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nonprofits: warm, cuddly and incompetent

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Research from the University of Pennsylvania found that people hold stereotypes about for-profit and non-profit organizations (i.e. companies and charities) that influence their consumer behaviour. Charities are often perceived as warm or feel-good, but less competent than businesses. Conversely  businesses are perceived as more competent but not as caring.

One of the impacts of this stereotype is that consumers are less likely to purchase a product or service from a nonprofit than a similar product or service from a for-profit. But they’re more likely to feel that a nonprofit is better than a for-profit at benefiting society and treating its employees well, for example. Perhaps this could be one of the reasons that social enterprises have not been able to scale up on a significant scale, and therefore one of the consumer attitude/behaviour barriers that will need to be overcome?

So how are nonprofits supposed to overcome this stereotype about incompetence? There are two tactics the researchers test and suggest might work:

Changing perception of nonprofits through endorsements

The researchers conducted an experiment in which people were presented with scenario of purchasing eco friendly bags from World of Good.  They were given two different World of Good organizations – one a dot com and one a dot org.  Participants were more likely to associate the dot com with a for-profit and the dot org as nonprofit…including all the stereotypes about warmth and competence that go along with those associations.

However, when the nonprofit World of Good received an endorsement from a trustworthy third party media outlet, perception of competence increased and people were much more likely to want to purchase a product from the charity:

consumers want to buy from for-profits more than non-profits due to greater perceived competence of the firm. However, with a strong endorsement, non-profits (vs. for-profits) benefit because consumers show a greater willingness to buy from them due to their combination of perceived warmth and competence.

Changing perception of nonprofits through priming

Another experiment tested the role of priming with money on competence of nonprofits. Plenty of studies show that thinking of money has a positive correlation with competence. So, the researchers divided participants into two groups: one group was primed through articles about money that they were told was part of an unrelated study, and the other group received no prime. They found that “exposure to the money prime (vs. no prime) made gDitty.org [the nonprofit in this study] appear more competent.”

Final remarks

This research is important for a number of reasons: brand perceptions, barriers to accessing funding through products/services, marketing strategies, leveraging positive associations with warmth, etc. This research also offers (for me at least) a fresh insight into the appeal of cause related marketing for companies. If the nonprofit association can bring that warmth to the perceived competence of their product, then it sets it apart from competitors.

The researchers didn’t go into it in this paper, but what implications does this have for donations? Are nonprofits missing out on funding opportunities because they are viewed as not very competent at management and business? Would changing attitudes of fiscal responsibility increase donations? My guess is that the old fundraising ratio is a symptom of ingrained stereotypes.


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