Charities are being cut out of the giving process, which could pose an “existential threat” to the sector, a new report published today by fundraising think tank Rogare and Kingston University Business School has warned.
The white paper explores the idea of “disintermediation”— which Rogare director Ian MacQuillin defined in the report introduction as “people cutting out the ‘middleman’ charity and giving directly to people in need”— and examines whether it may pose an “existential threat” to the sector.
MacQuillin also wrote that Rogare had attempted unsuccessfully to investigate disintermediation over a decade ago, but noted “the importance of this issue hasn’t gone away, and if anything has amplified”, with more and more “actors” doing activities traditionally performed by charities, while a growing number of people “actively avoid” going through charities when acting prosocially.
Disintermediation not inherently negative but caution needed
A key example cited by the report was a phenomenon in 2022, when Russia launched its invasion of Ukraine and members of the public who wished to financially support Ukrainians affected by the war booked Airbnb rooms in Ukraine without travelling to take up the booking, meaning the room’s owners (the perceived beneficiary) would receive the booking fee.
The report noted that while such examples of disintermediation were not inherently negative, they nevertheless “pose a disruptive challenge to the voluntary sector’s conventional role as the trusted intermediary between donors and beneficiaries”, adding that it’s “perhaps not an overstatement to say that disintermediation represents an existential threat to the nonprofit sector”.
Nevertheless, in the example of the Ukrainian Airbnb bookings, the report noted that while some had celebrated the initiative as “an example of the ‘democratisation’ of philanthropy”, caution was also urged due to some of the risks involved, which included the risk that some of the transferred Airbnb money would not have gone to individual Ukrainians, but to professional management companies outside of Ukraine.
Report first part of four-stage project
The report goes on to discuss other prominent recent examples of disintermediation, including “donor to recipient” examples such as YouTuber MrBeast’s philanthropy foundation, which gives money directly to recipients in “decentralised direct giving”.
The report also introduced the concept of “citizen fundraising” to describe people who raise money independently of traditional charity structures.
Unlike volunteers, citizen fundraisers act on their own initiative and may raise money through crowdfunding or other channels for causes with no connection to established charities, with 99-year-old British army veteran Captain Sir Tom Moore’s effort to raise more than £30m for NHS charities by walking laps of his garden during the Covid-19 pandemic being cited as a particularly prominent example.
The report additionally mentions philanthropy advisers, donor-advised funds (DAFs) and giving circles, which can increasingly become the primary link between donors and the causes they support.
The report comes as the first phase of a planned four-phase project aimed at helping charities “reintermediate”- find ways back into relationships and processes from which they have been displaced.
The Chartered Institute of Fundraising plans to collaborate on phase four, with the aim of producing a reintermediation toolkit for charities by late 2027 or early 2028 in order to help them regain control over their relationships with donors and decision-making processes within those relationships.
