The Key Ways Blockchain can Transform the Non-Profit Sector

The Key Ways Blockchain can Transform the Non-Profit Sector

Charities are crucial for the betterment of societies and the environment. Unlike the corporate world that’s incentivized by money and results, non-profit organizations (NPO) are motivated by a passion towards a social cause, the marginalized people, endangered living beings, or the environment. Because all you need is the passion for a just cause, venturing into the non-profit sector is always an evergreen option for beginners and experienced alike. 

Positive outcomes in charity initiatives hinge on its accountability, trustworthiness, honesty, and openness. Today, NPOs are inhibited primarily by trust issues. The public’s trust in NPOs erodes each time popular media broadcasts rare cases of fraud or scams. And the additional lack of clarity and transparency concerning the trail of funds also negatively affects the public’s perception of the sector. 

Blockchain technology can be advantageously adapted to support the core functions of NPOs as it can reestablish and strengthen the critical element of trust. Let’s explore the key ways blockchain break through barriers and can change the sector for the better. 

Blockchain can Improve Transparency and Accountability

Obscurity or the lack of transparency concerning the trail of finances is often a tell-tale sign of scandals, frauds or corrupt practices. Subsequently, donors are less likely to give money to such charities in the future. 

According to research conducted by a blockchain startup ‘Giftcoin,’ charities can improve donations by 50 % if NPOs are more transparent about how the money is spent. According to the research, most people believe that their money is largely used up for administrative costs, advertising, marketing, and salaries while only a portion of their money reaches the cause that they are giving to. 

In an NPOs endeavor to be more open and transparent, blockchain can powerfully yet affordably support the tracing of funds, publicizing financial details, identifying wasteful expenditure, mitigating risks and reestablishing trust. Its immutable and tamper-proof ledger system can accurately capture and display how each individual’s donations funnel down to the final recipient. Donors will be encouraged to confidently donate and at the same time, coordination between various charity organizations is strengthened. 

Blockchain can Reduce Costs and Boost Overall Efficiency

The trusted index of US charity organization named ‘Charity Navigator’ recently identified that many US charity organizations are spending much more money than giving for the end cause. While the biggest expenses are in spreading the word about the charity or marketing to raise funds, the high administrative costs are often red flags that indicate inefficiency and even illegal practices. 

Blockchain platforms can provide charities with a broad marketplace to reach out to ready donors easily. It removes the need for third-parties that traditionally facilitate operations. As it can function pervasively in spite of geographical or political limitations, the high remittance fees can also be cut down. The technology thus presents a low-cost operative model to run charities and its publicly accessible records can clearly capture the proof of the need to ensure that the cause is justified and is worthwhile. Once costs are lowered, more funds will reach the deserving recipients. 

Cryptocurrencies, Smart Contracts, and Mining for Charity

Charitable donations made through cryptocurrencies exceeded 70 million USD in 2017, reports the charity organization ‘Fidelity Charitable.’ More and more NPO’s including ‘Red Cross’, ‘Save the Children’, ‘The Water Project’, ‘Internet Archive’, ‘Humanity Road’ and ‘Watsi’ are beginning to accept crypto as payment. So, the wide acceptance of crypto is an opportunity to invite massive new streams of income. 

Smart contracts are computer protocols that automatically execute or carry out instructions once its original conditions or stipulations are met. For charities, smart contracts can ensure that tangible value is promptly delivered without any subjective or biased human intervention. Further, it encourages NPOs to strictly adhere to the original goals.  

Mining cryptocurrencies requires time and computing power and there is ongoing research into a better understanding of how to passively harness this activity. Now, the eminent humanitarian organization UNICEF has created a means for people to mine cryptocurrencies for the sake of the underprivileged. Similarly, ‘CudoDonate’ is an app that allows you to mine for charities in your spare time. And thus far, PC gamers have successfully mined Ethereum to donate for the suffering children in Syria.  


There are additional ways blockchain technology can transform the way non-profits function. For instance, it can radically improve response systems in emergencies or natural disasters. It can also create donor anonymity and cross-border donations. 

Blockchain is universally praised by organizations across the board and through incorporating this technology the non-profit sector stands to gain immensely.