The charity has been a part of society since ages given the need of people to do there a bit in making a difference. However, the dilemma arises when charitable giving turns out to be not as charitable as it could be. The lack of transparency, accountability issues and several other problems like limited ways of accepting donations pose barriers to the success of Charitable Organisations. The use of blockchain technology to facilitate charitable contributions can help organizations to raise funds and distribute them efficiently.
The Problem in Charity
Every year numerous headlines draw our attention towards the scandals happening in the world of philanthropy which ultimately leads to a decline in faith in charitable organizations. Americans donated over $410 billion to charity in 2017, a 5.2% increase from 2016. The series of scandals have rattled how the public perceives a charity, and trust in charitable organizations cratered to a mere 57%. The Oxfam scandal has exposed rampant sexual abuse by supposed do-gooders. It throws light on how the term charity has been used and abused. The main concerns that have been persistent for years in charitable giving are:
- High transaction fees charged on donations
- The huge potential of corruption by the intermediaries assisting and administrating funds and services
- Lack of accountability and transparency on how and where the funds have been spent within nonprofits and other NGOs.
These hindrances in Charitable giving has marked the rise of crypto-philanthropy. Fidelity Charitable reported that 2017 was a record year for crypto donations. The organization received about $69 million in cryptocurrencies. A number of prominent philanthropic organizations like Red Cross, Save the Children, United Way, the Wikimedia Foundation, and the Electronic Frontier Foundation have been trailing Bitcoin donations for years. There are many powerful and innovative ways of implementing blockchain that may help restore some of the lost credibility of charities apart from crypto donations.
Potential benefits of Blockchain-philanthropy
Crypto-donations: Online donations are increasing in popularity and cryptocurrency donations have made it easy for supporters to help their selected causes. The use of Cryptocurrencies to administer social causes eliminates the need for intermediaries, thus reduce donations processing and transactions costs along with the taxes on the donations. The donations made via Cryptocurrencies help the funds to move directly from donors to charities, and the decentralization of blockchain makes it uniquely suitable for international transactions. As each cryptocurrency transaction is unique and easily trackable through the blockchain, it aids in providing a higher level of transparency and public accountability.
Smart donations: Leveraging Smart contracts for charities can reinvent the sector towards ‘impact-based donations’. Smart contracts would ensure that the money is transferred only if certain trigger conditions are met, meaning supporters can get refunded if the impact of the donation is not proved. This type of donation would make charities more accountable and the transparency could increase trust among supporters.
Lower Administrative Costs: The high transaction and administrative costs have been a grave concern for philanthropy. Blockchain-based platforms would provide a marketplace to reach a ready-to-give audience, at much lower fees than traditional marketing and fundraising agencies. This platform would provide proof of need and proof of receipt along with the track whether the funds reach the intended party or not.
Mining Crypto for Charity: Many networks of high-powered computers which hold massive amounts of computer power can use their spare computing power to mine cryptocurrencies as a charitable venture.
Digital Asset Donations: Blockchain gives the power to create digital collectibles that cannot be copied, giving them a value. These digital collectibles can prove to be an asset that can be donated, providing a new revenue stream for charitable organizations.
Blockchain can be a platform to make the world a better place with its numerous applications. It provides a goal-driven fundraising model of philanthropy along with anonymity and transparency to donors, lower administrative costs and cross-border donations to charitable organizations.