Charities are facing an existential threat by being cut out of the giving process through the rise of ‘citizen fundraisers’ and increasing use of fundraising by companies, a report is warning.

The report, by think tank Rogare and Kingston University Business School, looks at the idea of ‘disintermediation’ in fundraising, where others, including citizen fundraisers, “displace nonprofits in giving, asking for support and providing aid and help”.

Citizen fundraisers are those who raise money for good causes “done by lay people out-side the remit of the fundraising profession”. This is often carried out through fundraising platforms and on social media

Meanwhile, their report also found that “other actors, particularly companies, are delivering services and providing help to people in need”. This includes work by B-Corp, social enterprises and community interest companies.

Company fundraising also includes firms asking customers for donations or to donate by becoming a subscriber. Mozilla Firefox and The Guardian are examples of firms doing this. Here companies are “using charitable fundraising methods to fund commercial activity”, found the report.

It warns that “there could be clear cases where this would displace charities” for example if a business outcompeted a charity to win a service contract and then asked for donations to deliver it.

‘Existential threat’

“It’s perhaps not an overstatement to say that disintermediation represents an existential threat to the nonprofit sector,” warns the report, called Death by a thousand cuts.

Rogare director Ian MacQuillin said: “We are all looking to grow giving and reverse what seems to be a decline in donations to charities.

“But what the move towards a ‘democratised’ disintermediation of charities tells us is that giving could be substantially grown, without any of that growth ever going near a charity bank account.”

The report uses the example of Russia’s invasion of Ukraine four years ago when “giving to charity was not the only way people channelled their money” to help Ukrainian communities.

One way that emerged on social media was for people to book an AirBnB room in Ukraine but not take up the booking. This meant that those letting rooms received a booking fee, who people perceived were the victims of the conflict.

This form of giving was carried out by bypassing international aid charities and local partners. In a single week 434,000 rooms were booked, with £15m transferred to the hosts.

MacQuillin added: “Looking ahead a decade, if the majority of giving were disintermediated in a way that provided money directly to beneficiaries, would this be in the best interests of people who currently rely on the services provided by charities?

“While fully recognising that charities have no right to claim this space – that it has to be demonstrated and earned – and that in some, possibly many, cases, alternative ways of helping might indeed be the best ways, it might still be that charities are the most effective and efficient channels though which people who want to help can provide that help for those who need.

“If that is the case, then we need to find ways to reintermediate into the relationship and processes from which we are currently being cut out.”

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