Why the Charity Sector Desperately Needs to Adopt Blockchain Technology

Currently, all eyes are fixed on the financial applications of blockchain technology. The idea of transferring money between two parties without a bank’s involvement is revolutionary stuff. Transferring money for charitable purposes is also fraught with middlemen. Charities, just like financial institutions, are beset by problems arising from centralized governance models.

DLT has attributes that are perfectly suited to the charity industry. A simple example would be a distributed open source ledger. A donor would transfer some cryptocurrency, which would be automatically be recorded on the blockchain and sent to a local agency instead of a centralized charity conglomerate. There are no accounting costs and no costs for sending money. The process is far faster, too. 

The world’s first crypto charity is taking advantage of this technology. All donations are tracked via a financials page, and 100% of the donation goes to those in need. While the Coins4Clothes team are innovators in the charity sector, they are by no means the only ones.

Wirex has launched a charity nomination initiative to facilitate adoption and serve a greater good, while cryptocurrency exchanges are also following suit. Coinbase has launched a crypto charity fund, while Binance has created its blockchain charity foundation that aims to raise USD 100 Million by the end of the year. This figure is quite possible since, last year, the Pineapple Fund saw bitcoin donations of USD 86 Million, and has thus far sent over USD $55 Million to 60 different charities.

DLT can remove the issues plaguing the charitable donations sector, which could ultimately result in more funds and services reaching those who need them most.

Issues within the charity sector

The track record of the charity industry is almost too shameful to list. Not to denigrate the works of the genuine organizations that work hard toward the greater good, but the charity industry is woefully inefficient and has had its fair share of well-documented public scandals.

The past two years, in particular, have seen a significant decline in the popularity of charity organizations. The public has lost trust in them, and charities have an uphill battle to fight to gain fundraising. Blockchain could be the only way to regain this trust.

The main issue with charities is the administration and documentation process, which eats into funds that should be going where they are needed. The second issue is transparency. Organizations do not have clear policies regarding governance, and there is no real way for people to know exactly where their funds are going.

DLT to revolutionize the whole industry

Most traditional charities have been reluctant to adopt blockchain technology, despite its obvious benefits. It seems that charities, like banks, are stuck in their ways, which could see their replacement by crypto philanthropy and charities designed from the ground up to accept crypto donations only. As with many other industries, unless companies change and adopt blockchain technology, they will likely become extinct.


Aubrey Hansen is a freelance writer, a graduate of Aarhus University and crypto enthusiast. She writes about blockchain technology, Fintech and cryptocurrencies.  She’s been researching major developments in the crypto world in past couple of years.

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