Analyzing the Role of Institutional Trust and Psychological Capital in Enhancing Charitable Participation in Iran: A Structural Equation Modeling Approach

Extended Abstract
 
Introduction and Objectives: Charitable participation constitutes one of the most significant manifestations of civic engagement and prosocial behavior in contemporary societies. Beyond its immediate role in alleviating poverty and social deprivation, charitable activity contributes to strengthening social cohesion, enhancing collective responsibility, and compensating for institutional and fiscal limitations of the state. In developing and middle-income countries, where public welfare systems often face structural constraints, charitable organizations and voluntary participation play a particularly critical role. Iran represents a notable case in this regard, as charitable behavior is deeply rooted in cultural, religious, and historical traditions, while at the same time operating within a complex institutional and socioeconomic environment. Despite the prevalence of philanthropic norms, recent years have witnessed growing challenges in sustaining and expanding charitable participation in Iran. Economic uncertainty, declining institutional trust, and increasing social pressures have raised concerns about the long-term vitality of voluntary and charitable engagement. Existing research suggests that charitable participation cannot be sufficiently explained by economic variables alone. Instead, it emerges from an interaction between institutional conditions and individual psychological resources. Institutional trust, defined as citizens’ confidence in the integrity and effectiveness of governmental, religious, and civil institutions, plays a crucial role in shaping collective action. Likewise, psychological capital—comprising hope, optimism, resilience, and self-efficacy—represents a key internal resource that enables individuals to engage in prosocial behavior under uncertain conditions. While previous studies have examined these factors separately, empirical research that simultaneously investigates their direct and indirect effects within a unified analytical framework remains limited in the Iranian context. Accordingly, the present study aims to analyze the role of institutional trust in enhancing charitable participation, with particular emphasis on the mediating role of psychological capital. By employing a structural equation modeling approach, this research seeks to provide a comprehensive explanation of the psycho-social mechanisms that facilitate charitable engagement at the national level.
Methodology: This study adopts a quantitative, cross-sectional research design based on structural equation modeling. The statistical population consists of all individuals aged 18 years and above residing in urban and rural areas of Iran during the first half of 2025. To ensure representativeness and capture demographic and socioeconomic diversity, a multistage stratified sampling method was employed. Stratification was conducted according to geographic region, gender, place of residence, and socioeconomic status, followed by random sampling within each stratum. A total of 500 valid questionnaires were collected from individuals who reported experience with or familiarity with charitable activities, including donations, volunteering, or engagement with charitable organizations. Data were gathered using a structured questionnaire composed of three standardized scales. Institutional trust was measured using a six-item scale assessing trust in governmental, religious, and civil institutions. Psychological capital was measured through a twelve-item scale capturing four dimensions: hope, optimism, resilience, and self-efficacy. Charitable participation was assessed using an eight-item scale reflecting both formal and informal forms of involvement. All items were measured on a five-point Likert scale. Content validity was confirmed through expert review, and a pilot study was conducted to ensure clarity and reliability. Data analysis was performed using Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS software. This method was selected due to its suitability for complex causal models and its robustness under non-normal data conditions. The analysis proceeded by first evaluating the measurement model and subsequently testing the structural model, including direct and indirect effects, using bootstrapping with 5,000 resamples.
Results: The evaluation of the measurement model demonstrated satisfactory reliability and validity for all constructs. Composite reliability values ranged from 0.82 to 0.91, indicating strong internal consistency. Convergent validity was confirmed, as the average variance extracted (AVE) for all latent variables exceeded the threshold of 0.50, and all factor loadings were statistically significant and greater than 0.60. Structural model results revealed that institutional trust exerted a positive and statistically significant direct effect on charitable participation (path coefficient = 0.41, t = 7.12, p < 0.001). This finding indicates that individuals who exhibit higher levels of trust in formal institutions are more likely to engage in charitable activities. Psychological capital also showed a positive and significant direct effect on charitable participation (path coefficient = 0.36, t = 6.45, p < 0.001), suggesting that stronger psychological resources enhance individuals’ propensity toward prosocial engagement. In addition, institutional trust had a significant positive effect on psychological capital (path coefficient = 0.38, t = 6.02, p = 0.001), indicating that a trustworthy institutional environment contributes to the development of positive psychological capacities. Mediation analysis confirmed that psychological capital partially mediates the relationship between institutional trust and charitable participation. The indirect effect of institutional trust through psychological capital was statistically significant (indirect effect = 0.11, p < 0.001). The total effect of institutional trust on charitable participation, combining direct and indirect paths, was estimated at 0.52. Regarding explanatory power, the model accounted for 47 percent of the variance in charitable participation (R² = 0.47) and 29 percent of the variance in psychological capital (R² = 0.29). The global goodness-of-fit index was calculated at 0.52, indicating acceptable overall model fit and structural robustness.
Discussion and Conclusion: The findings of this study highlight the central role of institutional trust and psychological capital in shaping charitable participation in Iran. The positive effect of institutional trust underscores the importance of credible, transparent, and responsive institutions in fostering civic engagement. When individuals perceive institutions as trustworthy, they are more inclined to believe that their charitable efforts will be meaningful and effective. The significant role of psychological capital further demonstrates that internal psychological resources are crucial in translating institutional conditions into actual behavior. The mediating role of psychological capital suggests that institutional trust not only influences charitable participation directly, but also operates by enhancing individuals’ optimism, resilience, and sense of efficacy. From a policy perspective, these findings imply that strategies aimed at strengthening charitable participation should adopt a dual approach. Enhancing institutional transparency and accountability can increase public trust, while social and educational programs designed to build psychological capital can further amplify prosocial behavior. In conclusion, charitable participation in Iran emerges as the product of intertwined institutional and psychological mechanisms. By addressing both dimensions simultaneously, policymakers and civil society actors can create more sustainable and inclusive pathways for the expansion of charitable and prosocial activities across society.
Acknowledgments: The authors would like to express their sincere gratitude to the editorial board and the esteemed reviewers of the Journal of Economic Studies with an Islamic Approach for their valuable insights and scholarly guidance, which significantly contributed to the improvement of this article.
Conflict of Interest: The authors declare that there is no conflict of interest of a scientific, financial, or organizational nature in relation to the preparation and publication of this article.