Blockchain refers to a public record technology in which each cryptocurrency transaction is digitally signed to confirm its originality and ensure that the information it contains is not altered. As such, the transactions recorded on the blockchain and the ledger itself are considered to be of the highest level of integrity.
In the early days of cryptocurrencies, people thought blockchain was all about bitcoin. Today, it is quickly becoming apparent that the technology is about more than just bitcoin, or digital currencies for that matter. But while blockchain has the potential to revolutionize nearly every industry, nowhere will its impact be greater than in pronounced charitable giving.
For charities, blockchain presents a rare window of transparency and honesty, which could help make them more trustworthy in the eyes of backers. Some of the problems nonprofits face involve a lack of accountability for how money is spent 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 concerns can cause them to become disillusioned.
This makes it difficult for charities to attract or retain patrons. However, blockchain is rapidly increasing trust in the system by showing philanthropists where their money is going. The technology accomplishes this by making the system completely transparent and information easily accessible. This is how blockchain improves transparency and trust in charities:
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The funds go directly to the cause to which the donors contribute. Thanks to blockchain technology, donations no longer need 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 leakage in the system and that money does not end up in the wrong pockets. The result is that donors feel more encouraged to give.
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All transactions are traceable. Distributed ledgers can be used to keep track of transactions. This enhanced traceability makes it easy to track how funds are spent. As a result, donors can see, even from a distance, how their funds ended up helping the people the charitable foundations claim to help.
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Blockchain makes it easier to distinguish well-intentioned organizations from fraudulent ones. Since donations made with cryptocurrencies can be tracked, it is easier for donors to identify organizations that further their cause than those that are just looking to enrich a few people. This way they know the right charities to work with.
Overall, blockchain and cryptocurrency will help ensure efficiency and give backers confidence that their donation is going to the cause they support.
Well-intentioned organizations must embrace the technology if they plan to improve transparency as well as quickly track and transfer funds. It is for all these reasons that platforms like Sponsy seek to help companies provide greater transparency and trust through blockchain technology.
