Blockchain refers to a public ledger technology in which each cryptocurrency transaction is digitally signed to verify its authenticity and ensure that the information in it does not change. As such, operations recorded on the blockchain and the book itself are considered the highest level of integrity.
In the early days of cryptocurrency, people thought that blockchain was all about bitcoin. Today, it is fast becoming evident that technology is more than just bitcoin or digital currencies. But while blockchain has the potential to revolutionize almost any industry, nowhere will its impact be more pronounced than in charitable donations.
For charities, the blockchain is a rare window of transparency and fairness, which could help make them more credible in the eyes of those who support them. Some of the problems that non-profit organizations are struggling with include a lack of accountability for spending money and transparency. Donors are sometimes reluctant to give because they can’t be sure where their funds are going or who they are helping with their donation. Over time, such worries can cause them to become frustrated.
This makes it difficult for charities to attract or retain sponsors. However, the blockchain is quickly raising confidence in the system by showing philanthropists where their money is going. Technology achieves this by making the system completely transparent and information easily accessible. Here’s how blockchain improves transparency and trust in charities:
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- Funds go directly to the purposes to which donors contribute. Thanks to blockchain technology, donations no longer have to go through intermediaries. Instead, they go directly to recipients and companies that are in a position to help them. This help ensures that there is less room for fraud or financial leaks in the system and that the money does not go into the wrong pockets. The result is that donors feel more encouraged to give.
- All transactions can be tracked. Distributed books can be used to track transactions. This improved traceability makes it easier to track spending. As a result, donors can even see from a distance how their funds have ultimately helped people that charitable foundations claim to help.
- Blockchain makes it easy to distinguish benevolent organizations from fake ones. Because donations made using cryptocurrencies can be tracked, it becomes easier for donors to identify organizations that support their goal than those that want to enrich just a few individuals. In this way, they get to know the real charities they can work with.
All in all, blockchain and cryptocurrencies will help ensure efficiency and provide confidence to sponsors that their donation is directed towards the goal they support.
Well-meaning organizations must embrace technology if they plan to improve transparency, as well as quickly track and transfer funds. It is for all these reasons that platforms such as Sponsy strive to help companies deliver greater transparency and trust through blockchain technology.