source of donations or volunteers. However, on-line networking is a very new marketing tool and my data indicates that it has the potential to become an effective method for non-profits. 50 Bibliography 1. 2. 3. 4. 5. Bhagat, V., Donovan, Q., and Hauf, B., (2007). The Online Marketing Nonprofit Benchmark Index Study. Convio Inc. Convio Inc. 2008. The Wired Wealthy: Using the Internet to Connect with Your Middle and Major Donors. Dwiggins-Beeler, R., Spitzberg,B., and Roesch,S, (2004). Vectors of Volunteerism: Communication Correlates of Volunteer Retention, Recruitment, and Job Satisfaction in a Nonprofit Organization. International Communication Association. Gueorguieva, V., (2008). Voters, MySpace, and YouTube. Social Science Computer Review, 26(3), 288-300. Gulati, G, and Williams, C. (2007). Social Networks and Political Campaigns: Facebook and the 2006 Midterm Elections. American Political Science Association. 6. Hager, M., Pollack,T., and Rooney, P., (2002). How fundraising is carried out in US nonprofit organizations. The Urban Institute. 7. Lipman Hearne and the American Marketing Association, (2008) The State of Non-Profit Marketing. 8. Mckinsey & Company. 2007. How Businesses are using Web 2.0. The Mckinsey Quartely. 9. Merten, M.J., and Williams, A.L. (2008). A review of online social networking profiles by adolescents. Adolescence. 10. Rainie, L. and Smith, A. (2008). The Internet and the 2008 Election. Pew Internet and American Life Project 11. Urban Institute. 2004. Volunteer Management Capacity in America’s Charities and Congregations. 51 Data Appendix: Variable Label: Volunteers Missing Observations: 76 / 152 Variable Description: This variable describes the average number of volunteers charities stated they gained through on-line networking. The original answers were in ranges for example between 1 and 25 volunteers. To make statistical analysis easier, this variable takes the average of each range. Variable values and coding: Non-missing Observations Volunteers | Freq. Percent Cum. ----------------------------------------------12.5 | 57 75.00 75.00 37.5 | 6 7.89 82.89 75 | 3 3.95 86.84 300 | 7 9.21 96.05 750 | 3 3.95 100.00 ----------------------------------------------Total | 76 100.00 Variable Label: Donations Missing Observations: 79/ 152 52 Variable Description: This variable describes the average number of donations charities stated they gained through on-line networking. The original answers were in ranges for example between $0-100. To make statistical analysis easier, this variable takes the average of each range. Variable Values and coding: Non-Missing Observations Donations ($)| Freq. Percent Cum. ----------------------------------------------50 | 46 58.23 58.23 250 | 16 20.25 78.48 750 | 7 8.86 87.34 2500 | 4 5.06 92.41 7500 | 1 1.27 93.67 25000 | 3 3.80 97.47 50000 | 2 2.53 100.00 ----------------------------------------------Total | 79 100.00 Variable Label : Connections Missing Observations: 95 / 152 Variable Description: This variable measures the percent of people who joined an organization's on-line social network(s) that respondents stated had no prior connection to the non-profit. The original answers were in ranges for example between 0 percent and 53 10 percent. To make statistical analysis easier, this variable takes the average of each range. Non-missing Observations Variable Values and coding: % of New Connections | Freq. Percent ----------------------------------------------12.5 | 23 24.21 37.5 | 27 28.42 62.5 | 8 8.42 83.5 | 21 22.11 95 | 16 16.84 ----------------------------------------------Total | 95 100.00 Cum. 24.21 52.63 61.05 83.16 100.00 Variable Label: Staff Missing Observations: 121 / 156 Variable Description: This variable describes who charities stated maintained their online networking sites. E stands for executives, V stands for volunteers, P stands for program staff, and M stands for marketing / fundraising staff. Charities were able to select more than one answer. Variable values and coding: Non-Missing Observations Staff | Freq. Percent Cum. ----------------------------------------------E| EM | EMP | EMPV | EPV | 3 3 3 3 1 2.48 2.48 2.48 2.48 0.83 2.48 4.9 7.44 9.92 10.74 54 EV | 1 0.83 11.57 M| 42 34.71 46.28 MP | 7 5.79 52.07 MPV | 5 4.13 56.20 MV | 9 7.44 63.64 P| 32 26.45 90.08 PV | 4 3.31 93.39 V| 8 6.61 100.00 ---------------------------------------------Total | 121 100.0 Variable Label: Year Missing Observations: 126/ 156 Variable Description: This variable describes the year charities stated they began on-line networking. 8 corresponds to 2008, 7 corresponds to 2007, 6 corresponds to 2006, and 5 corresponds to 2005 or earlier. Variable values and coding: (Year | Freq. Percent Cum. ----------------------------------------------5| 9 7.14 7.14 6| 23 18.25 25.40 7| 53 42.06 67.46 8| 41 32.54 100.00 ----------------------------------------------Total | 126 100.00 Variable Label: Time 55 Missing Observations: 125/ 152 Variable Description: This variable measures the time non-profits stated they spend per week changing, maintaining, and updating their on-line networking profiles. The original answers were in ranges for example between 1-5 hours. To make statistical analysis easier, this variable takes the average of each range. 0 corresponds to the response less than one hour. Variable values and coding: Time (Hours per week) | Freq. Percent Cum. ----------------------------------------------0| 48 38.40 38.40 2.5 | 64 51.20 89.60 7.5 | 9 7.20 96.80 12.5 | 1 0.80 97.60 17.5 | 2 1.60 99.20 20 | 1 0.80 100.00 ----------------------------------------------Total | 125 100.00 Variable Label: Change Missing Observations: 123/ 152 Variable Description: This variable measures whether non-profits stated the effectiveness of on-line networking increased, decreased, or stayed the same time over time. 56 Variable values and coding: Change | Freq. Percent Cum. ----------------------------------------------D| 4 3.25 3.25 I| 73 59.35 62.60 S| 46 37.40 100.00 ----------------------------------------------Total | 123 100.0 57 Figures: Figure A .3 .2 0 .1 % of responses .4 Year 2005 or Earlier 2007 2006 2008 Figure B .3 .2 .1 0 % of responses .4 .5 Time Less than an hour 5-10 hours 15-20 hours 1-5 hours 10-15 hours 20 or more hours 58 Figure C .3 .2 0 .1 % of responses .4 Staff Executives Only Program Staff Only Executives Plus Volunteers Plus Marketing Staff Only Volunteers Only Marketing Staff Plus Program Staff Plus Figure D .4 .2 0 % of Responses .6 Change In Effectiveness Increased Decreased Stayed the Same 59 Figure E 0 .2 .4 % of Responses .6 Donations $0-100 $500-1000 $5000-10,000 $50,000 or more $100-500 $1000-5000 $10,000- 50,000 Figure F .6 .4 .2 0 % of Responses .8 Volunteers 1-25 50-100 500-1000 25-50 100-500 60 Figure G 0 .1 .2 % of Responses .3 New Connections 0-25% 50-75% 90-100% 25-50% 75-90% 200 100 0 mean of volunteer 300 Figure H 0 Relationship (0,2.5) (2.5, 7.5) (7.5. 10) 2.5 7.5 Time (Hours Per Week) 10 P Values 0.089 0.3892 0.2191 61 6,000 4,000 0 2,000 mean of donations ($) 8,000 Figure I 0 Relationship (0,2.5) (2.5, 7.5) (7.5. 10) 2.5 7.5 Time (Hours Per Week) 10 P Values 0.0170 0.0763 0.2407 1,000 0 500 Median of Donations ($) 1,500 Figure J 0 Relationship (0,2.5) (2.5, 7.5) (7.5. 10) 2.5 7.5 Time (Hours Per Week) 10 P Values 0.001 0.880 0.741 62 0 20 40 60 mean of new connections (%) 80 Figure K 0 2.5 7.5 Time (Hours Per Week) Relationship P Values (0,2.5) (2.5, 7.5) (7.5, 10) 0.1445 0.2934 0.3937 10 0 1 2 Mean of Effectiveness 3 Figure L 0 2.5 7.5 Time (Hours Per Week) Relationship P Values (0,2.5) (2.5, 7.5) (7.5, 10) 0.0011 0.2620 0.0845 10 63 0 50 100 mean of volunteer 150 200 Figure M 5 6 7 8 Year Started Relationship P Values (5,6) (6,7) (7,8) 0.1257 0.4613 0.0603 0 5,000 10,000 15,000 mean of donations ($) 20,000 25,000 Figure N 5 6 7 8 Year Started Relationship (5, 6) (6,7) (7,8) P Values 0.0360 0.0452 0.0425 64 0 20 40 60 mean of new connections (%) 80 Figure O 5 6 7 8 Year Started Relationship P Values (0, 2.5) (2.5, 7.5) (7.5. 10) 0.0005 0.0448 0.1277 6,000 4,000 0 2,000 Mean of Donations ($) 8,000 Figure P Executives Only Volunteers Only Executives Plus Volunteers Plus Relationship (Vplus,P) (Vplus, Mplus) (P,V) (M,P) (E,M) Marketing Staff Only Program Staff Only Marketing Staff Plus Program Staff Plus P-value 0.0562 0.2260 0.2907 0.4083 0.3604 65 200 150 100 0 50 Median of Donations ($) 250 Figure Q Executives Only Volunteers Only Executives Plus Volunteers Plus Relationship P-value (V,P) (V, Vplus) (Vplus, P) 0.854 0.539 0.081 Marketing Staff Only Program Staff Only Marketing Staff Plus Program Staff Plus 200 150 100 50 0 Average Number of Volunteers 250 Figure R Executives Only Volunteers Only Executives Plus Volunteers Plus Relationship (M, Eplus) (M, P) (Eplus and Mplus) (Mplus and P plus) (Vplus and P) Marketing Staff Only Program Staff Only Marketing Staff Plus Program Staff Plus P-values 0.0031 0.0991 0.0502 0.0536 0.2280 66 60 40 20 0 % of New Connections 80 Figure S Executives Only Volunteers Only Executives Plus Volunteers Plus Relationship (P, Pplus) (P, Eplus) (Mplus, Pplus) (M, Mplus) (V, Vplus) Marketing Staff Only Program Staff Only Marketing Staff Plus Program Staff Plus P-values 0.0287 0.3985 0.1690 0.0471 0.0443 67