Bitcoin’s Potential Impact on the Nonprofit Sector
Bitcoin and other cryptocurrencies have the potential to change the way the nonprofit sector is funded. Through the use of bitcoin and the underlying blockchain technology, donors and recipient organizations are finding ways to conquer traditional fundraising hurdles.
Because the technology is still fairly new, and awaiting regulatory standards, some drawbacks exist. But as many donors and nonprofits are discovering, the advantages far outweigh the existing problems. The future of nonprofit donations will continue to be impacted by cryptocurrencies and blockchain technology.
Donors and nonprofits have discovered numerous advantages for funding through bitcoin and other cryptocurrencies:
1. Donate from anywhere in the world
Imagine visiting a neighborhood on the other side of the world from where you live. You become involved in a local nonprofit project that you would like to support financially. What if you could instantly share that funding, without having to wait until you get home, go through a lengthy and expensive process of transferring funds, worry about whether your money will line the pockets of a corrupt official, and hope that the local nonprofit has the capability to receive internationally donated funds (many do not).
2. No hoops to jump through
In many regions around the world, there are many people who cannot afford to open a bank account, let alone make transfer payments. Often, those are the very people with a passion to support nonprofit activities in their communities and around the world. This is often their way of investing into their communities to help improve their own lives. Bitcoin allows every individual the opportunity to support nonprofits. The nonprofits will benefit by making it possible to receive currency from their greatest local supporters.
3. Quick transfers for immediate needs
If you have worked for a nonprofit, you will know that emergency needs can come up suddenly. Traditional financing may take too long. Bitcoin allows the possibility for instant transfers of funds from all over the world. That person who needs to be flown to another city for emergency medical treatment can be on a plane within an hour.
4. Donate directly (no middle man)
Many large nonprofits exist for the purpose of supporting smaller organizations around the world. It takes the efforts of the larger organization to administratively and financially keep those smaller endeavors going. But a bloated organizational structure means extra administrative and financing costs. Bitcoin allows donors to send money directly to those smaller, local organizations. This avoids the extra time, costs, and agendas of the middle man.
5. Track usage of funds
With bitcoin and blockchain technology, it will be possible to ensure that money donated ends up exactly where it is intended to go. Without this transparency, a donor has no way of knowing whether the money donated to buy supplies for a local school was actually used in that way.
6. Anonymous donations
People have many reasons for wanting to donate anonymously. One of those reasons is simply to focus on the good of helping others, without bringing attention to oneself. Other reasons might include fear of reprisals, when the charity supported does not line up with local political, workplace, or family cultural agendas. And some donors simply want to avoid the paperwork or becoming part of an organization’s mailing list. Bitcoin makes it possible to donate anonymously to any organization that is permitted to process anonymous donations.
7. No blocks by financial institutions
Financial intermediaries have the power to block donations to organizations that are considered controversial. This can happen anywhere in the world for any reason. Bitcoin transactions allow people to bypass those intermediaries. Not only can this reduce transaction costs and time for the benefit of the recipient organization. It also prevents transactions from being blocked for political and other reasons.
Despite the many advantages, the nonprofit sector and its donors still have areas to watch and assess. Some organizations might not be able legally to accept anonymous donations. The tax-deductible status of cryptocurrency donations is not clear. The value of cryptocurrency can be volatile, affecting the monetary impact of each donation. While many countries are in the throes of enacting and clarifying cryptocurrency regulations, some countries (often where funding is the most needed) still have blocks against cryptocurrency. Threat of theft or loss of cryptocurrency also poses risks.
With any new technology or industry, early adopters will have to navigate potential problems. But with the many benefits for nonprofits, and the tremendous potential for using bitcoin and other cryptocurrencies in donations, no doubt these bumps in the road will be smoothed out. For anyone who works in or supports the nonprofit sector, it will be important to watch how bitcoin continues to change the way funding is carried out. This is also a great opportunity for interested individuals to join the global conversation and shape the future of the nonprofit sector.
The Blockchain Industry Group (BIG) is dedicated to promoting the adoption of blockchain technologies and digital currencies by actively collaborating with and promoting the efforts of our global blockchain community. With the support of our 3.8 million social media members, we intend to become the world’s largest, most active and most beneficial Blockchain Industry Group.