Modeling the Effect of Multidimensional Trust on Individual Monetary Donations to Charitable Organizations

Modeling the Effect of Multidimensional Trust on Individual Monetary Donations to Charitable Organizations

https://doi.org/10.1177/0899764017753559

Nonprofit and Voluntary Sector Quarterly 2018, Vol. 47(3) 623 –644

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Article

Modeling the Effect of Multidimensional Trust on Individual Monetary Donations to Charitable Organizations

Ibrahim S. Alhidari1, Tania M. Veludo-de-Oliveira2, Shumaila Y. Yousafzai3, and Mirella Yani-de-Soriano3

Abstract This study develops and validates a model that evaluates the effect of trust on individual monetary donations to charitable organizations (COs). Data were collected in Saudi Arabia using a two-stage approach and were analyzed via structural equation modeling. Data on psychosocial variables were collected in the first stage, and data on behavior were collected in the second stage, 4 weeks later. The findings confirm the study’s novel multidimensional perspective of trust in the context of individual monetary donations to COs in Saudi Arabia. The results validate the view that trust is present only when the individuals concerned are disposed to trust others and when they believe that the COs can conduct their charitable mission, are honest in the use of their donations, and prioritize beneficiaries’ rights. Individuals’ trust in COs affects both the intention to donate and future monetary donation behavior.

Keywords trust, monetary donation, charity, Saudi Arabia

Charitable organizations (COs), probably the most widely publicly recognized ele- ment of the nonprofit sector, are formal, self-governing organizations that are

1Al Imam Mohammad Ibn Saud Islamic University, Riyadh, Kingdom of Saudi Arabia 2Escola de Administração de Empresas de São Paulo da Fundação Getulio Vargas (FGV EAESP), São Paulo, Brazil 3Cardiff University, Cardiff, UK

Corresponding Author: Tania M. Veludo-de-Oliveira, Escola de Administração de Empresas de São Paulo da Fundação Getulio Vargas (FGV EAESP), Rua Itapeva, 474, 9 Andar. São Paulo, SP 01332-000, Brazil. Email: tania.veludo@fgv.br

753559 NVSXXX10.1177/0899764017753559Nonprofit and Voluntary Sector QuarterlyAlhidari et al. research-article2018

624 Nonprofit and Voluntary Sector Quarterly 47(3)

distinct from government and business organizations, that benefit essentially from philanthropy and voluntarism, and that do not look for profit (Kendall & Knapp, 1996). An important characteristic that distinguishes COs from other organizations is their dependence on financial donations (Notarantonio & Quigley, 2009; Okten & Weisbrod, 2000).

Individual monetary donations deserve special mention, as they usually are the main private source of charity funding (e.g., Giving USA, 2016). The continuous growth in the number of COs, the increasing demands on their services, and the reduced funding from the government and corporate partnerships make the search for donors highly competitive (Reed, Aquino, & Levy, 2007; Sargeant, Lee, & Jay, 2002). Rather than helping beneficiaries directly, individuals who give to COs help indirectly by channeling their financial contributions into charitable services. An environment with no direct interaction between the final users (beneficiaries) and the providers (donors) creates a perception of high risk (Yousafzai, Pallister, & Foxall, 2005), as opportunistic COs may misuse the money donated such that it does not reach the intended beneficiary. These COs may request money for projects that are not real and use misleading information in fundraising appeals. When they donate to a CO, donors explicitly place their trust in the CO’s ability to conduct its mission ethically and suc- cessfully (Laidler-Kylander, Quelch, & Simonin, 2007).

The nature of the exchange between donors and COs and the donors’ likely inabil- ity to determine the impact of their donations on beneficiaries result in unique ele- ments and antecedents of trust in the charitable setting. The objective of this study is to develop and validate a parsimonious model of the effect of multidimensional trust on individual monetary donation to COs in an underresearched cultural setting. Three research questions are posed:

Research Question 1: How is individuals’ trust in COs created? Research Question 2: What is the role of individuals’ trust in COs in their inten- tion to donate? Research Question 3: To what extent is individuals’ trust in COs related to their monetary donations?

This study offers three contributions. First, most of the existing literature on trust has been conceived in a commercial milieu (MacMillan, Money, Money, & Downing, 2005; Sargeant & Lee, 2002, 2004). Research that addresses individuals’ trust in chari- table giving is especially valuable in view of the CO sector’s constant growth and individual giving’s relatively substantial contribution to the COs’ ability to pursue their missions. Second, studies have examined trust as a single-dimension construct (e.g., Chaudhuri & Holbrook, 2001; Esch, Langner, Schmitt, & Geus, 2006; Ha, 2004), but the present study develops and tests a novel theoretical perspective of trust contex- tualized as a multidimensional construct. Third, while most of the literature on chari- table donation has focused on the nonprofit sector in developed countries (cf. Ranganathan & Sen, 2012), our study explores the overlooked fundraising context of Eastern, Muslim, Arab countries, by focusing on the Kingdom of Saudi Arabia (KSA).

Alhidari et al. 625

The Saudi CO Sector

The discovery in the 1930s of immense oil fields in KSA produced a boom in the country’s wealth such that the capacity for charitable donation greatly increased. The annual giving to charitable causes by individuals, foundations, corporations, and the government in KSA ranks among the highest in the world (Al-Yahya & Fustier, 2011; Opoku, 2013). The Saudi charitable sector, probably the largest area of activity for groups and associations in the country, can be traced back to the third Islamic Pillars of zakat (charitable giving) and the Arab culture, both of which encourage members of the society to help the needy (Kozlowski, 1998).

The Saudi charitable sector includes organizations of various sizes ranging from small local mutuals, to specialist charities (e.g., health and medicine, education, sus- tainability) and regional charities that look after their local communities (e.g., widows, orphans, the mentally and physically disabled, victims of family abuse), the merchant family foundations (e.g., Abdul Latif Jameel, the Olayan Foundation), the princely foundations (e.g., King Salman Center for Disability Research, the Sultan bin Abdulaziz Al Saud Foundation, the King Khalid Foundation), and large national orga- nizations (e.g., Al-Birr) (Montagu, 2015). Governmental support represents between 5% and 10% of Saudi COs’ total income (Ministry of Social Affairs [MSA], 2013a, 2013b). Among the sources of financing, individual donations driven by religious motivation, such as the zakat and sadaqa, are the most important because they consti- tute the majority of donations (Shinaikat, 2012). Zakat is the expression of a regular undertaking by which 2.5% of one’s wealth is given to charity (Kroessin, 2007). Sadaqa means to give away and give practical expression to one’s faith. Zakat occurs once annually, while sadaqa may be practiced during the course of the year. The com- plexities arising from the modernization of life in KSA have led individuals to find it simpler to give their zakat and sadaqa to COs instead of directly to the beneficiaries, as they once did.

Our study emphasizes the importance of the context, which shapes the opportu- nities available and the barriers faced by the COs. Research suggests that the effect of attitudinal constructs, such as trust, on charitable behavior may depend on the ever-changing social context it is measured in (Taniguchi & Marshall, 2014). Since the 1960s, the transition of traditional to modern CO in KSA has been increasingly regulated by the heavy-handed regulations of the MSA, the Ministry of Interior, and the Saudi Financial Investigation Unit (The International Center for Not-for- Profit Law [ICNL], 2016; Montagu, 2010). The government’s slow progress in licensing, especially after the clampdown post-9/11, has caused the establishment and operation of new COs in KSA a difficult and lengthy process, requiring several years to receive approval and registration. For example, it took 3 years to establish the Saudi Cancer Foundation and 17 years to get the Saudi Diabetes Association approved (Montagu, 2015). The strict reporting rules established by the govern- ment on COs’ funding have resulted in all aid transactions being monitored and documented in terms of the sources of donations, where and how they will be spent, and by whom (Opoku, 2013).

626 Nonprofit and Voluntary Sector Quarterly 47(3)

On one hand, some researchers argue that these strict reporting rules have created disincentives for individual giving as individuals and firms are hesitating to give due to the fear of supporting groups or causes possibly linked to terrorist activities (Barasi, 2005; Kroessin, 2007). On the other hand, the strict regulations have created more opportunities for COs, as donors (individuals and firms) are highly suspicious of donating to COs, they are now encouraged to give via registered COs, making these organizations the main destination for individuals’ donations in KSA (The International Center for Not-for-Profit Law [ICNL], 2016). A CO’s reputation has a direct positive impact on the donor’s trust in the CO (Torres-Moraga, Vasquez-Parraga, & Barra, 2010), which could potentially influence giving.

Previous Conceptualizations of Trust in COs

Trust is a difficult construct to define (McKnight, Choudhury, & Kacmar, 2002). Although the importance of trust is widely recognized in various fields, researchers often disagree on its definition, antecedents, and outcomes (Yousafzai et al., 2005). Uslaner (2002, 2008) provides a comprehensive definition of trust as a general con- struct in which generalized trust—trusting people who are different from oneself— is contrasted with particularized trust—trusting people one knows or identifies with as belonging to the same group as oneself (e.g., ethnicity, family ties, nationality). The diverse interpretation of the trust concept increases the difficulty of developing a conceptualization of individuals’ trust that is applicable to the context of monetary donation.

MacMillan et al. (2005) propose a conceptualization of trust in COs in which trust is a key driver of commitment, and trust is built by shared values, communication, and nonopportunistic behavior. This conceptualization suggests that donors must believe that they share values with COs, that communication can enhance COs’ trustworthi- ness, and that trust in a CO depends on donors’ perceptions regarding whether the CO will be true to its commitment and not take unfair advantage (nonopportunistic behavior).

Sargeant, Ford, and West (2006) also propose a conceptualization of trust in COs, in which trust, commitment, and donation behavior are linked sequentially. Trust in a CO is driven by the individual’s perception of three organizational factors: the CO’s performance, responsiveness, and quality of communication. Commitment is a func- tion of trust and serves as a mediator between trust and donation behavior, while trust is in turn created when a CO is perceived to have a positive effect in meeting a need and when appropriate communication is maintained with its donors.

Another attempt to conceptualize the construct of trust in COs is that made by Torres-Moraga et al. (2010) who investigate the influence of donors’ trust in an emerging charity sector. The researchers conclude that a CO’s reputation and the donor’s familiarity with the sector have a direct positive impact on the donor’s trust in the CO, opportunism has a directly negative effect on trust, and communication has an indirect effect on trust through its positive effect on the donor’s familiarity with the sector.

Alhidari et al. 627

The results of these studies should be examined within their own cultural context, as there is widespread evidence that the level of trust in institutions differs from country to country. MacMillan et al. (2005) and Sargeant, Ford, and West (2006) carry out their studies in the United Kingdom, and Torres-Moraga et al. (2010) do so in Chile. Edelman’s 2016 Annual Global Study, the Trust Barometer, provides the trust index, an average of a country’s trust in its institutions. The trust index for the mass population shows that 17 of the 28 countries researched were classified as distrusters in 2016, among which was the United Kingdom. Distrusters scored less than 50 on a scale from 0 to 100 in trust in the government, companies, nongovern- mental organizations (NGOs), and the media. Chile and Saudi Arabia do not appear in the Edelman Trust Barometer (2016), but data for their levels of trust can be obtained from the Global Barometer, which compares Latin America, Africa, Asia, and the Arab region in terms of their levels of trust and perceptions of democracy, the media, and the economy.

The Global Barometer (2016) shows that 15% of the Chilean population and 22% of the Saudi population believe that most people are trustworthy, indicating that the Saudi population is more inclined to trust others than is the Chilean population. However, KSA is considered less inclined to trust than are the Gulf Cooperation Council (GCC) nations of Bahrain and Kuwait, as 38% of the population of Bahrain and 53% of Kuwaitis believe that most people are trustworthy. Data for other GCC countries were not available either from the Global Barometer (2016) or the Arab Barometer (2016).1

A Model for Trust’s Effect on Individual Monetary Donation to COs

Our study envisages trust as a multidimensional construct that combines the dimen- sions of individuals’ belief in a CO’s trustworthiness and individuals’ disposition to trust. Perceived ability, perceived integrity, and perceived benevolence represent per- ceived trustworthiness. These three factors have appeared in the literature as contribut- ing to the creation of organizational trust and as explaining trustworthiness (Mayer, Davis, & Schoorman, 1995). Trust in COs leads to both the intention to donate to COs and actual donation behavior.

Antecedents of Trust in COs: The Perceived Trustworthiness of COs and an Individual’s Disposition to Trust

Perceived Ability

Perceived ability may be defined as a group of skills, competencies, and characteris- tics that enable a party to exercise influence in a particular domain (Mayer et al., 1995). A higher level of perceived ability in an organization is associated with a greater likelihood that it can earn the trust of buyers (Morgan & Hunt, 1994). Therefore, one

628 Nonprofit and Voluntary Sector Quarterly 47(3)

can argue that individuals’ trust is developed through their perceptions of a CO’s abil- ity to transfer their monetary donations to the cause it supports to benefit the cause. Sargeant and Lee (2002) argue that, in the context of the charitable sector, the nature of the exchange is complicated by the agency role the CO plays in investing individu- als’ donations to further the cause. Therefore, trust refers to the extent to which indi- viduals believe that a CO is able to (and will) invest their money in helping the cause. Our study hypothesizes that Saudi individuals consider a charity to be trustworthy if it demonstrates the ability—that is, the skills, knowledge, and human resources required—to benefit the charitable purpose:

Hypothesis 1 (H1): Individuals’ perception of the CO’s ability positively influ- ences their trust in the CO.

Perceived Integrity

The ability dimension is not sufficient for the development of trust (Rempel, Holmes, & Zanna, 1985). Perceived integrity, as defined by Mayer et al. (1995), refers to the individual’s perception that the trustee adheres to a set of acceptable principles. In the charitable context, expectations of integrity stem from a CO’s consistency over time, credibility of communication, congruence between words and actions, and commit- ment to ethical standards (Le Berre, 2010). The public has become highly suspicious of donating to COs, particularly to organizations that are known to have committed ethical lapses (Beiser, 2005), and increasingly concerned about how COs use their donations (van Iwaarden, van der Wiele, Williams, & Moxham, 2009), particularly regarding the proportion of donations that are spent on salaries and/or fundraising activities (Sargeant, Hilton, & Wymer, 2006), so the extent to which potential donors exercise trust is driven in part by the extent to which they believe that the organization has demonstrated wise use of donations (Tonkiss & Passey, 1999). Our study hypoth- esizes that Saudi individuals regard a CO as trustworthy when it uses their funds in a manner that is consistent with the CO’s mission:

Hypothesis 2 (H2): Individuals’ perception of a CO’s integrity positively influ- ences their trust in the CO.

Perceived Benevolence

The positive effect of perceived benevolence on trust has received considerable atten- tion in the literature (Doney & Cannon, 1997). According to Mayer et al. (1995), per- ceived benevolence is the individual’s perception of the extent to which a target wants to do good, beyond any egocentric profit-based motive. Bennett and Barkensjo (2005) find that a CO’s ability to stimulate feelings of trust as a result of its benevolence toward the people it is helping has a considerable impact on a donor’s assessment of a CO. Le Berre (2010) argues that, although perceived ability and integrity are more influential in the initial stages of a relationship in most organizational settings, benevolence plays

Alhidari et al. 629

a distinctive role in developing trust from the outset in the CO context. Donors’ percep- tion of a CO’s benevolence results from high visibility, commitment to action, and the communication of beneficial achievements (Le Berre, 2010). Our study hypothesizes that the degree to which a charity uses donations for the benefit of the desired cause has a positive effect on a Saudi donor’s trust in a CO:

Hypothesis 3 (H3): Individuals’ perception of a CO’s benevolence positively influ- ences their trust in the CO.

Individuals’ Disposition to Trust

An individual’s disposition to trust is defined as the general tendency to trust others (Gefen, 2000), including individuals, groups, or institutions (Wang & Graddy, 2008). Trusting people are more likely to have faith in humanity and are more willing to deal with others, regardless of the others’ attributes (McKnight et al., 2002). Trusting peo- ple are more likely to give to charitable causes (Brown & Ferris, 2007) and to engage in voluntary activities, including making donations to COs (Uslaner, 2002), and they donate more money to COs (Bekkers, 2003). Hence, one could assume that those who have a greater disposition to trust others are more likely to trust COs and more inclined to make monetary donations. Our study expects that Saudi individuals who are more disposed to trust others are also more willing to trust COs and more likely to have the intention to donate to them:

Hypothesis 4 (H4): Individuals’ disposition to trust others positively influences their trust in COs. Hypothesis 5 (H5): Individuals’ disposition to trust others positively influences their intention to donate to COs.

Outcomes of Trust in COs: Intention and Behavior

Individuals who trust COs to use their donations wisely are less likely than others are to halt their monetary support in the face of difficulties (Dwyer, Schurr, & Oh, 1987). Many scholars in the charitable marketing field (e.g., Bekkers, 2003; Burnnet, 2002; Saxton, 1995) argue that a higher level of trust in COs is associated with a greater willingness to become a donor and to give larger donations. Sargeant and Lee (2002) find that 13% of the variation in individuals’ donations is explained by their levels of trust. All of this evidence is consistent with the findings of Burt and Dunham (2009), who find that trust in a CO’s website is significantly correlated with a user’s interest in making an online donation and with the amount that they donate. Therefore, the impact of trust on an individual’s charitable giving behavior extends beyond simply enhanc- ing their willingness to give to charity to influence their actual giving behavior. Sargeant and Hudson (2008) confirm the positive relationship between trust and an individual’s actual giving, and conclude that donors with a high level of trust in COs are more active in giving than are those who have lower levels of trust. However,

630 Nonprofit and Voluntary Sector Quarterly 47(3)

Wiepking (2010) finds that trust matters only when people give to organizations acting under conditions of great uncertainty, such as international COs.

Our study proposes that trust has a direct impact on Saudi individuals’ intention to donate to COs and on their monetary donation behavior. Bartolini (2005) and Smith and McSweeney (2007) confirm the link between individuals’ intentions and their actual monetary donations, so it is expected that Saudi individuals’ intention to donate to COs also predicts their monetary donations:

Hypothesis 6 (H6): Individuals’ trust in COs is positively related to their intention to donate to COs. Hypothesis 7 (H7): Individuals’ trust in COs is positively related to their monetary donations to COs. Hypothesis 8 (H8): Individuals’ intention to donate to COs is positively related to their monetary donations to COs.

Method

Development of Measures

The questionnaire collected information on the respondents’ demographics and used multivariate items to measure the constructs of perceived ability, perceived integrity, perceived benevolence, trust in COs, individuals’ disposition to trust, and the intention to donate to COs. These items were measured at Time 1 using a 5-point Likert-type scale that ranged from 1 (“strongly disagree”) to 5 (“strongly agree”). A separate sheet attached to the questionnaire requested contact details from those who were willing to participate in follow-up research. At Time 2, four weeks later than Time 1, the respon- dents who agreed to participate in the follow-up research were asked by telephone about their donation behavior during the past month, which was operationalized on a 5-point Likert-type scale ranging from 1 (“not at all”) to 5 (“frequently”).

Except for trust in COs, all the scales used in this research were adapted from previous studies. Future monetary donation behavior was measured by means of two items adapted from Smith and McSweeney (2007). Intention to donate was mea- sured by three items adapted from Smith and McSweeney (2007) and Bartolini (2005). Perceived ability comprised of five items adapted from Bhattacherjee (2002); Sargeant and Lee (2002); Sargeant, Ford, and West (2006); and Sargeant and Hudson (2008). Perceived integrity was measured by five items adapted from McKnight et al. (2002), Sargeant and Lee (2002), Sargeant and Hudson (2008), and Yousafzai et al. (2005). Perceived benevolence was measured by means of two items adapted from Sargeant and Lee (2002). Trust in COs was measured by two items that were developed specifically for the purpose of this study. Finally, individuals’ dispo- sition to trust was measured through four items adapted from Lee and Turban (2001) and Huff and Kelley (2003).

The questionnaire was pretested to detect ambiguity and improve the sequencing and wording of the items. Two independent bilingual translators translated the

Alhidari et al. 631

questionnaire from English into Arabic and then back-translated it. A series of com- parisons between the translated versions of the questionnaire were performed to guar- antee conceptual equivalence among the items (Brislin, 1970).

Data Collection

Data collection at Time 1 used a snowball, drop-off survey and followed a systematic procedure for controlling snowball sampling. Thus, the snowball chain started from several social groups to increase the sample’s diversity and its representativeness (Emmanuel, 2009). The initial sample of 40 respondents was obtained through per- sonal contact with a large CO in Riyadh—the capital city of KSA—based on defined sociodemographic characteristics that reflected the diversity of the Saudi population. Once the researchers ensured that they understood the eligibility criteria for additional participants, 35 of these respondents2 were enlisted to find other potential respondents (Biernacki & Waldorf, 1981). The 1,000 questionnaires were distributed equally among these 35 de facto research assistants to collect data from their personal net- works. As the data-gathering process unfolded, the researchers checked the incoming sample to monitor the quality and validity of the data and ensure that the respondents reflected the general population in terms of gender, age, education, occupation, marital status, and income.

The target population was Saudi COs’ donors aged 18 and older who live in Riyadh, where almost 80% of Saudi COs are located (Ministry of Social Affairs [MSA], 2012). Riyadh has one of the largest populations in the country, with its 3.5 million residents representing a third of the Saudi population. Sixty-three percent of Riyadh’s residents emigrated internally from all of the regions across KSA, rendering it representative of the Kingdom’s population at large. The demographic characteristics of the population in Riyadh are similar to the demographics of the whole country: 52% of the population of Riyadh are male, compared with 51% in the whole population; the average age in Riyadh is 22 years, whereas that for the country is only 3 years older; fertility rates stand at 4% for both populations; and 73% of adults in Riyadh are married, compared with 68% for the country (Central Department of Statistics and Information, Saudi Arabia, 2016; Commission for the Development of Riyadh, 2011).

A total of 432 usable questionnaires were returned from the de facto research assis- tants. At Time 2, a telephone questionnaire was conducted with 221 respondents who, at Time 1, had agreed to be contacted in the follow-up research. This two-stage approach enabled the collection of data on psychosocial variables to occur at a differ- ent moment in time (first stage, Time 1) from the collection of self-reported behavior data (second stage, Time 2), thus permitting the prediction of future behavior.

Data Analysis

Respondents’ demographic profile. Our typical respondent is male, married, and aged between 26 and 45 years old; he or she holds a degree and is employed in the public sector. As Table 1 shows, the sample is representative of the Saudi population in terms

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Alhidari et al. 633

of occupation and marital status, and is skewed toward men and degree holders. No official income data are available to compare the sample with the Saudi population.3

Nonresponse bias and subdata set for behavior. The 432 respondents were numbered in the same order as they turned in the questionnaire. To test for nonresponse bias, we followed the seminal work of Armstrong and Overton (1977) and employed t tests to compare the early and late respondents, based on the assumption that late respondents are more simi- lar to nonrespondents than to early respondents. We found no significant differences between the responses of the first 25% and those of the last 25% (p > .05), and concluded that nonresponse bias is not an issue. In addition, we tested for nonresponse bias between the respondents who participated in the data collection in Time 2 compared with those who did not (see Table 1). We used t tests to compare the item means of each construct and found no significant differences between the two groups (p > .05). We also con- ducted chi-square tests to compare the two groups in terms of the categorical variables concerning respondents’ sociodemographic characteristics. We found no differences (p > .05) regarding gender, age, education, occupation, marital status, and income. From these results, we concluded that nonresponse bias is not an issue and, therefore, the data set concerning future monetary donation behavior is adequate for use in the analysis.

Structural equation modeling analysis. Data were analyzed using a two-step structural equation modeling approach (Anderson & Gerbing, 1988). The model was decom- posed into a measurement model (confirmatory factor analysis [CFA]) and a structural model, using the AMOS 18 software with maximum likelihood estimation. The results, reported in Table 2, show that each item loaded strongly (above 0.50) on its predicted factor (all loadings were statistically significant). These results suggest that, except for goodness-of-fit index (GFI), which is slightly lower than the threshold, all GFIs pro- vide an adequate fit to the data: χ2/df = 1.55, root mean square error of approximation (RMSEA) = 0.05, GFI = 0.87, Tucker–Lewis index (TLI) = 0.93 (normed chi-square [χ2/df]: upper limit of 3 indicates adequate fit, RMSEA: values lower than 0.08 indi- cate adequate fit, GFI: values greater than 0.90 indicate adequate fit, TLI: values greater than 0.90 indicate adequate fit; Hair, Black, Babin, & Anderson, 2010; Hu & Bentler, 1999; Raykov & Marcoulides, 2006). Reliability, which ensures that the mea- sures of the concepts are stable (Bryman, 2012), was tested by checking the internal reliability, composite reliability, and the average variance extracted (AVE). Cron- bach’s alpha is a measure of internal reliability, and scores over .7 are reliable (Ander- son & Gerbing, 1988). Composite reliability indicates the reliability and internal consistency of a latent construct (Fornell & Larcker, 1981); a value of .7 or higher suggests good reliability (Hair et al., 2010). AVE measures the level of variance cap- tured by a construct versus the level due to measurement error; values above 0.5 are considered acceptable (Fornell & Larcker, 1981). Table 2 shows that Cronbach’s alphas ranged from .64perceived benevolence to .97future monetary donation behavior—all but one higher than .7, although the lower score for perceived benevolence (α = .64) is considered acceptable (Hair et al., 2010). Table 2 also shows that the composite reliability and the AVE of each construct were above the cutoff points. These results indicate that the measurement model has a satisfactory level of reliability.

634 Nonprofit and Voluntary Sector Quarterly 47(3)

Table 2. Factor Loading, Reliability Coefficient, Composite Reliability, AVE, M, and SD.

Construct (items) Factor loading α CR AVE M SD

Future monetary donation behavior .97 0.96 0.92 How often during the past month have you made

monetary donations to COs? (BEH1) 0.95 3.39 1.44

In the past month, I have donated money to charities and community service organizations. (BEH2)

0.97 4.29 1.40

Intention to donate .81 0.86 0.68 I am likely to give a monetary donation to a CO this

coming month. (INT1) 0.63 3.70 1.19

I intend to give a monetary donation to a CO this coming month. (INT2)

0.92 3.83 1.17

I will give a monetary donation to a CO this coming month. (INT3)

0.89 3.80 1.31

Perceived ability—I believe that COs .89 0.89 0.62 Fully understand the needs of their beneficiaries.

(ABL2) 0.72 3.73 1.07

Are competent and effective in conducting their activities. (ABL4)

0.68 3.35 1.07

When faced with problems have the ability to solve them. (ABL5)

0.84 3.26 0.95

Are likely to have an impact on the charitable cause. (ABL6)

0.91 3.75 1.07

Use donated funds appropriately. (ABL7) 0.77 3.60 1.14 Perceived integrity—I believe that COs .86 0.89 0.62 Are honest. (ING1) 0.88 4.04 1.09 Are truthful in their dealings with donors. (ING2) 0.75 3.88 1.10 Always do what they say they will do. (ING3) 0.76 3.41 1.11 Conduct operations ethically. (ING5) 0.80 4.02 1.08 Will keep their promises. (ING6) 0.75 3.37 1.02 Perceived benevolence—I believe that COs .64 0.72 0.56 Have the best interests of their recipients at heart.

(BEN1) 0.61 3.84 1.24

Always ask me for appropriate sums. (BEN2) 0.87 3.38 1.07 Trust in COs .88 0.85 0.74 COs can be trusted. (TRST1) 0.98 3.93 1.14 I feel confident when dealing with COs. (TRST3) 0.72 3.83 1.19 Individuals’ disposition to trust .71 0.79 0.54 I have trust in other people. (TRUD1) 0.88 3.39 1.09 I tend to trust people even if I know little about

them. (TRUD2) 0.69 2.87 1.21

I feel that trusting someone or something is difficult. (TRUD3)

0.65 3.08 1.14

I have faith in humanity. (TRUD4) 0.67 3.59 1.11

Note. All factor loadings are significant at p < .001. ABL1 (Have the skills to safeguard my money), ABL3 (Have the required knowledge to conduct their activities), ING4 (Do not exploit their donors), and TRST2 (COs are reliable organizations) were deleted by inspection due to redundancy and ambiguity to improve the validity of the constructs. AVE = average variance extracted; CR = composite reliability; COs = charitable organizations; BEH = Future monetary donation behavior; INT = Intention to donate; ABL = Perceived ability; ING = Perceived integrity; BEN = Perceived benevolence; TRST = Trust in COs; TRUD = Individuals’ disposition to trust.

Alhidari et al. 635

Convergent validity, which ensures that the items that are indicators of a specific construct share a high proportion of variance (Hair et al., 2010), was tested by deter- mining whether the factor loadings were 0.5 or higher (Anderson & Gerbing, 1988) and the AVE values were greater than 0.50 (Fornell & Larcker, 1981). Table 2 shows that all the factor loadings were above the cutoff point, and the AVE values were acceptable (range = 0.54individual disposition to trust to 0.92future monetary donation behavior). Therefore, convergent validity is established.

Discriminant validity can be established by evaluating whether the correlations between the constructs are below the cutoff value of .85 (Kline, 2011), and the square root of AVE values are greater than the interconstruct correlations (Fornell & Larcker, 1981). The results in Table 3 shows that all of the correlations were below the cutoff value, with the only exception of the correlation between perceived integrity and trust in COs, which is marginally higher (.86), and that all the square root of the AVE values exceeded the interconstruct correlations. These results provide evidence of discrimi- nant validity. that is, the items that represent a latent variable discriminate from the items that represent other variables (Garver & Mentzer, 1999). On the basis of these criteria, it can be concluded that the measures in the study provided sufficient evidence of reliability, and convergent and discriminant validity.

On the basis of the conventional criteria provided above, the structural model achieved a good fit overall (χ2/df = 2.3, RMSEA = 0.08, GFI = 0.94, TLI = 0.90). The two predictors, that is, individuals’ disposition to trust (β = .11) and trust in COs (β = .47), together explained 39% of the variance in the intention to donate to COs. Similarly, the four predictors, that is, perceived ability (β = .78), perceived integrity (β = .84), perceived benevolence (β = .69), and individuals’ disposition to trust (β = .34), together explain 37% of the variance in participants’ trust in COs ratings. Finally, trust in COs (β = .20) and intention to donate (β = .58) together explained 19% of the vari- ance in future monetary donation behavior.

In addition, we conducted the proportion of mediation test to report direct and indi- rect effects of each variable. The coefficient associated with the indirect path is con- ventionally labeled “a × b” (i.e., “a” is the standardized path from “this x” to “that

Table 3. Correlation Matrix and Square Roots of AVE.

Constructs 1 2 3 4 5 6 7

1. Future monetary donation behavior .96 2. Intention to donate .39 .82 3. Perceived ability .19 .36 .79 4. Perceived integrity .18 .54 .74 .81 5. Perceived benevolence .17 .47 .52 .68 .76 6. Trust in COs .30 .58 .60 .86 .62 .85 7. Individuals’ disposition to trust .05 .19 .18 .25 .29 .26 .75

Note. The square root of the AVE is presented in italics (diagonal values). All correlations are significant at p < .01 (two-tailed). AVE = average variance extracted; COs = charitable organizations.

636 Nonprofit and Voluntary Sector Quarterly 47(3)

mediator”; “b” is the standardized path from “that mediator” to “the outcome”). When both “a” and “b” are significant, there is prima facie evidence of mediation. To deter- mine the relative size of the indirect pathway versus direct pathway, we compared the magnitude of the indirect to total pathway (a × b) / ((a × b) + c). Iacobucci, Saldanha, and Deng (2007) refer to this as the proportion of mediation test. We examined the mediated relationship between individuals’ trust in COs and future monetary donation behavior via intention to donate to COs. The ratio of the indirect to total effect equaled 57.7% (0.47 × 0.58) / ((0.47 × 0.58) + 0.20). This shows that nearly 58% of the future monetary donation behavior variance explained was accounted for by the indirect route via intention to donate to COs, while 42% (1%-58%) was accounted for by the direct path, consistent with partial mediation. Similarly, examining the relationship between individuals’ disposition to trust and intention to donate to COs via individu- als’ trust in COs equaled 59.2% (0.34 × 0.47) / ((0.34 × 0.47) + 0.11), which shows that 59% of the intention to donate to COs variance explained was accounted for by the indirect route via individuals’ trust in COs, and the remaining 41% via the direct path. Table 4 shows the hypothesis testing results, and Figure 1 shows the model of multidi- mensional trust for individual monetary donations to COs.

Discussion

Implications for Theory

Our model is parsimonious, consistent with theory, and empirically robust. Our find- ings provide support for an alternative interpretation in which trust in the context of the individuals’ monetary donation to COs is a multidimensional construct formed

Table 4. Hypothesis Testing Results.

Hypothesized path Standardized coefficient

Critical ratio (t-value) Results

H1 (+) Perceived ability → Trust in COs 0.78 9.31*** Supported H2 (+) Perceived integrity → Trust in COs 0.84 10.70*** Supported H3 (+) Perceived benevolence → Trust in COs 0.69 12.50*** Supported H4 (+) Individuals’ disposition to trust → Trust

in COs 0.34 3.20** Supported

H5 (+) Individuals’ disposition to trust → Intention to donate

0.11 2.60** Supported

H6 (+) Trust in COs → Intention to donate 0.47 6.27*** Supported H7 (+) Trust in COs → Future monetary

donation behavior 0.20 3.07** Supported

H8 (+) Intention to donate → Future monetary donation behavior

0.58 5.96*** Supported

Note. COs = charitable organizations. **p < .01. ***p < .001.

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638 Nonprofit and Voluntary Sector Quarterly 47(3)

by four antecedents: perceived ability, perceived integrity, perceived benevolence, and individuals’ disposition to trust, that is, the findings validate the view that trust occurs only when individuals are assured that COs can perform their charitable mis- sion, are honest in the use of their donations, and prioritize beneficiaries’ rights, and when individuals are disposed to trust others. The findings extend previous studies (MacMillan et al., 2005; Sargeant & Lee, 2004; Torres-Moraga et al., 2010) by showing that individuals’ trust in COs influences both the individuals’ intention to donate and actual donation behavior, which emphasizes the central role of trust in individuals’ donations to COs.

Our study shows that trust in the CO depends less on the individual’s disposition to trust others than on his or her perception of the institution, that is, the relationship between the disposition to trust and trust in COs is the weakest among the elements that compose trust in COs. This insight is important because it shows that the donation depends much more on the CO’s ability to create a positive and trustworthy image among its target public than on the effort to find people with a disposition to trust oth- ers, who might become donors. Individuals’ trust in the COs is an essential element in our model. It significantly affects future monetary donation behavior directly and indi- rectly via its mediating effect on intention to donate to COs. The most fruitful path to a donation sequentially links the perceived trustworthiness of the CO, the trust in the CO, the intention to donate to the CO, and actually donating to the CO.

Implications for Practice

One of the most significant implications of this study for practitioners is that individu- als’ donations should be managed with the objective of building a trusting relationship. Although the essence of a donor’s relationship with a CO is to help beneficiaries, the donor’s trust in the CO is an essential aspect of this relationship (Reichheld & Schefter, 2000). Organizations cannot manage current and potential donors’ disposition to trust, but they can manage their perception of the CO’s ability, integrity, and benevolence. If a Saudi CO wants to capture donations, it should promote transparency and account- ability in reporting its activities and provide evidence that brings out its trustworthi- ness, such as current data on its impact on the community.

Saudi COs should combine ability, integrity, and benevolence to generate trust in donors. In so doing, they must move away from so-called “cash asks” to a strategy of building strong, trusting relationships with donors. Although all three elements are important, integrity attracts the most attention from donors, and it can be promoted through disclosure and transparency. Therefore, Saudi COs are advised to communi- cate how their funds are used, especially because donors may hesitate to give for fear of unwittingly supporting terrorist activities. Accountability mechanisms should help COs secure stakeholders’ trust by demonstrating a commitment to ethical standards (Lloyd, Warren, & Hammer, 2008). COs should eliminate the occurrence of deceptive behavior, manipulation of information, administrative errors, cover-ups, and the use of confusing information (Romar, 2004). Publishing annual financial statements is one tool for Saudi COs to increase individuals’ perceptions of integrity and develop their

Alhidari et al. 639

trust in COs. This is clearly an important step, but further effort also needs to be made to communicate these statements in such a way as to enable people to read and under- stand them. Although recognizing their importance, donors seem not naturally inter- ested in annual reports and information on the financial efficacy of COs. It is especially important for Saudi COs to guarantee transparency and accountability as well as to deliver financial statements in an accessible and stimulating format.

A Saudi CO’s ability to pursue its mission effectively can be communicated to donors by showing that the organization has the skills and knowledge necessary to play its charitable role effectively. To increase perceived benevolence, Saudi COs should demonstrate that their activities are aimed at benefiting the charitable cause and that priority is given to beneficiaries.

Conclusions, Limitations, and Directions for Future Research

Our research findings provide answers to three central questions: (1) trust in COs is created by an individual’s disposition to trust and perception of COs’ trustworthiness (i.e., perceived ability, perceived integrity, and perceived benevolence), (2) trust in COs determines individuals’ intention to donate money to COs, and (3) trust in COs determines future monetary donations to COs. From these findings, we can regard trust as a multidimensional construct in both its measurement and structural effects, and conclude that the meaning and consequences of trust are better understood when each of its dimension is viewed separately.

A limitation of the current study is the use of snowball sampling. To address this limitation, we have employed a systematic controlling procedure which includes sev- eral strategies such as the selection of initial respondents reflecting the sociodemo- graphic characteristics of the general population to increase the sample’s representativeness; engaging these initial respondents as research assistants; and mon- itoring the referral chains for data quality (Biernacki & Waldorf, 1981).

Studies that employ our model should consider that our findings relate most closely to the cultural setting of a Muslim society in a developing Arab country in which people have been encouraged to give their individual donations directly to COs. Therefore, future research could seek to validate our findings further by testing the model in diverse cultural settings, especially because the tendency to trust varies from society to society and even within societies with similar cultural backgrounds. It would also be useful to determine whether the proposed model holds true in certain types of organizations, such as religious or international charities, and for other kinds of behav- ior, such as donation of time or blood. Additional research could also include other aspects of trust in the model, such as a CO’s reputation (Torres-Moraga et al., 2010), brand (Le Berre, 2010), or accreditation (Bekkers, 2003).

Acknowledgments

The authors would like to acknowledge the invaluable assistance of Paul Bottomley and three anonymous reviewers in the preparation of this article.

640 Nonprofit and Voluntary Sector Quarterly 47(3)

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

Notes

1. The Edelman Trust Barometer and the Global Barometer are independent initiatives and use different methodologies. The Edelman Trust Barometer is a global measurement of trust. It reveals the extent to which the population of different countries trusts its major institutions. The Global Barometer, on the contrary, is a worldwide project that provides systematic comparable data on public attitudes and orientations toward democracy, and includes the trust dimension. Five regional barometers join the project: the Afro Barometer, Arab Barometer, Asia Barometer, Eurasia Barometer, and the Latino Barometer.

2. The sociodemographic profile of the initial 35 respondents is as follows: 55% are males; 62% are between 18 and 35 years old, and 32% are in the 36 to 55 age group; 65% have an undergraduate degree; 56% hold jobs in the public sector, whereas 32% are in the private sector; 65% are married; and 63% have a monthly income between 4,000 SAR and 16,000 SAR.

3. We conducted multiple group moderator analyses and found no effects of demographic variables (age, income, or gender) in the model.

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Author Biographies

Ibrahim S. Alhidari holds a PhD from Cardiff University (UK). He works as a professor at Business School—Al Imam Mohammad Ibn Saud Islamic University. His interest in research lies in the area of nonprofit marketing and fund-raising.

Tania M. Veludo-de-Oliveira holds a position as associate professor at Escola de Administração de Empresas de São Paulo da Fundação Getulio Vargas – FGV EAESP (Brazil), where she teaches consumer behavior and marketing. Her current research interest focuses on transforma- tive consumer research.

Shumaila Y. Yousafzai is a reader at the Cardiff Business School (UK), where she teaches entrepreneurship, marketing, and consumer behavior. She has coedited a special issue on wom- en’s entrepreneurship for entrepreneurship and regional development.

Mirella Yani-de-Soriano is senior lecturer at Cardiff Business School (UK). Her research focuses on consumer behavior, particularly in the areas of cross-cultural consumer research, emotions, addiction behavior, and anticonsumption. Her research has been published in a range of marketing and management journals.


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