How Blockchain Will Transform the World of Giving?

Growing strings of scandals and stories of aggressive fundraising practices have taken away the trust that the public had in charity and charitable organizations. According to the annual report published by Watchdog for 2018-19, there had been an 83% increase in whistleblowing incidents. As headline-grabbing scandals, huge cash surpluses, allegations of mismanagement and sizeable administrations costs continue to grapple with the world of philanthropy, it is unsurprising to witness the decline in trust towards charity organizations. And this has caused a significant decline in donations. Charity organizations need to challenge traditional fundraising strategies and restore the level of public trust in order to engage more people. This is where blockchain technology pitches in and presents itself as a perfect solution to address the troubles plaguing the charity sector.

The Rise of Cryptophilanthropy


Charity foundations and investors are increasingly turning to cryptocurrency donation, terming it as “crypto-philanthropy”. Such blockchain based charity projects ensures a higher level of transparency, minimized expenses and reduced taxes.

What makes blockchain technology the best alternative solution for non-profit organizations and charities to receive funds and raise donations? Decentralization, cryptography and consensus are the three defining characteristics of blockchain technology that contribute to its immutability. Whenever there is a transaction of digital assets in a blockchain network, its details are recorded to a block which comprises of data, hash and hash of the previous block. Data present in a block varies according to the type of blockchain. For a bitcoin transaction, the data would be the details of a transaction such as sender, receiver and amount of coins. Hash is a unique string of encrypted data that is set to identify the corresponding block and its data. This hash is processed along with the new transactions to create a brand new hash for next block in the chain. Since each block links to its previous block through its hash, even the slightest change in any part of the data would change all the hashes, making all the following blocks invalid and false.

All the blocks in the blockchain are back-linked in chronological order and monitored across P2P nodes which makes it highly improbable to tamper records or corrupt the network. If one has to hack into the bitcoin blockchain, then he has to hack not only a single block, but all the preceding blocks and then redo the proof-of-work chain on all computers connected across the peer-to-peer network, all within a very short amount of time, which is near to impossible. When you own a bitcoin, you avail digital keys (a pair of public and private key) that confirm your ownership and access to the funds in a cryptographically secure cryptocurrency systems.

Blockchain technology can be leveraged to build a completely transparent charity system by tracking the donations through multiple layers. This would enable donors to track how their funds are spent and ensure they reach the ultimate beneficiaries.

Potential benefits of Cryptophilanthropy



  • Reduction of transaction costs
    Exorbitant administrative expenses are a red flag in charity. Non profit organizations and charities spend a huge sum for fundraising and marketing activities. Moreover, the usual costs associated with the donations processing and banking transactions are higher. Blockchain-based platforms helps charity organizations to harness the power of peer-to-peer networks by eliminating the financial intermediaries such as banks. This would reduce the transaction costs and transaction settlement time dramatically.

  • Automating processes with smart contracts
    Smart contracts are digital contracts that runs on computerized transaction protocol supervised by a number of nodes connected to a blockchain network. Since blockchain contracts work on a decentralized system between all permitted parties, it can self-execute and self-maintain thereby eliminating the need for intermediaries such as lawyers or notaries. This type of algorithmic philanthropy not only increases trust among supporters, but also make charities more accountable. Automated smart contracts prove beneficial for philanthropies as it ensures the funds can only be used as intended and will be released to their grant recipients only when the conditions are met.

  • Boosting transparency
    Transactions recorded on blockchain network are immutable and transparent ,which makes it easy for all the parties involved to gain a greater clarity within donation systems. Records linked on a blockchain network can be tracked across the value chain. When it comes to philanthropy, blockchain-based platforms allow the donor to track their donations all the way up until it reaches the beneficiary. Having a robust and transparent impact tracking and measurement systems would help in reducing unnecessary costs, eliminating corruption and boosting levels of trust.


Real-world cases


Some of the internationally renowned charitable organizations such as the Red ross, Save the Children, United Way, and Greenpeace have been using crypto-philanthropy to make a positive impact. Fidelity Charitable, a global philanthropic organization reportedly received $69 million in cryptocurrency donations in 2017. And in the same year, an anonymous benefactor known as ‘Pine’ distributed his wealth to various charitable causes as bitcoin donations through Pineapple Fund. Blockchain Charity Foundation (BCF), another popular example of crypto-philanthropy organization has combined forces with 47 companies to introduce a stablecoin on Binance Chain for running a poverty campaign in developing countries.

Final thoughts


Cryptocurrency donations and blockchain-based charity projects are still in its infancy. Moreover, there are some potential concerns such as volatility, security and public awareness connected with the blockchain adoption. But as blockchain technology blockchain technology continues to gain popularity and acceptance, philanthropists, foundations and nonprofits can embrace it as an effective way to help those in need.




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