Demonstrations have been held across Northern Ireland for 11 nights running, ever since a motion was passed to restrict the flying of the Union flag at Belfast City Hall to designated days.
"As I said to Peter Robinson and Mike Nesbitt, you can't tell the protestors anything - you have to ask them," Mr McDonald told UTV.
"You have to speak to them; you have to listen to them. We have to have dialogue with them, because they are angry."
While numerous peaceful protests have been held by loyalists, a number of areas have been subjected to violence and traffic disruptions when demonstrations resulted in blocked roads.
Concerns have also been expressed about the economic impact, particularly so close to Christmas.
The most important people to sort this thing out are the people who are organising the protests - they have to feel as if they're having some impact and getting some result.
Jackie McDonald
Mr McDonald says that he supports the protests 100%, but that he condemns any violence and also feels for the traders in Belfast who have been affected by disruption.
The UDA leader told UTV that one proposal being discussed is the setting up of a joint unionist-loyalist group or taskforce to find an agreed way forward.
"One taskforce might not be enough," Mr McDonald added.
"It has to be widespread and it has to be all inclusive, where nobody feels left out."
Mr McDonald met with the DUP leader on Monday, with MLA Nelson McCausland also present, before further talks also involving the UUP leader were held at Stormont Castle on Wednesday night.
Orange Order Chaplain Rev Mervyn Gibson said he had met with Jackie McDonald and protestors in an attempt to "listen to everyone" to begin to deal with the issue.
He added that unionist politicians had shown leadership "as much as they can in the circumstances".
This is a ground roots force that has come out onto the streets. It was not organised by the loyal orders, it was not organised by the paramilitaries, it's not organised by political unionism.
Rev Mervyn Gibson
Rev Gibson added: "It is people feeling they are frustrated - they come to show that frustration."
He said his and the presence of other unionist representatives had ensured a peaceful protest at the east Belfast Alliance office on Tuesday night following an attack on police there on Monday.
"I think the protests portray an anger within the unionist community that's manifested itself on the street," he said.
Rev Gibson said the disorder was "ruining the cause" of those protesting.
"Any threat to any politician, any threat to police or indeed anybody is not justified, unequivocally should be condemned, and should be stopped," he said.
In response to a taskforce on the issue, he said he welcomed "whatever structure" would deal with the topic seriously.
"People need to know that someone's addressing the issues they are concerned about," he said.
"They need to know that it stops here, the dilution of their Britishness ... that's there's a strategy to deal with that. I think that people will then, at some stage, stop the protests if that's the case, and the sooner the better because the protests are only a symptom of the problem - the protests will not solve this.
"The only thing that will solve this is politics."