The not-for-profit sector is among the most recent industries to reap the rewards of blockchain technology. Low fees, instant transactions, and transparency are the main reasons why several major aid organizations are beginning to accept crypto donations.
Recently, UNICEF France embraced crypto donations by accepting payment in Bitcoin and other digital assets. Flood relief in Japan has also shown that blockchain’s immutable ledger can provide much-needed transparency when it comes to emergency relief.
However, while crypto donations are taking off in the private charity sector, politicians remain skeptical of accepting crypto funding for political campaigns.
Reaching a wider audience
Crypto donations have been around since the early days of BTC. On Reddit, one can find dozens of examples of coin giveaways for various causes. Now, non-profit organizations are looking to reap the rewards of this culture.
For a long time, charities have dealt with growing expenses, distrust, and stifling bureaucracy. This is why some of the world’s biggest non-profits are now recognizing cryptocurrencies as an additional revenue stream.
Lower fees and wider reach are the main reasons why UNICEF – among other organizations – are looking toward crypto. After all, fiat transactions incur high expenses that may deter potential donors.
Cryptocurrencies, on the other hand, offer instant transactions with minimal fees. For example, on October 16, 2018, a Bitcoin user moved 29,999 BTC worth $194 million for a fee of $0.10. It doesn’t matter whether you’re transferring your crypto next door or to the other side of the world; the fee stays the same. That makes crypto donations ideal for large foreign aid campaigns.
All about transparency
The blockchain technology behind cryptocurrency offers a range of other benefits. One of them is transparency, as seen with the fundraising effort to provide flood relief to Japan in July this year. The crypto community, led by Binance, raised a significant sum for flood-affected areas by accepting crypto donations.
Thanks to blockchain’s ledger records, anybody could trace every cent of the money raised to ensure that no funds “go missing.” Smart contracts then allowed charities to direct those funds to where they were needed most. In that way, flood victims received the aid they needed, with no risk of any fraud along the way.
Without any complex bureaucracy to slow the process down, victims received the necessary aid within days, not weeks. Binance reported that the initiative was successful, with 63.03 Bitcoin (BTC) and 169.85 Ethereum (ETH) sent to Japan. These crypto donations have paved the way for the aid community to consider blockchain as a broader solution.
As UNICEF France Director Sébastien Lyon said:
Cryptocurrency and blockchain technology used for charitable purposes offers a new opportunity to appeal to the generosity of the public and continue to develop our operations with children in the countries of intervention.
What about crypto donations in politics?
While aid organizations are making the most of cryptocurrencies, politicians are taking a much harsher stance. On November 8, Michigan’s Department of State announced that it had banned crypto donations to political campaigns. The statement highlighted Bitcoin’s frequent value fluctuations and dependence on market trends as reasons for the ban.
“Bitcoin has no intrinsic value, and derive[s its] value in exchange either from government fiat or from the belief that they [it] may be accepted by someone else.”
Michigan is the latest US state to prohibit crypto donations in political campaigns. It follows California, which banned crypto funding on September 20. Other states to prohibit crypto donations include Kansas, Massachusetts, South Carolina, and North Carolina.
Apparently, it’s not only the government that distrusts political organizations with crypto. According to research firm Clovr, 64 percent of respondents don’t trust politicians with digital coins either. Their greatest concern is the misuse of crypto, as well as the possibility of foreign interference in elections.
While it appears that political campaigns won’t accept crypto donations anytime soon, the increasing use of crypto in the not-for-profit sector is encouraging for everyone involved in the market.