Unlocking the Potential of Blockchain for Charities – Cryptopolitan

Blockchain is a technology that has the potential to revolutionize not only the financial sector, but also many other industries, including charities. Charities are organizations dedicated to providing help and support to those in need, and blockchain for charities can give them new opportunities to deliver help more efficiently, securely and transparently.

A lack of transparency and accountability often plagues organizations. Crypto-philanthropy offers an alternative solution, using blockchain technology to facilitate donations securely and directly – without intermediaries. In addition, this type of decentralized donation can be more easily tracked and monitored during the transaction process.

Crypto-philanthropy allows for increased donor anonymity while improving donation efficiency; nonprofits benefit from low processing fees, allowing more of each contribution to go to the intended cause. Introducing blockchain technology into the charitable sector could lead to more substantial funds being raised and properly distributed.

Cryptocurrency Philanthropy

Although there is still a significant journey ahead for the adoption of cryptocurrency globally, especially in charity, many organizations have accepted them as a current mode of donation.

Donors who wish to use cryptocurrency to send donations through these charities make significant contributions to persuade them to accept crypto.

Before taking these measures, charities must develop processes that ensure transparency and efficiency regarding the distribution of funds collected from crypto-donations.

Benefits of blockchain for charities

The potential benefits of blockchain are clear; it could revolutionize the charity sector by addressing many current challenges and issues relating to financial transparency, efficiency and accountability.

1. Increase donation transparency: With blockchain technology, the donation process is transparent and tamper-proof. In addition, donors can track their contributions in real time through chain analysis.

2. Donors can track their money: Blockchain makes it easier for donors to track where their money goes. The charity can provide transparency about how they use donations by providing access to the public ledger with all transactions recorded.

3. Protects against fraud and theft: By using blockchain, charities have an extra layer of security against fraud or theft as the funds are securely stored and difficult for hackers to steal.

4. Cost savings: Charities can save significantly on costs associated with payment processing using cryptocurrency donations through blockchain than traditional methods.

5. Fast and easy donations: With blockchain, donations can be made quickly with minimal effort required from the donor. All they need is a crypto wallet, which sends the payment directly to the charity.

6. Anonymity: Donors may wish to remain anonymous when donating. Using cryptocurrency provides that opportunity, since analysts cannot trace all donations at public addresses back to an individual donor’s personal information.

7. Reach new audiences: Cryptocurrency acceptance opens up new avenues for donations by allowing charities to receive funds from donors in different countries instantly and without costly fees or complicated paperwork.

8. Tokenization: Charities can use crypto for fundraising quickly and efficiently by creating tokens that represent a project stake or effort. They can use crypto airdrops to reward donors who contribute to the cause.

Limitations of blockchain for charities

Despite the potential benefits, some issues still need to be resolved before public adoption of blockchain in the charity sector.

1. Regulatory compliance: The lack of regulatory compliance in some countries and regions limits the use of blockchain technology.

2. Limited adoption and awareness: There still needs to be more adoption and awareness of cryptocurrency among the general public, which can make it difficult for charities to accept donations in this form.

3. Technical challenges: Blockchain technology requires technical expertise and knowledge that many charities may not have access to or fully understand.

4. Volatility: Cryptocurrencies are highly volatile and their value fluctuates constantly, making them unpredictable for charities.

5. Lack of support: There needs to be more support from financial institutions regarding cryptocurrency transactions, which can make it difficult for charities to receive donations in this form.

6. Security issues: Despite its benefits, blockchain technology also exposes charities to potential security risks and hackers.

7. Donation Tracking: The transparency benefits of blockchain come with drawbacks; tracing the source of donations can be difficult due to the anonymous nature of cryptocurrency transactions.

8. Availability: Not all charities will have the resources or knowledge to access and accept cryptocurrency donations, which can limit their use.

Blockchain use cases in charity

The Building Blocks system, designed and installed by the World Food Program (WFP), uses blockchain technology to increase the efficiency of cash transfers to refugees living in camps in Jordan. By using a secure, transparent ledger system, it has enabled increased accuracy and detail in the program and ensured financial assistance when needed. In October 2018 alone, over 100,000 citizens were able to benefit from this WFP program, an indication of the success of information sharing between entities and individuals.

The Alice Funding Platform, developed in the UK, has implemented performance-based funding. This system of incentives rewards charities when they achieve their goals. In addition, blockchain technology allows organizations to share impact data with Alice, reducing due diligence and reporting costs while allowing collaboration between social organizations.

Blockchain is the driving force behind Amply’s mobile app, which enables third-party accountability for school attendance verification. A significant advantage of the implementation is in schools related to teacher workload. By streamlining this process and introducing automated data collection, they saved around 4,000 working hours each month. The case exemplifies how distributed ledger technologies can solve real-world problems.

The Chandolo Primary School Water Project, which BitGive partnered with to crowdfund in Kenya, was a successful endeavor due to the donations of BTC 1.2 (approximately USD 15,000) made in 2018. In response to its success, the project is building a rainwater harvesting system and toilets and provide training. Additionally, it is an example of how using bitcoin for charitable giving can be effective and beneficial when done through proper channels such as those established by BitGive.

AIDChain is making waves in the charity sector for its innovative application of blockchain technology, with several solutions that allow donations to be tracked and managed securely. Through the AidPay and AidCoin cryptocurrency platforms, donors can have confidence that charities are using their contributions efficiently and appropriately, as the blockchain ledger records all transactions publicly. This increased level of transparency increases trust between donors and charities, allowing them to be more innovative with their giving campaigns.

Conclusion

It is clear from the use cases listed that blockchain technology has great potential to revolutionize charitable giving. A secure, transparent ledger system can provide increased levels of trust and security for donors while increasing the efficiency and accuracy with which they track and manage donations.

Initiatives such as the Alice Funding Platform show how incentives can reward charities when they achieve specific goals. As the technology develops and becomes more widespread, blockchain is likely to continue to play an integral role in the charitable sector.