Blockchain has extended well beyond digital money and payment option. In all quarters, its underlying technology has brought radical change from being a harbinger of hope for the unbanked, relinquishing centralized control over our own data that are being exploited and owned by corporate giants, up to opening doors to break free from the demands of the existing capitalist system. But among the potential uses of its underlying technology, using blockchain toward philanthropic ends to better humanity may be the sweetest spot.
Science showed that humans are actually wired for compassion, and helping others is our first instinct. People are more likely to donate to charities and help a diverse range of causes they deeply care about such as homelessness, environmental perils, giving food and cash assistance to millions of families struggling to make ends meet, supporting a research study seeking a cure for AIDS, or helping victims of abuse and social injustice rebuild their lives. However, public trust in the charity sector had fallen significantly as scandals, corruption, hidden agendas, and allegations of mismanagement hit the headlines. For instance, a significant portion of donations is spent on exorbitant administrative expenses (staffing cost, fundraising, and marketing) rather than on its purported causes. And while most of the charities lack transparency, progress on certain campaigns and how donations are being used can be difficult to track as some organizations refused to disclose how much money actually reached the intended recipients or the amount of funds they have in reserve. More than that, what makes it utterly painful and ironic is that some charity leaders who are supposed to be deeply invested to give to a worthy cause are being tempted to embezzlement schemes given the current structure of charitable institutions. Thus, distrust and inefficient use of funds lead to public disengagement and donor attrition.
Nevertheless, with the advent of more sophisticated and constantly evolving technology such as blockchain and cryptocurrency, the tainted reputation of charities can be restored and prove themselves credible and worthy. Blockchain can significantly reduce fundraising and administrative costs that eat up on donation expenses, at the same time increase the efficiency, transparency, and create tools for accountability through smart contract and distributed ledger. With its decentralized nature, blockchain allows direct transfer from donors to the non-profits of their choice that can bypass several layers of bureaucracy that take cuts on people’s donations. Moreover, it enables finances to be publicly audited tapering down financial leakage and fraud, giving donors a real-time update on the progress and impact of projects along with a guarantee that their money is being put to good use. Thus, a traceable donation is one of the huge philanthropic benefits of blockchain technology that will encourage more generosity from individuals.
Today, there are various blockchain-tailored philanthropic platforms that are actually making an impact. One example is a London-based social tech startup called Alice that uses smart contracts to track donations and initiate social funding. It also incentivizes charities, NGO’s, or social enterprises when they achieve their evidentiary milestone. On the other hand, Usizo which is a South Africa-based blockchain platform aims to connect poor African schools to the international donor market. The platform allows anybody from around the globe to directly fund utility bills for community schools using cryptocurrencies. Benefactors can even track down the school’s actual electricity consumption and calculate the amount of electricity they can buy with their own donations. Another revolutionary project is called Amply in South Africa that uses blockchain technology to help register children to receive government subsidies. Many children living in extreme poverty lack proper identification which makes them invisible to the government and deprives them of the basic social services. More than providing children their own blockchain-based digital identity, this platform also helps school teachers digitize attendance records and reports required by the government to receive subsidies such as educational programs, nutrition, and childcare. These higher standards of transparency can have a huge impact on donor engagement and long-term retention.
Today, philanthropic application of blockchain technology is becoming widespread and familiar. More and more charities are coming to embrace it as one more attractive way to help those in need. But still, it remains a relatively new means of giving for most individuals and organizations that makes them skeptical to use the system. If only donors and charitable organizations will be willing enough to try and accept positive innovation for a good cause or even felt a deep inner sense of personal responsibility for the world, it would be a far different place.
The world exists the way it exists because we have chosen for it to. Something needs to be changed in the not-for-profit industry and we are now given the resources and tools with which to make a different choice. Blockchain has the potential to be extraordinarily powerful and can lift the fog from the philanthropic landscape helping well-meaning charities increase whatever good they are doing. But the question is “Will you let it?”.