The blockchain refers to a public registration technology in which each cryptocurrency transaction is digitally signed to confirm its originality and ensure that the information it contains is not manipulated. As such, transactions recorded in the blockchain and general ledger are considered to be of the highest level of integrity.
In the early days of cryptocurrency, people thought the blockchain was all about bitcoin. Today, it is becoming clear that technology is not just bitcoin, nor digital currencies. But while blockchain has the potential to revolutionize almost every industry, nowhere will its impact be more pronounced than in charitable giving.
For charities, blockchain presents a rare window of transparency and honesty, which could help make them more reliable in the eyes of sponsors. Some of the problems faced by non-profit organizations are the lack of accountability on how money is spent and transparency. Sometimes donors are reluctant to donate because they cannot be sure where their funds are going or who they are helping with their donation. Over time, these concerns can cause you to become disillusioned.
This makes it difficult for charities to attract or retain sponsors. However, blockchain is rapidly increasing confidence in the system, showing philanthropists where their money is going. Technology achieves this by making the system fully transparent and easily accessible. Here’s how blockchain improves transparency and trust in charities:
The funds go directly to the cause contributed by the donors. Thanks to blockchain technology, donations no longer have to go through intermediaries. Instead, they go directly to the recipients and the 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 go into the wrong pockets. The result is that donors feel more encouraged to give.
All transactions can be tracked. Distributed ledgers can be used to track transactions. This better traceability makes it easier to keep track of how funds are spent. As a result, donors can see, even from a distance, how their funds ended up helping the people the charities claim to be helping.
Blockchain makes it easy to distinguish well-intentioned organizations from fraudulent ones. Because cryptocurrency donations can be tracked, it becomes easier for donors to identify organizations that promote their cause than those that only seek to enrich some people. In this way, they know the right charities to work with.
Overall, blockchain and cryptocurrency will help ensure efficiency and give sponsors confidence that their donation is going to the cause they support.
Well-intentioned organizations should adopt the technology if they plan to improve transparency as well as track and transfer funds quickly. It is for all these reasons that platforms like Sponsy seek to help companies deliver greater transparency and trust through blockchain technology.