It warns that British NGOs face falling donations, a dearth of volunteers, and the prospect of becoming irrelevant to young people unless they change their attitude to radical activism.
The paper, written by Sarah Lister of the Institute of Development Studies at Sussex University, argues that they must take the so-called global justice movement far more seriously.
It says that, despite campaigns on trade justice and debt, NGOs have "lost touch with the groundswell of radical activism".
The paper also says that, by constantly taking "the middle path", development charities reinforce the established economic system and "stifle the possibility of more radical and 'democratic' change".
Lister warns: "There is a danger that NGOs will be squeezed out of their niche, unable to recruit volunteers or attract as many donations, but also that they will be rejected by a new generation of activists as irrelevant, or part of the system they are fighting."
The paper will be launched to more than 100 NGO directors on 28 April.
The event will bring together policy makers, academics, donors, activists and trade unions to discuss vital issues affecting NGOs.
Louise Richards, chief executive of War on Want, said NGOs could benefit from a closer relationship with the new social movements. "Radical activism is often the launchpad for more constructive forms of campaigning. If an organisation's values and results are strong enough, then NGOs have nothing to fear."