RESEARCH ARTICLE Relational exchange in nonprofits: The role of identity saliency and relationship satisfaction Jennifer A. Taylor 1 | Katrina Miller‐Stevens 2 1 Department of Political Science, James Madison University, Harrisonburg, USA 2 Department of Economics and Business, Colorado College, Colorado Springs, USA Correspondence Dr. Jennifer A. Taylor, James Madison University, School of Public and International Affairs, Department of Political Science, 91 East Grace Street, MSC 7705, Harrisonburg, Virginia 22807, USA. Email: taylo2ja@jmu.edu In practice and research pertaining to charitable giving, the emphasis has been on iden- tifying the characteristics and motivations of donors, but few have asked why donors continue to support a particular nonprofit. This study examines the relationship between renewing donors and nonprofits and their impact on charitable giving levels using identity salience and relationship satisfaction as key mediators of nonprofit rela- tional exchange. In a survey of 719 repeat donors in the United States, to a broad range of nonprofit organizations, identity saliency and relationship satisfaction are introduced as mediating constructs, and the results confirm that both constructs par- tially guide donor motivations and charitable giving. Theoretically, this suggests that the more a donor identifies with a nonprofit organization and the more satisfied the donor is in the relationship with the organization, the higher their intention to donate. This finding supports previous research in segmentation strategies and service‐domi- nant logic in the nonprofit sector. Managerial implications of this research include indi- cation of a paradigmatic shift from relational exchange to transformational exchange (or value cocreation) in nonprofit organizations' approach to donor cultivation. 1 | INTRODUCTION As a significant social and economic force, the nonprofit sector con- tinues to experience unprecedented growth while accounting for shifting economic and political forces (Key, 2009; Lott & Fremont‐ Smith, 2017; Talansky & Deshmukh, 2011). Consequently, the increased competition for financial resources requires new and improved approaches to fundraising. In the U.S., the Internal Revenue Service (IRS) recorded over 1.57 million tax‐exempt organizations in 2016, a significant increase since this data was first tracked in 1995. While not all of these were regularly seeking contributed revenue; the Business Master File (BMF) in 2016 included 1,097,689 public charities; 105,030 private foundations; and 368,337 other types of exempt organization such as chambers of commerce and fraternal organizations. Supported by several recent studies of the state of the nonprofit sector, the impact of the demand for services during the recession can also be attributed to a rise in unemployment, pov- erty, and government budget cuts (Abramson, 2017; Smith, 2017). Increased demand for services and expanded competition for resources are consistent refrains in the nonprofit sector. In a recent survey of more than 900 nonprofit organizations, 87% of those orga- nizations reported that current economic conditions continue to impact their operations, and 85% anticipate that demand will continue to increase (Talansky & Deshmukh, 2011). However, fewer than half of the nonprofits can meet this increased demand for services, and 60% have less than 3 months of operating expenses put aside. The results of another study also express concerns over increased demand for services over past years, while witnessing either a decline or very modest growth in funding (Nonprofit Research Collaborative, 2016). At the same time, overall charitable giving hit record levels in the U.S. for the third consecutive year in 2016 (Giving USA, 2017). In 2016, total private giving by individuals, foundations, and corporations was estimated to be $359.69 billion, an increase of 3.7% from 2015 (Giving USA, 2017). Individual giving remains the largest contributed revenue source for most nonprofit organizations and accounted for an estimated $281.86 billion in 2016. These charitable contributions account for about 72% of total contributions, an increase of 3.9% as compared with 2016. Numbers such as these demonstrate the impor- tance of individual giving for nonprofit organizations in securing This research received no specific grant from any funding agency in the public, commercial, or not‐for‐profit sectors. Received: 4 September 2017 Revised: 9 April 2018 Accepted: 24 April 2018 DOI: 10.1002/nvsm.1618 Int J Nonprofit Volunt Sect Mark. 2018;e1618. https://doi.org/10.1002/nvsm.1618 © 2018 John Wiley & Sons, Ltd. wileyonlinelibrary.com/journal/nvsm 1 of 12