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Blockchain in Charity

Charity is an organization set up to provide help and raise money for those in need. And charitable organizations encounter barriers to success due to a lack of transparency, accountability issues, and limits to the ways they can accept donations.

We can say that charities face declining donations among the young, increasing skepticism over CEO pay, and concerns about where donations end up.

The term charity has been used and abused, and much of the public is no longer willing to take charities’ word as bond. But blockchain can help everything.

In this article, we will discuss how blockchain can help in charities!

Crypto-philanthropy is the use of blockchain technology to facilitate charitable contributions, which offers an alternative solution, with decentralized and direct transactions that may help these organizations receive donations and raise funds more efficiently.

Benefits of Crypto-Philanthropy

Crypto-philanthropy promises some notable advantages for charitable organizations and donors, which include:

  1. Total transparency: Each cryptocurrency transaction is unique, which means that it is also easily tracked through the blockchain. The higher level of transparency and public accountability can ease donors’ minds and encourage them to give while also reinforcing the charity’s reputation for integrity.

  2. Global and decentralized: Most blockchain networks present high levels of decentralization, meaning that they do not need to rely on a centralized government or other institutions. Thus, funds can move directly from donors to charities, and the decentralized nature of blockchain makes it uniquely suitable for international transactions.

  3. Digital agreements: Blockchain makes it easier to share and store digital data, and may also be used to ensure that important documents or contracts cannot be modified without the approval of all involved members. 

  4. Reduced expenses: Blockchain technology has the potential to simplify the way charities are managed, automating parts of the process and reducing the overall costs by requiring fewer intermediaries.

  5. Reduced taxes: Considering a US-based donor as an example, if a contribution is made with Bitcoin, the charity will get the full donated value (no capital gain taxes). Moreover, the donor would be able to claim a higher tax deduction towards governmental agencies.

What does Blockchain Technology mean for Charities?

Blockchain technology has some fascinating features that could have a huge impact on charities and charitable giving.

It could play in boosting transparency and trust in charities, the impact of new assets becoming available for giving, and the potential for ‘smart contracts’ that govern philanthropy. This leads to the idea that in the future, ‘smart’ domestic appliances could become ‘AI philanthropists.’

It could also be used to transform the way charities are created and regulated. We look at what it might mean for registering and monitoring charities; whether it could open up the possibility of 100% transparent, real-time financial information on charities; and explore whether smart contracts could result in a fundamental shift in the way rules are enforced. We also consider whether this could eventually spell the end of traditional charity regulation.

Cryptocurrency Donations

There is still a long way to go until cryptocurrencies get globally adopted, and this route is particularly long when it comes to charity. Currently, there is a small but growing number of charitable organizations that have already embraced cryptocurrency as a donation method.

Donors that intend to use cryptocurrency to make their contributions may have to either confine their efforts to the few organizations that support them or donate large enough amounts as an attempt to persuade their favorite charities into accepting crypto payments.

Before a charity starts receiving cryptocurrency donations, it needs to have a process in place for managing and distributing the funds in a transparent and efficient way. Understanding the basics of cryptocurrencies and blockchain technology and how the donations can be converted into fiat currency is crucial for an effective implementation strategy.

Blockchain technology could help resurrect the images of charities willing to adopt its services.

The Blockchain build trust with donors, recipients, and other stakeholders reaches the right people and improves administration costs and efficacy. Show donors the difference their donation makes, acquire funds rapidly through crowdfunding, and hand control to the people you help.

Why do People Struggle to Trust Charities?

Some charities have been accused of lacking transparency, either by failing to disclose how much money from donations goes towards paying staff or administration or by refusing to reveal how much money they have in reserve. The pay rewarded to top executives has also angered donors in some cases.

Blockchain allows finances to be publicly audited, ensuring charities remain accountable. Its decentralized nature also eliminates banks, allowing funds to be directly sent to those in need without a middleman.

Through blockchain, charities can cut the transaction fees associated with accepting payments from donors and transferring money to those in need. This helps maximize the impact of the funds they have raised, especially when transactions are taking place internationally.

Instead of creating their own platforms for generating awareness and accepting donations, blockchain organizations have developed APIs which can be customized and adopted by smaller non-profits, helping them to expand their reach and spend less money on developing technical infrastructure.

Blockchain solutions can also enable charities and non-profits to deliver results in entirely novel ways that would be impossible without the blockchain.

Binance Charity Foundation (BCF)

Binance Charity Foundation (BCF) launched its blockchain-based donation portal at the UNCTAD World Investment Forum.

The foundation is a revolutionary donation platform for nonprofits to provide transparency and accountability by making financial information to donors.

The platform is built on the blockchain technology to ensure that the process is traceable, immutable, and reliable.

Helen Hai, the head of the Blockchain Charity Foundation (BCF), said:

”Donations through the BCF platform will ensure full transparency, accountability and direct reach to end recipients.”

For charities, overhead costs have been a point of much contention. These costs denote the number of donations that goes to administrative expenses versus an actual cause, and while many see overhead costs as necessary, exorbitant administrative expense percentages are a red flag.

Also, blockchain has the potential to help charities in three critical ways:

  1. Increases accountability & reduces the custodian-of-funds issue: Blockchain technology helps increase accountability within organizations and prevents future misuse of these funds. The nature of a distributed ledger and the consensus model that governs it ensures that all transactions are secure and accounted for. Since each transaction builds onto the blockchain, there is no way for it to be manipulated. With this issue out of the way, so they can rest assured their donations are being used for their intended purpose.

  2. Improving workflow and efficiency: As the world moves to digital, charitable organizations need a digital donation platform they can trust. Non-profit organizations are no exception to this issue. These organizations want to ensure they have an efficient and reliable platform for managing donations. Many have to turn to third-parties as a result, which tend to take time and resources that could be put towards their cause instead. In addition to the concern about privacy issues and whether these third-party sites are safe from possible attacks, organizations also have to be concerned with the amount of time and resources it will take to get these accounts and sites up and running. These additional steps often slow their internal processes. Blockchain has the potential to solve this issue by offering a secure, reliable, and efficient way to manage donations and allow for an efficient workflow. With the use of smart contracts, organizations don’t have to rely on intermediaries to confirm transactions and can proceed faster than they would in the traditional workflow model.

  3. Innovation is a risk for non-profits: It’s beneficial to open nonprofits and charitable organizations to a new type of donor. Many within the cryptocurrency community are beginning to see the need for blockchain and cryptocurrency for social impact and as more investors enter this space, it comes with a great benefit to the nonprofit sector.


The primary administrative cost for charities is associated with fundraising and marketing or getting the word out about the charity. Blockchain-based platforms are aiming to provide charities with a marketplace to reach a ready-to-give audience, and these platforms take far fewer fees than traditional marketing and fundraising agencies.



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