As I opened up my facebook news feed, I saw the text message

“Are the cops here? My teacher died. He’s sitting in the doorway”

This was sent from one brother to another, both sheltering in place during the recent High School shooting in Florida. I know as I read that message, that if there was a way I could help those impacted, I would have done so, right there and then.

But how could I help? Which organizations should I donate to? How do I know they are actually helping the causes I care about? How much of my donation really goes to making a difference?

Blockchain technologies have the potential to answer these questions, and in doing so, unleash generosity by getting people hooked on helping others.

Donating to charity in the US has remained depressingly flat at around 2% of income for the past 40 yrs, and this despite an 8X increase in large scale disasters since 2000, and inequality at levels last seen in Robber Baron days.

Trust is often given as a reason for why generosity remains so low — people are concerned about how transparently charities spend their money. Increasingly donors are basing their decision to give on the how much feedback they get on the impact of giving.

60% of Millennials say that visibility of impact is a significant driver of giving.

This is not surprising, given the high-levels of charity fraud, especially around times of disaster, and with the rise of crowd fundraising. In the aftermath of Hurricane Katrina, for example, the FBI estimated that over 4,000 fake charities were set-up to defraud donors, and the recent High school shooting in Florida was plagued by fake gofundme accounts.

Charities, for their part, are focused on program delivery, and aren’t typically strong at providing donor feedback, especially in an authentic, transparent and compelling way. This is where Blockchain comes in…

Blockchain and its associated cast of Cryptocurrencies have a bad reputation right now. They are mostly known for making a small group of early adopters incredibly wealthy, with FOMA driving further speculation. And the predominant use cases are perceived to be drug dealing and money laundering. But the core principles underlying blockchain have tenets that are much more admirable.

There are two major benefits, firstly, it allows for decentralized transaction reporting on an open ledger, that is 100% accurate, secure, and authenticated — but what does this actually mean?

Imagine I have $100 that I want to give to Katie, then blockchain technologies allow me to pay Katie quickly, cheaply, and in a way that ensures both Katie and I are who we say we are, so eliminating fraud. Think of it as a banking system without the banks, or the associated high transaction fees and risk of identity theft (for a much better and more in-depth explanation of Blockchain, see video here, or if you have an afternoon free, go here).

The second benefit of Blockchain is that it allows my payment to Katie to be dependent on specific conditions that Katie needs to meet before she gets paid — these are known as ‘Smart Contracts’.

For example, perhaps Katie has committed to spending my $100 building a well to deliver water to kids in Africa. With Blockchain and smart contracts, I can be certain that Katie has purchased the materials and permits needed to start the project, before I release my $100 to help with the build.

This ability to tie payment to specific performance milestones is critical in social investment projects — consider the Haiti earthquake scandal, where the Red Cross raised over half a billion dollars and built only 6 homes. By using a ‘pay-for-performance’ model, with increased transparency on where the money is actually going, you can increase confidence in the donation process, and encourage more people to give.

In doing so, Blockchain offers the tantalizing prospect of enabling real, authentic feedback on how donors are impacting the causes they care about.

This can move you as an individual from feeling like you are ‘giving’ to actually ‘helping’, releasing the dopamine that can come from knowing you are making impact improving the lives of others.

Making ‘Giving equal Happiness’ is needed to unleash generosity, by getting people hooked on helping others.

The challenge with building out this new way of giving, is the classic chicken and egg problem. Donors won’t give more until there are a range of charities that support Blockchain and Smart Contracts, and charities won’t invest in the necessary process changes to deliver this until there is a large enough donor base to justify the investment.

Most organizations attempting to tackle this challenge approach the problem from the end-user perspective first. Wishcoin, Giftcoin, Alice.si and others, focus on delivering a more satisfying donor experience, by working with charities that can provide feedback on donor impact using Blockchain protocols.

Whilst admirable, these initiatives may struggle to gain traction, as charities are notoriously slow at adopting technology change, and often only the largest charities have the reserves needed to invest in significant process improvements.

This doesn’t match with where people increasingly like to give . We’ve found that Millennials (who don’t like to be called this) are much more likely to give to small, local charities, than large national ones.

On the network-for-good platform, over 2/3rds of all donations go to charities within 100 miles of the donor.

And it is precisely these smaller, local charities that struggle with adopting large scale process change.

Is there a better way? What if there was an existing problem, with existing donors and charities, that could immediately benefit from Blockchain? It turns out processing digital donations today in the US offers exactly that opportunity.

Today at Network-for-good.org, we are the world’s largest digital donation platform, processing over $400M annually for millions of donors, thousands of charities, and on behalf of partners like Facebook and Google. The main service we offer as a non-profit, is an ability to donate to any verified charity in the US.

This process can sometimes be time-consuming, as we need to make sure that charities are registered with the IRS and not subject to any investigations, before we can offer donors a tax receipt.

We also need to adhere to strict local laws for soliciting donations on behalf of charities, which vary from state to state. Finally, we need to ensure that we have accurate and up-to-date address and bank account details for each charity before we make any disbursement, to avoid paying someone pretending to be a charity or acting fraudulently.

Given there are currently over 1.5M charities in the US, growing at over 200 a day, this is a significant administrative burden with a high need for security and accuracy.

Blockchain can alleviate many of these challenges through the creation of Charity Crypto-wallets, connected to the IRS registered list of charities. Donations can be made to these wallets (in either local currency or Crypto-currency), and the donors can receive an immediate tax credit, as well as have confidence that the charity they are donating to is a valid charity.

Doing so would increase the speed of disbursement for charities, from weeks down to days or even minutes, and would also reduce transaction fees, from roughly 3–7% today down to 1% or less. This is particularly beneficial for smaller charities, that often struggle with cashflow.

The second immediate benefit for charities would be a much improved ability to send money internationally. For many charities, the majority of donations are received in Developed Nations and invested in the Developing World, and these charities face significant operational and financial hurdles in getting the funds from point A to point B.

With Blockchain, these funds could be transferred almost instantaneously and at very low costs — likely over a 95% reduction from the current fee level (typically 7–10% of the total value transferred).

When you consider that over $40B is donated to developing countries from the US, this has the potential to unlock over $3B in impact right away.

As an added benefit, the amount of fraud involved in international fund disbursement could be reduced to almost zero.

By embarking on a solution for the problems above — namely more efficient charity validation, payment and funding infrastructure — we can build a foundation that allows for future growth into Smart Contracts and more transparent feedback to donors.

This is not to say that some charities couldn’t start using the new Giving platform for Smart Contracts today — indeed, some tech-forward charities such as CharityWater.org or Watsi.org have made it there mission to unlock giving through better, more transparent feedback on how donors are making an impact.

These organizations could lead the way for other charities on the platform, and encourage them to move beyond just using the faster, cheaper disbursement process, to hooking in Smart Contracts that drive up donor acquisition and loyalty.

When you consider that trust and lack of feedback are top drivers for why people don’t give today, even if this shift only contributed to a 10% increase in generosity, this would still be worth over $30B annually to those in need.

Blockchain has massive potential to unleash generosity and change the world, but we need to start in the right place. There are very real, sizable problems today that a Blockchain solution can help solve— namely improving the current infrastructure for digital donations.

This can solve the ‘chicken-and-egg’ problem that many start-up Blockchain initiatives face, and offer a foundation on which to transform the giving experience.

So if you’d like to help us on this journey and get involved, please don’t hesitate to get in touch. We’d love to hear from you!