How blockchain tech can help charities become more transparent
The charity and nonprofit sector is grappling with a serious trust issue — but blockchain technology could provide a solution.
Just 56 percent of people globally trust NGOs (Non-Governmental Organizations), according to the 2019 Edelman Trust Barometer [PDF], which surveyed more than 33,000 people across 27 territories.
Even more concerningly, that figure drops below 50 percent in a number of key markets, including Japan, Germany and the United Kingdom.
Givers, particularly younger ones, are now more likely than ever to demand clearer indicators that their donation will make a material impact.
This has led to the rise of third-party organizations which rate the effectiveness of charities; a recent study in the Journal of Accounting, Auditing and Finance found that a seal of approval from one such organization could lead to an increase in contributions of more than 50 percent.
Trust through transparency
What this indicates is that building transparency is now more important than ever for nonprofits, and blockchain technology can play a central role in this process.
Delivering greater transparency throughout the entire donation user journey needs to become a top priority for these organizations.
Easy5050, a blockchain based fundraising platform that brings the classic 50/50 draw format into the digital age, is one way charities and nonprofits can better engage those who consider trust a key prerequisite when deciding whether or not to give.
The concept is simple.
A giver buys one or more virtual tickets via the Easy5050 platform, and those tickets are stored immutably on the Peerplays blockchain.
Once a preset time limit or financial target has been hit, a provably fair draw will take place with 50 percent of the funds returned to the winner and 50 percent to the charity or nonprofit.
Of course, 50/50 draws are nothing new, but when hosted informally and off the blockchain, they are liable to inaccuracies and fraud. Players can lose their tickets, and entrants never truly know if the draw was completely fair.
By bringing this form of fundraising onto a transparent, immutable and provably fair platform — which also dramatically improves the user experience for those purchasing tickets — it is possible to scale draws on a global level.
The potential applications are widespread, from local fundraising, to global campaigns, to crisis scenarios where speed is of the essence, Easy5050 can deliver in a way that traditional drives cannot.
Blockchain for the better
This is just one way in which blockchain technology can help nonprofits better achieve their goals.
But elsewhere, we are beginning to see a whole host of applications involving blockchain and the charity section.
Meanwhile, an increasing number of people are choosing to make their charitable donations in cryptocurrencies; Fidelity Charitable said in August that it was received more than $106 million in cryptocurrency donations since it first began accepting them in 2015.
The most famous cryptocurrency philanthropist, an anonymous donor known simply as Pine, distributed a remarkable $55 million in Bitcoin via the Pineapple Fund in 2017.
With millennials fast becoming the most important demographic for donations, engaging them with modern platforms that utilize the same technology that is playing an increasingly important role in other areas of their lives is critical.
The future of philanthropy
We believe that blockchain will be at the heart of philanthropy over the coming years. This technology provides real-world solutions to many of the daily challenges facing nonprofits.
And this goes beyond the greater transparency blockchain systems can bring to the sector.
The decentralized nature of many blockchains also helps narrow the trust deficit between givers and organizations.
In the future, we may see accountability for the spending of donations tied to smart contracts, enabling donors to donate directly to those best in a position to help.
Similarly, this technology makes it easier to transfer funds globally, quickly, and without high fees, which is another major advantages for the uniquely international nature of many nonprofits.
We also foresee significant cost reduction and efficiency benefits as more charities utilize blockchain infrastructure in the daily running of their operations.
Put simply, blockchain is on the cusp of revolutionizing the relationship between donors and charities. What we, the crypto community, must do is work hard to educate organizations to the benefits of this technology.
And by bringing 50/50 draws onto the blockchain for the first time, we hope Easy5050 can provide just a little glimpse of this future.
