What disintermediation means for the charity sector

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What disintermediation means for the charity sector

We've explored disintermediation before, and the effects it has on charities' incomes. But why are donors donors still keen to prioritise personal appeals over charity campaigns?

Ben Roberts

Last year, we explored the strong outpouring of support for the victims of the war in Ukraine. Nearly half of the general public reported taking action to help refugees or those still in the country in April 2022. This was a spectacular indicator of the dedication to philanthropy that we see again and again in the British public – but we identified a concerning trend in their giving.

Many reported bypassing charities to give their money directly to personal appeals. This is disintermediation – cutting out the middle man and giving directly to the individuals affected (or as close to that source as you can get). Last year, only 40% of the public thought that a donation to the DEC appeal or a charity working directly with those affected was the most effective way of providing aid to Ukraine. This stat is still concerning, as it plays into the larger trend towards direct action and giving through personal channels.

But why is this happening, and what does the data show us a year later? Read on for our breakdown of disintermediation over the past year, where the trend has come from, and how the sector can combat its effects.


Why is disintermediation happening?

One of the main reasons is that it has become a lot easier to bypass charities. There are more and more personal appeals for support on social media, and online fundraising platforms like GoFundMe facilitate easy donations to individuals and causes. Young people in particular are more open to personal appeals, with more than one-in-five preferring personal fundraising over charity campaigns. Depending on the cause this can go even further, with almost a third (31%) preferring to give to individuals over charities in support of children or young people with cancer.

But it isn’t just the heightened visibility of personal appeals that has boosted their performance. Many people have become more sceptical of large organisations. Institutional trust, particularly in charities, is at low levels. In this context personal appeals can appear more authentic and trustworthy than organised efforts.

This is one of the reasons why public interest in disintermediation methods has stayed consistent over the past several years, with 27% of the public who showed a preference choosing to support personal appeals. This means that disintermediation is almost exactly as prevalent now as in 2018 when trust in the sector was at a low.


The dangers of disintermediation

Disintermediation has significant implications for the charity sector. Firstly, it reduces the impact of charities, who rely on donations to support their programs and services. When donors give directly to personal appeals, they are bypassing the established infrastructure that charities have in place to ensure their donations are used effectively and efficiently.

Charities are often better equipped to respond to complex and long-term social and humanitarian challenges. When donating to support Ukraine, for example, 31% of the public prefer personal appeals, even though the logistics involved in providing support in a warzone are much better left to large-scale organisations. Through personal appeals, funds become fragmented, and spending becomes less efficient. This is detrimental to the wider community affected by conflict. 

Disintermediation can also lead to a lack of accountability. Personal appeals are not subject to the same transparency and accountability standards as charities, making it difficult for donors to know how their money is being used. This can result in the misuse of funds and the potential for fraud.


What can organisations do to respond to disintermediation?

To respond to the trend of disintermediation, charities need to take a proactive approach to rebuilding trust with donors. This can be done in several ways:

  1. Address transparency and accountability – Organisations need to be more transparent about how their funds are being used and provide regular updates on the impact of their work. This will help to build trust with donors and encourage them to give through official channels.
  2. Invest in digital – Your brand is an essential tool in the fight against disintermediation. We encourage charities to invest in platforms and tools that allow you to reach out to donors directly, give feedback on performance, and allow for easy and secure online donations. 
  3. Engage with Gen Z – young people are the future of the charity sector, and it's important for organisations to engage with this demographic to understand their motivations and concerns. This could involve partnering with influencers and social media platforms, creating content that speaks directly to young people, and finding the right platforms to make it easier for them to get involved and make a difference.

One tool we can recommend to help you boost your brand online is CAM. To find out more, download a briefing pack below.

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