Since the 1970s, nonprofit organizations (NPOs) have been proliferating around the world, becoming one of the driving forces of international social and economic development (Salamon, 1995). Although NPOs can obtain aid and support from governmental organizations, public funding alone cannot adequately meet society’s needs to address poverty, disaster relief, and other humanitarian causes. Thus, most NPOs must rely on private donations (Thornton, 2006). Because the expansion of the nonprofit sector is outpacing the growth of the donor base, funds and volunteers are becoming increasingly scarce resources for NPOs. In the US alone, according to the Nonprofit Almanac 2012 from the National Center for Charitable Statistics, the number of registered NPOs increased by 23.6% from 1.26 million in 2000 to 1.56 million in 2010 (Roeger, Blackwood, & Pettijohn, 2012). Accordingly, NPOs increasingly find themselves competing with each other for monetary and human resources. In these conditions, rejection is the standard response to solicitations by NPOs to the general public for charitable contributions (Diamond & Noble, 2001). Furthermore, as geographic constraints diminish, global competition for funds means that NPOs now face fiercer competition than ever before.

In the face of the development of this global, competitive environment for NPOs, in this study we investigated how people respond to the competition amongst NPOs. Although scholars have studied at great length the effects of competition amongst for-profit firms, few have explored the influence of nonprofit competition (Duffy & Kornienko, 2010). As the dynamics and effects of competition in the nonprofit sector are likely to differ considerably from those of for-profit organizations, this is an important area of study. In this research we focused on the relationship between competition among NPOs and people’s charitable behaviors (e.g., making donations or volunteering). In doing so, we expected that our findings would help managers and staff of NPOs realize how competition can lead to better donor responses through the mechanism of identification.

Conceptual Development

Competition Among NPOs

Competition is defined as a rivalry for scarce resources and, thus, it is the joint product of interdependence and conflicts of interest (Moorthy, 1985). For NPOs, their scarce resources include not only the donors’ (consumers’) funds but also the time, energy, and attention of volunteers. Although some NPOs compete aggressively against other NPOs for the support of donors, other organizations may compete less directly, in that they are not appealing to the same donor base. Regardless of the initial level of willingness of an NPO to compete, most NPOs are involved in some way in a competition to secure donors and funds. Despite this increasingly intense competition, there is still little research regarding NPO competition.

Existing theories of competition for profit-driven organizations are not completely applicable to the NPO market because of two distinct differences between the for-profit and nonprofit sectors. The first dimension in which for-profits and NPOs differ is in their primary mission. For-profit firms, with goals that are directly or indirectly finance-related, may develop competitive strategies that are based on achieving increased market share, higher margins, greater profits, or increasing shareholder wealth – often at the expense of their competition. Conversely, NPOs do not compete in a system where success comes as a result of the failure of another organization. This “friendly” competitive interaction amongst NPOs can make for a more complex and nuanced competitive environment than that found in the for-profit sector.

The second dimension in which NPOs and for-profit firms differ is in the motivations of their consumers. Unlike customers of for-profit firms, who may follow the traditional exchange paradigm by which they seek the direct benefits of a product or service in return for the costs they bear, people who donate money or time to an NPO are more likely to be motivated by a desire to do good or to see someone else benefit from their efforts. Because of the distinctive differences in their consumer bases, several researchers have sought to formulate theories of competition that are relevant for NPOs (Aldashev & Verdier, 2010; Cermak, File, & Prince, 1994; Mottner & Ford, 2007; Thornton, 2006).

Charitable Behaviors

Researchers in each of the fields of behavioral economics, social psychology, and marketing have made attempts at explaining the motivations behind people’s charitable behaviors (Ranganathan & Henley, 2008). Different from consumption motives (e.g., “Do I get tangible value in exchange for my money?”), most people’s decisions concerning their charitable behaviors are motivated by the potential for social and psychological benefits (Bekkers & Wiepking, 2007; Odendahl, 1990; Ostrower, 1997; Sargeant, 1999; Sargeant & Woodliffe, 2007), benefits that may include a positive mood, the alleviation of guilt, reduction of aversive arousal, and a desire to show gratitude (Bekkers, 2010; Bekkers & Wiepking, 2007). Charitable behaviors have also been shown to depend heavily on donors’ worldview (Waters, 2009). Even though individuals may be intrinsically motivated to donate by their values and worldview, most donations are actually made in response to some form of solicitation (Bekkers, 2006; Bryant et al., 2003; Diamond & Noble, 2001; Randle & Dolnicar, 2012; Wardell & Ashley, 2011). In other words, the first prerequisite for people to perform charitable behaviors is generally a request that either provides the initial awareness of an organization’s need or stimulates an existing but dormant awareness.

Competition Among, and Identification With, Nonprofit Organizations

Barman (2002) argued that the competition in the NPO market helps the public to recognize the differences among them. NPOs often function as intermediaries, connecting donors and volunteers to the end user that will ultimately benefit from their funds or efforts (Feigenbaum, 1987). However, because NPOs have varying priorities, such as different charitable causes, they may have different approaches to the same objective. For example, the objective of the Arbor Day Foundation is to have a positive impact on the environment by planting trees, whereas the objective of the National Recycling Coalition is also to attempt to improve environmental conditions, but the approach is through waste reduction, reuse, and recycling. Accordingly, these organizations may find themselves in indirect competition for the funds and time of the same group of environmentally conscious individuals who wish to support these types of initiatives. This competition amongst NPOs is manifested in donation solicitations, which brings about greater awareness of an NPO and its needs. As such, we hypothesized:
Hypothesis 1: NPO competition will have a positive influence on consumers’ charitable behaviors.

In social identity theory it is suggested that people derive a portion of their identity from the social groups to which they belong (DeRue, Ashford, & Cotton, 2009; Tajfel, 1982; Tajfel & Turner, 1985; Turner, 1999). Unlike the portion of a person’s identity that is formed through interpersonal relationships, social identity is formed by making comparisons to people both within and outside of the individual’s reference group. Further, individuals may categorize themselves into groups with which they wish to identify as well as those with which they actually identify (Ashforth & Mael, 1989; Tajfel & Turner, 1985).

Organizational identity theory is a branch of social identity theory that relates to individuals’ associations with organizations, such as employers, churches, stores, or schools (Pratt & Foreman, 2000) and which is believed to be a major component of one’s sense of self (Levinson, 1965). In the theory of organizational identification it is posited that individuals define themselves, in part, in terms of the organizations of which they are members – either literally or symbolically (Ashforth & Mael, 1989). This suggests that when a person identifies with a group, that person is psychologically intertwined with the group, feeling the group’s successes and failures at a personal level (Tolman, 1943). Although membership can be considered dichotomous (i.e., the individual either is, or is not, a member), the extent of an individual’s identification with the group or organization is a matter of degree (Ashforth & Mael, 1989). Thus, within the context of this research, we defined nonprofit organizational identity as the psychological link between a specific individual (and potential donor) and a particular nonprofit organization.

Arnett, German, and Hunt (2003) found that the more important organizational identification was to an individual, the more likely it was that the person would promote and make a donation to that organization. Whereas, in existing studies, researchers have explored the relationship between formal membership, such as being an alumnus of a college, and outcomes, in this study we tested the informal or symbolic aspects of membership. Our focus was organizational identification in the context of individuals who support a charity but do not technically belong to it via employment or membership. Thus, we hypothesized:
Hypothesis 2: As competition amongst NPOs increases, individuals’ identification with NPOs will become greater.

As it is indicated in social identity theory and organizational identity theory that individuals tend to support groups that have identities consistent with the favorable aspects of the identities of those individuals themselves, we posited that individuals’ support for NPOs would increase as the level of their identification with the NPO increased. Thus, we hypothesized:
Hypothesis 3: As individuals’ NPO identification level increases, charitable behaviors toward the NPO will also increase.

Considering these hypothesized relationships between NPO competition and identification, and between identification and charitable behaviors, we reasoned that the direct path from competition to charitable behaviors could be weakened in the presence of a mediated path.
Hypothesis 4: NPO identification will mediate the relationship between NPO competition and charitable behaviors.

Method

Participants and Procedure

We piloted the scales and questionnaire we used in this study with a sample of 40 students enrolled in Master of Business Administration (MBA) and Executive Master of Business Administration (EMBA) courses at three large research universities in central China. The results indicated acceptable measurement properties.

Data were collected from three separate sampling frames. The first sample came from publicly available lists of donors to three leading NPOs in China. We emailed our survey instrument to 100 people on these lists, of whom 42 replied to our survey within the time period of the study. Of those, 40 replies were deemed acceptable for analysis in our study, giving us an effective response rate of 40%.

The second sampling frame comprised students enrolled in MBA and EMBA courses at the same three universities in central China in which we had conducted in the pilot study. We distributed 70 survey forms in paper format, of which 64 were returned. Of these there were 60 that were acceptable for inclusion in analysis in our study, resulting in a response rate of 85.7%.

As charitable behaviors are composed of donations of time as well as funds, we wanted to expand our sample to include respondents who might be more inclined to donate their time (i.e., to volunteer) rather than money. Therefore, the third sample frame was the general student body at these same three universities. We sent out 110 survey forms and received 105, for an effective response rate of 95.5%.

Overall, there were 205 respondents and an effective response rate of 73.2%.

Measures

Perceived level of nonprofit competition (PComp). We developed a seven-item scale for measuring perceptions of NPO competition, based on from our insights from fieldwork. Scale items include: “There is a competition between X (the charitable organization I support) and others,” and “Every charitable organization emphasizes its own strengths compared to other charitable organizations.”

Organizational identification (OID). We adapted a six-item scale from Mael and Ashforth (1992) to measure organizational identification, with responses rated on a Likert-type scale anchored by 1 = strongly disagree and 7 = strongly agree. It includes such items as: “When someone criticizes the charitable organization to which I donated (or volunteered at), it feels like a personal insult,” and “When I talk about this charitable organization, I usually say ‘we’ rather than ‘they’.”

Charitable behaviors (CBehav). Charitable behaviors were measured with the following items: “Which types of charitable giving have you chosen in the past three years?” Answer options were money, in-kind donations, and volunteering. “What is the total amount you have given to charitable organizations,” and “What is the frequency with which you donate.”

Results

Confirmatory factor analysis (CFA) conducted using AMOS version 7.0 revealed acceptable measurement properties. Based on Cattell’s (1966) scree test criterion, our 16 items were appropriately classified into their three respective factors. The CBehav scale’s lowest standardized factor loading was .568, and the average loading was .693 – slightly below the general accepted standard of .700. The average variance extracted (AVE) also fell slightly below the .50 benchmark. However, as the square root of the CBehav AVE exceeded its correlation with the other variables, we could infer that the discriminant validity is acceptable (Fornell & Larcker, 1981). All other measures were in acceptable ranges, as can be seen in Table 1.

Because there were moderate correlations among the three variables, we reviewed the variance inflation factor (VIF) for each variable to determine if multicollinearity might be a problem. As can be seen in Table 2 all VIFs are below 2.5, indicating multicollinearity is not a concern (Hair, Black, Babin, Anderson, & Tatham, 2006). Finally, as can be seen in Table 2, overall model fit statistics were also acceptable.

The relationship between perceived competition and consumers’ charitable behaviors was found to be positive but nonsignificant. Therefore, Hypothesis 1 was not supported. The path from perceived competition to organizational identification exhibited the strongest relationship at .457 (p < .001), providing support for Hypothesis 2. Further, Hypothesis 3, in which we predicted that there would be a positive relationship between organizational identification and charitable responses, was also supported (.382, p < .001). These effects in the mediated path analysis are summarized in Table 3.

Considering the results of the tests of Hypotheses 1, 2, and 3, we conclude that organizational identification fully mediated the relationship between perceived competition, providing support for Hypothesis 4. The overall empirical model is shown in Figure 1.

Discussion

Theoretical Implications

In this study we have made a number of contributions to existing literature on NPO competition. Previous researchers have shown that competition amongst NPOs influences the way they operate. However, few scholars have studied how the competition amongst NPOs influences the donors and volunteers who are the consumers. In this study we made the business-to-consumer connection by measuring both competition and a number of consumer-related metrics. Specifically, we showed that, among our respondents, NPO competition directly influenced the ability of those individuals to identify with the various NPOs, which, in turn, influenced the charitable intentions and behaviors of those individuals.

This finding is consistent with that of Friedkin and Simpson (1985), who suggested that interorganizational competition could make the differences among the organizations more salient, leading to stronger identification between individuals and the organizations to which they belong. Likewise, our research findings support their perspective and this suggests that an outcome of competitive interaction also holds in the NPO arena.

Additionally, we evaluated the impact of competition beyond its effect on identification. We found that as identification with an NPO increases, so do one’s charitable intentions and behaviors in relation to the NPO. In other words, the competitive actions of NPOs ultimately impact the donation intentions and behaviors of individuals. This result is similar to that of Mael and Ashforth (1992), who studied this causal chain in the context of individuals and their alma mater. Our results in this NPO study indicate that the identification effect generalizes to a broader context. This competition–identification–intention/behavior chain yields a model in which the mediating role of organizational identification is accentuated.

An additional contribution to the OID literature is our evidence that individuals do not have to be actual members of the organization in order to have a strong identification with it. Previous OID researchers have typically studied individuals with direct ties to an organization, such as the employees of a firm. For instance, Mael and Ashforth (1992) demonstrated that a formal membership group of alumni of a school varied in their support intentions based on their level of identification with their alma mater. However, as it is suggested in identity theories that these relationships should also hold for symbolic or indirect membership, we tested the role of identification when membership was quite informal. To our knowledge, ours is the first study in which it has been empirically demonstrated that: (a) individuals do identify with organizations with which they have only an indirect membership (in this case, NPOs, with which the individuals’ only relationship is as a donor or prospective donor), and (b) greater identification is related to stronger donation intentions.

Practical Implications

Our research results also provide meaningful insights for NPO managers. By demonstrating that donations are strongly related to identification, it can be inferred that the advertising efforts of NPOs should be focused on creating a distinctive identity for the NPO with which members of their target audience can relate. As competition for donors’ time and funds continues to increase in intensity, NPOs will need to further sharpen their marketing skills in order to attract donors. Marketing campaigns should be designed with an eye toward dif-ferentiation, an emphasis on distinctive qualities of the NPO, and messages that highlight the NPO as much as the beneficiaries of its work. Such identity-crafting strategies might require considerable branding or rebranding efforts to make certain associations more apparent. Brand marks, outward-facing imagery, and even an organization’s name should be evaluated from the perspective of how these elements work together to create a distinct and meaningful impression on the potential donors and volunteers.

Our results indicate that it is likely managers of NPOs will be most effective in their solicitation efforts when they target individuals who identify closely with the NPO. Therefore, when seeking donors, NPOs should practice market segmentation rather than soliciting en masse in a particular geographic area. For example, an NPO in which the objective is to promote animal welfare might be better served to identify prospective donors and volunteers through the offices of local veterinarians than via a general database of residents in the area. In such a case, the NPO could provide promotional collateral in the waiting rooms of veterinarians’ offices. With perspectives on, and disposition toward, animals that are similar to the NPO, veterinarians may be amenable to including in their new patient registration paperwork an information sheet on the NPO and “opt in” language that allows the veterinarian to share contact information with the NPO. Similarly, an NPO in which the focus is literacy initiatives may find a receptive audience in the education community. Parent-teacher organizations and teachers’ unions are examples of groups that are likely to identify with an NPO whose objective is the promotion of literacy initiatives. This type of NPO could send representatives to give presentations at meetings of parent-teacher organizations and could submit feature articles for publication in the newsletters of teachers’ unions. In summary, rather than promoting an NPO with a general message to a mass audience, managers of NPOs may find it more effective to tailor the organization’s message to a few niche groups that are more likely to identify with the objectives of that NPO.

Limitations and Directions for Future Research

Our study has limitations that should be addressed in future research. First, our participants were all from China, which limits the generalizability of our research findings. Differences, especially as regards organizational identification in various cultural contexts, could be taken into consideration in subsequent research. Second, as Ashforth and Mael (1989) suggested, there may be a feedback loop from identification to its antecedents. A longitudinal research method could be utilized to capture the dynamics of identification over time. Third, it is likely that variables other than those we examined also influence the relationships that we have studied. For instance, the perceived efficacy of an NPO could influence one’s intention to donate. Arumi et al. (2005) found that donors have an aversion to expensive fundraising methods. If, as a result of competition, NPOs resort to using more expensive techniques for gaining the attention and commitments of donors, the NPO may be perceived by those donors as less efficient. Thus, perceptions of efficacy could be a valuable construct for study in the future. Moreover, the competitive relationships among NPOs may vary considerably. There are four basic forms of nonprofit competition: combative, collegial, alternative, and directional. Future researchers could explore whether or not these four basic forms of nonprofit competition affect a donor’s identification and behavior and, if they do, in what ways.

References

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Arnett, D. B., German, S. D., & Hunt, S. D. (2003). The identity salience model of relationship marketing success: The case of nonprofit marketing. Journal of Marketing, 67, 89-105. http://doi.org/fvk9qb

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Sargeant, A., & Woodliffe, L. (2009). Gift giving: An interdisciplinary review. International Journal of Nonprofit and Voluntary Sector Marketing, 12, 275-307. http://doi.org/cdg74m

Tajfel, H. (1982). Social psychology of intergroup relations. Annual Review of Psychology, 33, 1-39. http://doi.org/bx78zx

Tajfel, H., & Turner, J. C. (1985). The social identity theory of intergroup behavior. In S. Worchel & W. G. Austin (Eds.), Psychology of intergroup relations (pp. 7-24). Chicago, IL: Nelson-Hall.

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Wardell, C., & Ashley, S. R. (2011). From solicitation to search: A study of monitoring costs as a driver of donor giving behavior in online portal websites. International Journal of Nonprofit and Voluntary Sector Marketing, 16, 409-420. http://doi.org/bdqxc3

Waters, R. D. (2009). The importance of understanding donor preference and relationship cultivation strategies. Journal of Nonprofit & Public Sector Marketing, 21, 327-346. http://doi.org/cxwjzf

Aldashev, G., & Verdier, T. (2010). Goodwill bazaar: NGO competition and giving to development. Journal of Development Economics, 91, 48-63. http://doi.org/fqqdv5

Arnett, D. B., German, S. D., & Hunt, S. D. (2003). The identity salience model of relationship marketing success: The case of nonprofit marketing. Journal of Marketing, 67, 89-105. http://doi.org/fvk9qb

Arumi, A. M., Wooden, R., Johnson, J., Farkas, S., Duffett, A., & Ott, A. (2005). The charitable impulse. New York: Public Agenda.

Ashforth, B. E., & Mael, F. (1989). Social identity theory and the organization. Academy of Management Review, 14, 20-39. http://doi.org/cr55d8

Barman, E. A. (2002). Asserting difference: The strategic response of nonprofit organizations to competition. Social Forces, 80, 1191-1222. http://doi.org/bmb2mp

Bekkers, R. (2006). Traditional and health related philanthropy: The role of resources and personality. Social Psychology Quarterly, 68, 349-366. http://doi.org/br33wd

Bekkers, R. (2010). Who gives what and when? A scenario study of intentions to give time and money. Social Science Research, 39, 369-381. http://doi.org/dzx6fs

Bekkers, R., & Wiepking, P. (2007). Generosity and philanthropy: A literature review. Unpublished manuscript. http://doi.org/fx74s7

Bryant, W. K., Jeon-Slaughter, H., Kang, H., & Tax, A. (2003). Participating in philanthropic activities: Donating money and time. Journal of Consumer Policy, 26, 43-73. http://doi.org/bg2652

Cattell, R. B. (1966). The meaning of clinical psychology. In L. A. Pennington & I. A. Berg (Eds.), An introduction to clinical psychology (pp. 608-631). New York: Ronald Press.

Cermak, D. S. P., File, K. M., & Prince, R. A. (1994). Customer participation in service specification and delivery. Journal of Applied Business Research, 10, 90-97.

DeRue, D. S., Ashford, S. J., & Cotton, N. C. (2009). Assuming the mantle: Unpacking the process by which individuals internalize a leader identity. In L. M. Roberts & J. E. Dutton (Eds.), Exploring positive identities and organizations: Building a theoretical and research foundation (pp. 217-236). New York: Routledge.

Diamond, W. D., & Noble, S. M. (2001). Defensive responses to charitable direct mail solicitations. Journal of Interactive Marketing, 15, 2-12. http://doi.org/csg8kd

Duffy, J., & Kornienko, T. (2010). Does competition affect giving? Journal of Economic Behavior & Organization, 74, 82-103. http://doi.org/bfbnn5

Feigenbaum, S. (1987). Competition and performance in the nonprofit sector: The case of US medical research charities. The Journal of Industrial Economics, 35, 241-253. http://doi.org/dp8ps5

Fornell, C., & Larcker, D. F. (1981). Structural equation models with unobservable variables and measurement error: Algebra and statistics. Journal of Marketing Research, 18, 382-388. http://doi.org/cwp

Friedkin, N. E., & Simpson, M. J. (1985). Effects of competition on members’ identification with their subunits. Administrative Science Quarterly, 30, 377-394. http://dx.doi.org/10.2307/2392670

Hair, J. F., Black, W. C., Babin, B. J., Anderson, R. E., & Tatham, R. L. (2006). Multivariate data analysis (6th ed.). Upper Saddle River, NJ: Pearson Education.

Levinson, H. (1965). Reciprocation: The relationship between man and organization. Administrative Science Quarterly, 9, 370-390. http://doi.org/d8qgsj

Mael, F., & Ashforth, B. E. (1992). Alumni and their alma mater: A partial test of the reformulated model of organizational identification. Journal of Organizational Behavior, 13, 103-123. http://doi.org/dxg53x

Moorthy, K. S. (1985). Cournot competition in a differentiated oligopoly. Journal of Economic Theory, 36, 86-109. http://doi.org/fds3c9

Mottner, S., & Ford, J. B. (2007). Internal competition in a nonprofit museum context: Development of a scale. International Journal of Nonprofit and Voluntary Sector Marketing, 13, 177-190. http://doi.org/dt4294

Odendahl, T. J. (1990). Charity begins at home: Generosity and self-interest among the philanthropic elite. New York: Basic Books.

Ostrower, F. (1997). Why the wealthy give: The culture of elite philanthropy. Princeton, NJ: Princeton University Press.

Pratt, M. G., & Foreman, P. O. (2000). Classifying managerial responses to multiple organizational identities. Academy of Management Review, 25, 18-42. http://doi.org/fdvp3p

Randle, M., & Dolnicar, S. (2012). Attracting volunteers in highly multicultural societies: A marketing challenge. Journal of Nonprofit & Public Sector Marketing, 24, 351-369. http://doi.org/sqp

Ranganathan, S. K., & Henley, W. H. (2008). Determinants of charitable donation intentions: A structural equation model. International Journal of Nonprofit and Voluntary Sector Marketing, 13, 1-11. http://doi.org/bwws3g

Roeger, K. L., Blackwood, A., & Pettijohn, S. L. (2012). The nonprofit almanac 2012. Washington, DC: Urban Institute Press.

Salamon, L. M. (1995). Partners in public service: Government-nonprofit relations in the modern welfare state. Baltimore, MD: Johns Hopkins University Press. [Chinese trans. K. Tian (2008). Beijing: Shangwu Press.]

Sargeant, A. (1999). Charitable giving: Towards a model of donor behaviour. Journal of Marketing Management, 15, 215-238. http://doi.org/dcrcs7

Sargeant, A., & Woodliffe, L. (2009). Gift giving: An interdisciplinary review. International Journal of Nonprofit and Voluntary Sector Marketing, 12, 275-307. http://doi.org/cdg74m

Tajfel, H. (1982). Social psychology of intergroup relations. Annual Review of Psychology, 33, 1-39. http://doi.org/bx78zx

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This study was supported by the Natural Science Foundation of China (71202050)

the Project of Humanities and Social Science in the Ministry of Education of China (11YJC630061)

and the Foundation of China Postdoctoral Fund (2012M511621).

Jundong Hou, School of Economics and Management, China University of Geosciences, No. 388 Lumo Road, Hongshan District, Wuhan 430074, People’s Republic of China. Email: [email protected]