It has been claimed that Blockchain could certainly be a game changer for the Charity & Philanthropy industry, and we agree. Tough we believe that the most profound impact will be in areas not readily seen, and that the changes will happen only gradually over the coming years.
That said, there have recently been ‘doom and gloom’ prognosticators saying that Blockchain will do away the charity “industry” as we know it. However we believe that those predictions are not only premature, they ignore the fact that there will still be a need for individual players who are both familiar with and practiced in the singular charity opportunities in order to make sure that funds are funnelled where they are legitimately needed, they will also be focused on the always fluid and changing sources of funds for the different charitable needs,
Charities worldwide have brought in trillions of dollars/pounds in contributions, a reasonable portion of that coming from charitable contributions. They have to make sure that whatever they do not only meets their own needs and ‘targets’ but also that as well of their constituencies.
Rather than doing away with those frameworks that are currently in place, if anything, they’re going to lift the burden of many of the costly activities associated with running charities and philanthropies and this will allow for more needed funds to get to where it is needed more quickly. Essentially minimising overhead.
There are a few issues, and this ‘BICU overview’ will likely expand as I glean more information about the industry.
First is the so called ‘volatility problem’, which is something that charities have been dealing with for quite some time – using some of their income as their endowment. They want to make sure that they stabilise the purchasing power of their donations. Volatility is a certainly a well-known issue in that those taking coins as donations will be familiar with being gifted stocks for the charity. They just have to learn the volatility earlier on. Something any good charity financial officer should know. will know how to deal with. If you were given an Ethereum coin as a contribution March of last year, you would see a tremendous fluctuation, and you would have to plan accordingly.
The is another concern called Triaging problem. Who makes those decisions? The people that are doing it today.
Triage becomes a ‘challenge’ and not a problem depending on how much donors wished to be involved, and how transparent the charities wish to become.
Transparency is challenging now, but one which Blockchain will make easy to do – where is the money going. Where it becomes an ‘issue’ is when a donor demands certain conditions “I wannna build a school with my name on it’ – and in that sense, Blockchain will change the nature of receiving donations.
People will need to walk before they run, and as new use cases are tried out and evaluated, it will behove those members of charities to see what is happening so that they know what is possible in the future.
It may come too that Blockchain technologies could be used to facilitate governance as well as to carry out the activities normally reserved to regulators.
Quite a few benefits
- Transparency – the ledger is public and will be seen by anyone. It will give the charitable foundations more clarity and the donor more comfort that the money is going to reasonable causes and not to execs travelling first class world-wide.
- Transaction costs – the ledger of transactions will be owned by the users – less associated costs
- Increased trust – eliminates 3rd parties keeping track and leaves activities open
- Lowered corruption – not criminal corruption, but more on the side of the thumb on the scaled corruption
While BCIU does not endorse any of the use cases that follow, we wanted to give you a good view of what was out there.