The fundraising think tank Rogare is examining the ethical and regulatory questions relating to “disintermediated giving”.
Disintermediation happens when traditional charities are cut out of the process of giving by the funds going straight to the affected individuals, such as through crowdfunding platforms.
Rogare says there are many different ways that charities can be cut out of the giving process and there are questions about the ethics, accountability and regulation of the practice.
The think tank has published a paper that draws up a typology defining the different types of disintermediation that can occur, such as money being given directly to the beneficiary or recipient, or via the use of microlending sites such as Kiva.
Rogare is expected to make disintermediation a big focus over the coming year, in conjunction with Kingston University, through a new work stream on the philosophy of fundraising.
Ian MacQuillin, director of Rogare, said: “Each of the types of disintermediation described in our typology raises questions about its practices, ethics, regulation and accountability.
“For example, at the start of Russia’s invasion of Ukraine, money was transferred to individual Ukrainians via Airbnb bookings. While some celebrated this as ‘democratisation’ of philanthropy, others pointed out that this could ramp up inflation by flooding a wartime economy with cash, making a bad situation worse.”
MacQuillin said some microlending sites “intentionally position themselves as more ethical alternatives to charity” because they argue that it allows recipients of loans to work their way out of poverty rather than being passive beneficiaries of charity handouts.
“But does this ensure that all people who need help get it, not just those whose business proposition is attractive to lenders? And it might even reintroduce the notion of the ‘undeserving poor’ through the back door.
“But because we don’t have clear consensus of what we mean by disintermediation, these ethical questions often fly under the radar, and we struggle to come up with solutions because something that seems right for one type of disintermediation might be rejected because it’s not appropriate for another type.
“This typology provides that clarity so we can better see what the ethical and regulatory issues are and so better target our solutions.”
The typology is published in an article in the Journal of Philanthropy and Marketing, which has been co-authored by MacQuillin, Rita Kottasz from Kingston University, Juniper Locilento from the National Arts Centre Foundation/Toronto Metropolitan University, and Neil Gallaiford of Canadian fundraising agency ST (Stephen Thomas) Ltd.