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Blockchain Based Charity And Its Benefits

By Rupesh Ghimire

Blockchain and smart contracts open up new philanthropic opportunities, transform aid into digital assets, and build trust in charities. Donors can now track the impact of their contributions while charitable organizations can use cryptography to encourage donations. Many will wonder if their contribution will have an impact when they decide to donate funds for charitable reasons. Many non-profit organizations, by taking shady schemes to extract more income, have shaken people's trust in philanthropy and made them question the credibility of charitable initiatives. In the world of philanthropy today, transparency is one of the main problems. Enter blockchain technology, the immutable booklet that shows every record. Distributed and decentralized among its users, blockchain allows them to track transactions and ensure that fraudulent activities are not carried out. Read more about the increase of Blockchain charity projects and the advantages for organizations, donors, and beneficiaries of philanthropy. People expect their money to be funneled to a good cause when donating. By not including technology in donations, we can accidentally end up funding fraudulent campaigns because supporting non-profit activities is only a click away. Kai Brockington, for example, launched a charity called Our Genesis Project in 2014, which claimed to help the community through its funds to create medical clinics. But Brockington instead encouraged others to fictitiously document donations to his "clinic" to match their employers' donations, according to the FBI. Brockington earned more than $680,000 over the next four years and spent that money for himself.

How Blockchain is Eliminating Charity Frauds

Through blockchain integration in the registration of charitable donations, donors can track exactly where their donations are made and when used. Blockchain will offer greater transparency to non-profit organizations and give greater accountability to both donors and operators as regards the spending of donations. Donations cannot be falsified with the immutable structure of Blockchain and are registered for donors to view. Furthermore, blockchain can monitor the amount of each donation being made to actually help the cause, which prevents organizations in turn from the diversion of funds into the pockets of their own management. There is always the opportunity for too many levels of management to consume their funds with large centralized charities. The number of intermediaries between donors and those they want to contribute with Blockchain-based charitable organizations is reduced to a minimum, which allows more donations to be made to those in need. With blockchain technology, donors can verify their donations themselves, and keep tabs on how their money is used, in order to track, store and authenticate donations. By giving greater visibility to charitable transactions, Blockchain enhances the trust that donors have in charities, paving the way to a more philanthropic future.

Blockchain Resolving The Challenges Charities Face Today

As charities grow in size, their governments do the same. However, a University of Maryland report found that volunteering in rural and suburban areas dropped to a high level in 2015. With fewer people willing to volunteer at non-profit organizations, the gap is bridged by the recruitment of more people. The problem with hiring more and enhancing their management is, on the other hand, that funds intended for gifts can be diverted into paid managers and staff so that the charity works smoothly. By integrating blockchain into their systems, NGOs can reduce their staff members without sacrificing their organization's integrity. There would be lower overhead costs with a smaller administration. It would ensure that the cause they support is a larger proportion of donations. Many of the tasks of the charity administration are to manage funds and record the distribution of funds. These funds would be permanent and securely connected with blockchain's unaltered storage into a chain of blocks. The course and distribution of donations would be recorded in the headline quickly and efficiently, reducing red tape and possible financial fraud. Using blockchain to record these funds and their uses also generates unaffected digital receipts of funds and enhances the credibility of organizations. Blockchain could quickly solve certain employee problems in its organization by integrating them into their administrations.

How Blockchain is Transparent for Charities

Transparency is another problem for charities. In general, when people donate to charities, they trust that their money is well spent. Many non-governmental organizations are not as up-front as donors might expect. Some organizations fail to disclose their funds in broad terms and neglect to disclose particulars or even falsify their records. Donors are therefore left in the dark about how much money they have actually spent for helping those in need and how much they have been transferred to other organizations or covering budget problems and other overhead costs. With blockchain added to charities, donors would no longer be unaware of their money. Donation information is stored in pages along with information from donors. This way donors are able to keep their privacy in a way that does not reveal their identity with a digital signature. Since blockchain is a public library that can be seen by anybody, charitable fraud would not be easy. Donors can monitor their funds carefully and make sure that no information is manipulated. Blocks are permanently and in chronological order, so donors can verify how they spend their donations, who has their money at any time and where it is spent. Moreover, if enough donors connect their computers to the blockchain (which then works as nodes), they would enhance blockchain safety, make it harder to manipulate their donations, and have more trust in their transaction safety. While most carers and fundraisers are legitimate and seek to help the least fortunate, some false operators are still trying only to cheat people. Donors can use validation mechanisms to identify true non-profit entities by taking place on a blockchain ecosystem.

Blockchain Benefiting Charity Organizations

Blockchain could introduce a range of new and innovative tools for philanthropic organizations as a technology as well as applications that are based on this, including digital wallets, trading stocks, and lending solutions. Below mentioned are some 

Smart contracts into the blockchain

Smart contracts are applications that operate on blockchain technology, where rules and conditions have been programmed and where certain events are met. These agreements could constitute agreements between the giver and the charitable organization when dealing with philanthropy.

Tokenization of  philanthropic assets

Tokenisation is the practice of creating digital assets of any value, like charitable donations, that can be purchased and shared between stakeholders. These digital assets can be used to sustain a funding system in which donors are rewarded with tokens for taking part in charitable events. The tokens increase in value as more donations are made and are thus created by other supporters. Specific reasons like supporting daily operations in an inn or providing medical supplies may be given to tokens. In this way, donors can decide which projects they want to take part in and send their funds directly to the people they want to support, instead of just helping an organization financially.

Payments based on Blockchain that have tax benefits

Cryptocurrency payments, such as bitcoin, do not attract income tax. Furthermore, since charities are often global organizations, international payment fees will not be a problem as the transferring charges for cryptocurrency are significantly lower. The charity receives the entire value donated by the contributor. At the same time, a higher government tax deduction will also be available to the donor.


Blockchain networks are distributed and decentralized, which means that members can interact and exchange services in a boundless environment. Each platform is equipped with its own architecture and apps. Bitcoin mainly serves the financial and payment industries while the network of Ethereum is the basis for the development of new systems with a range of uses, from financial to healthcare and philanthropic. As blockchain platforms are becoming increasingly common and spread across the business environment, joining them into a single network and services ecosystem is the next innovative step towards a brand new economy. This creates a comprehensive, open, and decentralized Internet network. This kind of global ecosystem for charity and philanthropy will eliminate the challenges that exist today by accepting international contributors' donations by reducing fees, cutting administrative costs, and speeding up processes without intermediaries.