What Cryptocurrency and Blockchain Mean for Charities?
“Trillions of dollars are misappropriated: it is used for other causes, it’s stolen through over invoicing, it’s stolen under delivery, it’s misused and applied to other causes.”
– Rudi Kruger, Founder of Donorcoin
Charity and good cause is a popular yet tricky subject. We are very lucky to be sharing this world with so many generous individuals who are always ready to help, reaching into their pockets without much thought and no matter their financial situation.
Then, what’s the problem? When you give money to a good cause or make a donation, you want to believe it’s reaching the people in need. There’s been a lot of negative media coverage, and that’s how we know that far too often this isn’t happening…
Could blockchain offer a reasonable solution?
New Standards of Transparency
A lot of charities have been accused of lack of transparency. In 2016, the American Red Cross was accused of diverting 25% of the Haiti donations to internal expenses.
Some charities refuse to disclose any information on how much money is spent on organizational expenses and how much actually reaches its destination.
Big charity organizations would normally employ auditors to keep money flows under control, as well as to be able to spot if and where money changes hands.
Fintech and blockchain stand for transparency for all. Blockchain technology allows finances to be publicly audited. Instead of real money that can be easily redirected or stolen, tokens can first be sent to where they are needed most, using secure smart contracts technology. Only once all the requirements have been met can real money be released.
Why is Blockchain Better for Charities?
Cryptocurrency and blockchain offer solid features that could transform the charitable sector.
Blockchain removes third parties and middlemen from the equation. We don’t want to be pointing fingers but there’s no need for either auditors or banks in the blockchain charity world.
Due to its transparent nature, blockchain will make sure that all charities remain accountable. No more hidden information. The decentralized nature of blockchain, on the other hand, means there is no need for banks and additional fees as funds can be delivered to the ones in need directly.
With quite a few third parties eliminated, charity will become more trustworthy and will attract fewer criminals.
In other words, security of blockchain will lead to cutting back on administrative costs, helping charities save money. We think it’s a win-win for everyone (well, not for auditors and banks).
We also can’t ignore the time issue. And time is still money. We all know very well that blockchain payments are much faster than traditional payment methods, and some of them, almost instant.
Are Charities Aware of Blockchain?
Of course, not all charities will accept blockchain, but the sector has become aware of the potential blockchain technology has to offer.
A network of charities around the world called the Start Network, including such organizations as Oxfam, Save the Children, and Christian Aid, gave blockchain a try already last year.
Start Network director Sean Lowrie said, “this exciting partnership could catalyze a new way of working, one that is transparent, fast and which drives accountability to taxpayers and those affected by crises.”
Early this year, the World Wildlife Fund in Australia, Fiji, and New Zealand joined forces to stamp out illegal fishing and slave labor in the tuna fishing industry using blockchain technology. Today, WWF is investigating blockchain technology use cases for other seafood industries and fundraising initiatives. It also held two hackathons last year to develop solutions to environmental sustainability issues using the revolutionary technology.
Finally, there are several charity platforms using blockchain technology: Alice, Charitychain.io, and Giveth. Other charities like Unsung, Bitgive, and Giveth are already accepting donations in digital currencies!
Blockchain has not only revolutionized the financial sector as we know it, but is also getting closer than ever to changing the way charity and philanthropy work, making sure donations are received by the ones in need.
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Moving crypto forward,
The CoinMetro Team