Leesa Harwood: Are donors losing faith in the existing charity model?

With modern technology, decentralised and agile organisations are finding favour with those who see extra layers of hierarchy as simply adding costs

Leesa Harwood
Leesa Harwood

Most of today’s charities were established by those who believed that injustice or social problems could be resolved with courage, passion and the solidarity of like-minded people. Today we would call these founders social entrepreneurs who, unable to solve problems using existing systems, they set up their own. Eglantyne Jebb, Sir William Hillary, Thomas John Barnardo and many others resolved to make the world a better place with what are now some of the most well-known charities in the world. We stand on the shoulders of these giants.

But charities are not the only way to solve problems, nor do they have a monopoly on redistributing supporters’ time and money to effect change. People can change the world without even engaging with a registered charity and today there are more options than ever before.

I had lunch with a 17-year-old recently. Her mother has worked for a large non-profit organisation for almost a decade, so she’s no stranger to the role of big charities. She is cynical and sees them as an additional layer that adds cost and complexity but not much else. She liaises directly on Facebook with an overseas community where she volunteered last year with the help of a very small international community development organisation.

If she wants to support projects financially she could continue to circumvent the big-charity model by using Kiva, GoFundMe or Leetchi. A five-minute internet search offers up 17 online giving platforms where individuals and families pitch alongside multimillion-dollar charities. In this environment a donation to a big organisation doesn’t necessarily present a more compelling case for support than a direct loan to help a woman in Bengal to expand her dairy business by buying a cow. In this environment big brands and multimillion-pound marketing budgets don’t always win.

Reducing the number of layers or intermediaries between supporter and supported is known as disintermediation. It’s a trend that traditional charities ignore at their peril because in the world of disintermediation the largest organisations are not necessarily the ones that survive. Agility, proximity to impact and transparency are important but not always easy to find in centralised superstructures. Decentralised or distributed autonomous organisations are much more aligned with these criteria. When supported by advances in technology they become alternatives to cumbersome, hierarchical structures in traditional organisations.

Give Directly removes the concepts of intermediary charity and conditional funding altogether by distributing cash directly to vulnerable households in remote communities. It is testing evidence to suggest that cash transfers reduce poverty and improve lives: the Universal Basic Income hypothesis. This is an approach to economic security in which everyone is unconditionally provided with some money, regardless of work. It does not follow the traditional NGO approach in which the experts in charities ultimately decide how best to spend their donors’ contributions. Advocates say the system could be an effective way to lift millions out of poverty. Opponents argue that recipients will waste the money or lose the incentive to work. Either way, there are plenty of donors signing up to fund the experiment.

The bottom line is this: the founders of today’s charities created this model because the existing systems did not effectively solve the problems they identified. Are today’s entrepreneurial citizens losing faith with existing systems and charities? Are they using technology and global networks to harness the courage, passion and solidarity of like-minded people? Maybe a new generation of giants is stirring. But this time their beacons are causes, not big, centralised charities, and this time they use technology to achieve direct impact. I wonder what Eglantyne would say.

Leesa Harwood is a fundraising consultant

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