Blockchain refers to a public ledger technology where every cryptocurrency transaction is digitally signed to ensure its authenticity and ensure that the information in it has not been tampered with. As such, transactions recorded on blockchains and ledgers are considered to have the highest level of integrity.
In the early days of cryptocurrency, people thought that blockchain was all about Bitcoin. Today, it is quickly becoming clear that the technology is more than just Bitcoin, or digital currency for that matter. But while blockchain has the potential to revolutionize nearly every industry, nowhere will its impact be more apparent than in charitable giving.
For charities, blockchain presents a rare window into transparency and honesty, which can help make them more trustworthy in the eyes of supporters. Issues that nonprofits deal with include 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 whether their donations are helping. Over time, such anxiety can make them depressed.
This makes it difficult for charities to attract or retain sponsors. However, blockchain is rapidly increasing trust in the system by showing philanthropists where their money is going. The technology achieves this by making the system completely transparent and information, easily accessible. Here’s how blockchain increases transparency and trust in charities:
Funds go directly to the cause donors are contributing to. Thanks to blockchain technology, donations no longer have to go through intermediaries. Instead, they go directly to recipients and organizations in a position to help them. This helps ensure that there is less room for fraud or financial leakage in the system and that funds do not end up in the wrong pockets. As a result, donors feel more motivated to give.
All transactions are traceable. Distributed ledgers can be used to track transactions. Such improved traceability makes it easier to monitor how funds are being spent. As a result, donors can see, even from afar, how their funds have helped the people the charitable foundation claims to help.
Blockchain makes it easier to tell well-intentioned companies apart from fraudulent ones. Because donations made using cryptocurrency are traceable, it becomes easier for donors to identify organizations that are furthering their cause rather than those that just want to enrich a few individuals. This way, they can know the right charities to work with
Overall, blockchain and cryptocurrency will help ensure efficiency and give supporters confidence that their donations are being given to the causes they support.
Well-intentioned companies should embrace the technology if they plan to track and transfer funds faster, along with improving transparency. All of these reasons are why platforms like Sponsy strive to help businesses deliver greater transparency and trust through blockchain technology.