When Russia invaded Ukraine last year, people wanted to help. The way they often do that is by giving money, and an appeal by the Disasters Emergency has raised £420 million (and counting). The DEC appeal is a traditional way of helping people in need: those who want to help give money to an NPO, which converts those donations into goods and services to be distributed to those who need it.
Donating via a charity wasn’t the only way that money was channelled into Ukraine. One idea that sprung up on social media was to book rooms in Ukraine via Airbnb, but not take up the booking, so the properties’ owners would receive the booking fee. According to some sources, 434,000 rooms were booked in just one week, with £15 million being transferred to the hosts.
There was much chatter on social media celebrating the Airbnb initiative as an example of the ‘democratisation’ of philanthropy. Some said it is more efficient than giving to charity since all the money goes directly to beneficiaries (which wasn’t necessarily true, since although Airbnb waived their fees, other management companies did not).
Others argued recipients could use the money as they wanted, not necessarily how a charity wanted it to be spent. Charities, it was said, put up barriers to helping people, but this type of democratised giving allows “generosity to find a way” around those barriers.
Yet this ‘democratisation’ of giving didn’t receive a unanimous thumbs up. First, because it gave little guarantee that money was going to the people who needed it most (not everyone owned spare rooms or property). Second, because it might make a bad economic situation even worse by hiking up inflation on basic products.
The Airbnb/Ukraine initiative is an example of ‘disintermediated’ giving. The term ‘disintermediation’ is well understood in the commercial sector, where it means the elimination of ‘middleman’ agents in business transactions, such as booking a holiday directly rather than going through a travel agent.
‘Many micro-lending sites (such as Kiva) allow donors to choose to whom they want to give, something that is particularly valued by lenders. Not only does this approach raise the spectre of the voting charities of the 19th Century (in which donors could vote on which beneficiaries should receive support), it might also introduce biases regarding who is helped.’
The concept of ‘disintermediation’ doesn’t transfer so well to the nonprofit sector. One reason is that there is an extra stakeholder – the beneficiary – that is not present in the commercial exchange. Their presence means there are ethical issues that are unique to giving, fundraising and philanthropy, issues that have barely begun to be identified and described, yet alone addressed.
To better pinpoint these ethical issues, a project team at Rogare – The Fundraising Think Tank devised a new typology of disintermediation in the nonprofit sector. I won’t go into detail describing this typology (the full paper in the Journal of Philanthropy and Marketing is open access). Instead, I’ll focus on some of the ethical challenges the typology helps us see more clearly.
One example is the so-called ‘madness of the crowd’, in which people using crowdfunding sites follow the herd and often make irrational funding decisions based on incomplete information. A case in point is the online appeal started in 2019 by the Australian comedian Celeste Barber.
Raising money to buy equipment to fight the bush fires ravaging Australia, the AUS$51 million (£27m) appeal delivered more money than the intended beneficiary knew what to do with. Yet people carried on giving to the appeal, even when it seemed like it was way oversubscribed. Why did they? And what harms did their continued giving cause? How to use the donations had to be decided by Australian courts.
Many micro-lending sites (such as Kiva) allow donors to choose to whom they want to give, something that is particularly valued by lenders. Not only does this approach raise the spectre of the voting charities of the 19th Century (in which donors could vote on which beneficiaries should receive support), it might also introduce biases regarding who is helped. Research reveals a ‘colourism’ bias in mircofunding whereby lighter-skinned people receive more support than populations that are darker-skinned.
The movement to democratise philanthropy, giving and fundraising is pressing forward. It presents a challenge for traditional charities in how they remain relevant in mediating the transfer of resources between donors and beneficiaries.
But as we celebrate giving more voice and agency to donors, are we failing to notice – or not even look for – other ethical harms that might arise from this democratisation, specifically in whether it results in people that traditional charities would have helped no longer receiving that support? Our challenge is to ensure that democratisation of giving doesn’t lead to inequality in helping.
Ian MacQuillin is the director of Rogare – The Fundraising Think Tank
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