The New Culture of Giving: How Blockchain Is Changing Charity
Charity is like the twilight zone: something is going on there, but no one knows what exactly. Some people stubbornly donate money while others keep on ignoring the problems. Meanwhile, a blockchain technology brick by brick builds the brave new world of charity, transparent and honest.
The Global Trends in Generosity
Since 2010,Charities Aids Foundations (CAF) publishes the World Giving Index, an annual report reflecting the scope and nature of giving around the world. In 2017, people from 139 countries took part in the survey. According tothe report, all developed countries in the top 20 show a decline in giving money. The proportion of people across the world who reported making donations is the lowest seen for three years.
The general tendency shows that people become more and more indifferent over time. The reason why it’s happening is complex. Donors can’t be sure who they’re actually helping and where their money goes to. It’s not the issue that they want every penny to be accounted for – they just want to see the results. IRL though, it often happens that your money is gone and that’s it. You see no changes, thus, don’t feel your donations make difference. But what is even more crucial is that you’re not sure whether you can trust those who ask you for help.
In such conditions, charity organizations have to struggle to attract donors and to raise funds. Meanwhile, the blockchain is quietly waiting around the corner for its time to come.
A blockchain lifts the veil hiding charity funds from donors, show them where their money goes, and raise trust.
“We are now observing how a blockchain is building a basis for a new type of relationships. To trust someone, you do not need to know them by sight anymore. There is no sense in fearing that someone will deceive you; you know what the others are doing, and the others know what you are doing – your trust is based on the absolute transparency and accessibility of information. This will help to overcome skepticism and create a new, honest, open and decentralized world.”
Johnny Kartakov, Managing Partner EU at Ambisafe
So, what does happen exactly when the blockchain is in the heart of charity?
- All the donations go straight to the charity foundations – without any intermediaries, commissions, or never-ending red tape.
- All transactions can be traced, and the system is fully transparent. It’s possible to follow all the way money has passed from a donor to its final destination. Hence, there’s no risk that the money will be squandered or misused.
- A blockchain helps to overcome the division into “credible” and “not very credible” foundations by making them all equally transparent. Due to this, the resources are distributed among organization more rationally and efficiently. Therefore, only the projects solving the most acute problems (from the community’s perspective) keep afloat.
- Smart contracts become the basis of the new type of charity. They are codes defining the conditions of the cooperation between a donor and a foundation and the obligations of the parties. Unlike traditional agreements, smart contracts cannot be forged, destroyed, or changed. Besides, when both sides have fulfilled their obligations, smart contracts will be implemented automatically. If any condition has been violated, the contract would be invalidated. For example:
If a foundation purchases a vaccine for a hospital, it will receive a Donor’s money.
If the foundation does not purchase a vaccine for a hospital, the Donor will receive their money back.
How Does It Work?
In simple words, a blockchain is a list of interconnected records (e.g., of money transfers). This list doesn’t belong to one owner – it is accessible for all of the parties involved in the process (all contributors and employees of the foundation). And if someone is trying to change even the tiniest detail of the list (e.g., a sum of contributed money), everyone would be able to see the alteration.
In other words, once information is added to a blockchain, it cannot be deleted, forged, or hidden. The blockchain is decentralized, it makes everything transparent, and gives all the users access to all the data.
On the technological level, an application of the blockchain to charity looks like:
- A charity foundation signs a contract with a developer company (e.g.,Ambisafe) to create a secure cryptocurrency wallet;
- The donors transfer funds to this cryptocurrency wallet;
- The donors observe how their money is being spent.
Due to these simple steps, charity foundations give the donors an opportunity to follow the implementation of the project.
Skeptics might try to blame us for being too naive and romantic. But the truth is that the blockchain technology is already applied to charity campaigns around the world.
To illustrate, theBitGive platform built on a blockchain is one of the most successful initiatives pooling cryptocurrencies for charity projects. With its help, many good deeds have already been done:
- The Water Project has raised more than $11,000 for building a sewer in a Kenyan girls’ school;
- After a severe typhoon hit the Philippines, Save the Children raised $4,850 to help the affected children in mere 24 hours;
- Medic Mobile has raised almost $6,500 for purchasing mobile phones for hospital staff in Nepal.
Also, a blockchain was used in the UN World Food Program to collect funds for 10,000 Syrian refugees in Jordan: they received cryptocurrency vouchers, which they could exchange for necessities and food in the partner shops.
On the basis of the Ethereum blockchain, a network for establishing a digital identity for refugees and other minors is to be created. The projectBlockchain for Humanity is suggesting this technology to prevent the child trafficking in Moldova. The identity data of every child will be registered on a blockchain to avoid cases of using fake identification documents. If someone tries to falsify a child’s identity data or destroy it, all members of the network would be aware of the fraud.
Building the New Culture of Giving
The projects mentioned are just a tip of the iceberg. New initiatives based on the blockchain emerge worldwide to raise the involvement of people in charity campaigns.
In the world of charity 2.0, charity foundations look honest and reliable as the blockchain makes all their actions transparent. Also, more local initiatives emerge, and donors can find the most appealing ones to support. As donors have an opportunity to follow the money transfers and see the results, they feel that their donations make difference and that their actions are meaningful. Sounds a bit like utopia, but we’ve already seen how the blockchain enhances projects worldwide.
If donors leave their skepticism behind and give the blockchain a chance to show its potential, we’d see an entirely new model of financing charity projects rather soon.