How Crypto and Blockchain are changing Philanthropy
Much of the growing interest in Bitcoin along with other digital currencies has focused on getting rather than giving. But flying under the radar is an exciting new trend toward leveraging cryptocurrencies for philanthropy.
Fundraising with Crypto
Over the past couple of years, a number of foundations and charities have been trialing Bitcoin donations. Cryptocurrency donations to charity are definitely on the upswing. Fidelity Charitable, which houses the country’s biggest donor-advised fund, received $69 mln in cryptocurrency contributions in 2017, up from $7 mln received in 2015 and 2016 combined.
Past charity donations are many innovative platforms and projects occurring in the emerging “crypto-philanthropy” space. These include crowdfunding programs such as BitHope, which enables donors to create Bitcoin contributions to selected charities for their fundraising campaigns. Besides, some new instruments such as GiveTrack and Alice can track the flow of contributions from donor to a donee publicly, and to verify what charities have received and attained, all to a Blockchain.
Past cryptocurrency contributions and monitoring, quite a few societal purposes digital coins have been created to encourage particular nonprofit programs and jobs. Clean Water Coin, by way of example, was developed to raise money for the non profit Charity:Water and also bring clean water into the families across the world. Pinkcoin, a philanthropy coin that allows investors to both donate to charity and to earn a return on their investment, is listed on important cryptocurrency exchanges and has performed well compared to other commercially traded digital currencies.
Another new arrival from the cryptocurrency for charity space is the “crypto-foundation.” One anonymous investor established a base to provide away 5,057 Bitcoins. The motto of the donor’s union, the Pineapple Fund, is : “Because once you have enough money, money doesn’t matter.” Thus far, through the anonymous outreach of an individual who goes by the moniker of “pine,” $56 mln has been given to 56 hand-selected charities.
Further down the street, we might even find an autonomous and decentralized base or fund, below which grant and financial distributions are made purely via the votes of holders of foundation created tokens. Such a “Distributed Autonomous Foundation” will be governed through an external collective of shareholders with the right to lead donation flows and even produce and fund project ideas through bulk token rule.
Blockchain-based systems may also help enhance the standing of charities. According to recent studies, one in three Americans have been said to lack faith at nonprofits, many thinking that these associations spend too much of the funds on overhead and too little straight on programs. Decreased overhead spending because of improved operational efficiencies and disintermediation via Blockchain technologies (e.g., direct donor to beneficiary giving) could help revive faith in charitable giving among skeptical givers. This, in turn, could result in improved philanthropic engagement and a increase in overall giving.
In the future more charities, and even foundations, could create their own cryptocurrencies, the sale of which might enable a new sustainability model. A charity token exchange developed exclusively for the buying and selling of these, may one day bolster a new market-based strategy to philanthropy in which both philanthropists and charities earn money from trading “digital currencies for good.” Nonprofits and bases could also engage in fundraising through token mining.
Despite infinite opportunities, there are a number of challenges ahead. Most prominent among these is the fact that digital currency contributions and Blockchain anchored systems continue to be brand new and untested in the world of philanthropy, and there is limited awareness and interest among human givers, charities, and foundations.
What the future holds
In the short term, it’s unlikely that cryptocurrency and Blockchain platforms will significantly disrupt or displace traditional philanthropy, but they’ll drive additional experimentation and innovation in the industry.
There’ll also be testing of smart contracts and Blockchain managed tracking and giving which, if successful, could set a new norm for transparency in philanthropy. Ultimately, as givers and beneficiaries socialize more immediately, we might see diminished functions for charities, aid agencies, and foundations - in some instances even the removal of these entities in the philanthropic equation.
On the reverse side, if greater transparency in giving and impact does lead to increased confidence in charities, tens of thousands (or even billions) of dollars more may be created to the social sector.