How blockchain can help charitable and non-profit organizations

The charity and non-profit sector is adopting blockchain as a means of showing transparency and accountability. However, some have started to express concern.

The number of people donating is reporting a drop, although the amount raised remains stable as the wealthy give more. So the question is how to reverse this trend.

The BBB Wise Giving Alliance (, a standards-based charity evaluator, conducted a survey of 2,000 people. He was asked if he would consider using cryptocurrency to make a donation. 73% said yes. There are many reasons for this – the foremost being the tax benefits.

Source: Youtube

In the US, the Internal Revenue Service (IRS) treats crypto as stock or property, and a donor can take a full deduction of its value without paying capital gains taxes if they donate directly to crypto.

If they cash out cryptocurrencies, they will lose money in taxes and thus be able to give less money to charity.

Why the need for blockchain?

Blockchain has shown many use cases in the non-profit sector. First, they have been effective financial tools for cross-border payments through remittances and crowdfunding and reduction of transaction fees in cross-border payments.

Non-governmental organizations (NGOs) are increasingly using blockchain for identity and property rights, especially for refugees who may not have much property.

They can be given an identity on the blockchain where everything can be verified, and each of the UN agencies or charities have access to that blockchain. They can distribute the person’s resources to them or track what type of medical care they need.

Blockchain can also serve as an effective medium for donor engagement. Smart contracts can allow donors to follow their donations throughout the process. Donors can also participate in voting and decision making through a system that is easily auditable, editable, always transparent and non-tamperable.

How Blockchain Can Help The Nonprofit Sector

A Morales report gives an essential idea of ​​how technology can strengthen the nonprofit sector.

How Blockchain Can Help With Nonprofit Accountability And Transparency In The Charity Sector
Source: Morales

According to the report, blockchain reduces overhead costs as charitable organizations have to deal with the heavy paperwork involved in compiling, registering and administering their customer relationship management (CRM) systems.

However, using a decentralized network would eliminate such problems. Other benefits include increased audience confidence and wider reach.

The report states: “Transparency in nonprofits is paramount to an organization’s success in the future. With blockchain increasing trust in the charitable sector, more people will be likely to donate.

Meanwhile, blockchain has the advantage of being accessible on a global platform using state-of-the-art technology. In the charitable sector, blockchain not only increases accountability and transparency in non-profit organizations but also puts them in front of people willing to give. It may also see a wider reach among donors located around the world.

The money sent also reaches the needy faster. From a payer’s point of view, it is much easier to send money from a wallet than from a traditional bank account.

Additionally, transactions are confirmed within minutes. In contrast, a large donation through the legacy system can take several days and may be subject to regulatory scrutiny.

Various crypto institutions have also launched projects to support their philanthropic aspirations. Pink Care Token (PCAT) is the first stable coin issued for social good on Binance Chain.

The token was introduced as part of the End Poverty campaign, which was created in alliance with 47 other businesses and organizations.

Any concerns to consider?

While there are many clear value additions to cryptocurrency and blockchain in the nonprofit sector, privacy and security remain significant challenges.

In July 2020, a 17-year-old hacked the Twitter accounts of several public figures such as Barack Obama, Elon Musk and Kanye West. They said that they were giving back to their community and that all bitcoins sent to a particular address would be doubled and sent back. Thousands of people fell for this scam, losing thousands of dollars.

On the implementation front, donations need to be up to speed in order to receive crypto donations. A staff member or group of staff members familiar with cryptography will be needed to control the operation.

Following this, steps are being taken to expedite the process, manage accounts and wallets, and establish protocols for accepting anonymous donations and verifying the genuineness of sources.


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