The charity sector is notoriously slow to react to transformative technologies—in the Charity Digital Skills Report 2019, only 12% of UK charities are considering how technological innovations like AI could change their charity. And in the 2019 Global NGO Technology Report, only 34% of NGOs worldwide admitted to understanding blockchain—the lowest stat relating to emerging technologies like the Internet of Things and augmented reality.

Among small charities, though, a revolution is brewing. Spurred on by challenges around infrastructure and dealing with authoritarian states, some forward-thinking organisations are already using cryptocurrency to receive donations. They’re hoping that big charities will catch on, too.

Feeding Venezuela with Bitcoin Cash

With the highest rate of inflation in the world, soaring crime and a shortage of basic goods, Venezuela is an extremely difficult country to live in. It’s also extremely difficult to get money into.

In February 2018, Venezuelan brothers Jose and Gabriel—both longtime users of crypto—discovered Bitcoin Cash (BCH), a fork of Bitcoin. After Jose was quizzed online by friends about the situation in Venezuela, the brothers decided to set up EatBCH, a nonprofit food drive using Bitcoin Cash.

EatBCH in Venezuela (Image: EatBCH)

Jose, who doesn’t like to reveal his identity due to a fear of reprisals in the increasingly authoritarian state, told Decrypt that, “We were receiving questions from people on Reddit about Venezuela, such as: ‘Is it really that bad?’, ‘Are people really starving’ or ‘How do you manage?’”

“One person told me to send him a [Bitcoin Cash] address so he could send $5 that I could either keep, or use to buy food for kids on the streets.”

Jose and Gabriel used that $5 to buy a meal for a family – and then some 40 more people.

They then started asking for charitable donations on Twitter and provided a BCH address to receive the money. The BCH was then sold, used to buy food from local food vendors. The two then posted photos – mainly of children they’d given food to – as proof the cash was being used to feed starving Venezuelans.

In a country where it is thought a generation of young people will never meet their full physical or mental potential due to malnutrition, the result of a crippling economic crisis, the donations continued to come flooding in.

To date, EatBCH has received thousands of donations and bought hundreds of meals. They operate in 23 locations around Venezuela and have just launched in South Sudan. Last year they were invited to Washington DC to talk about their strategy with a think tank.

The initiative is also being noticed by businesses who wish to donate to charity. US-based food startup Crazy Calm, which sells CBD instant coffee, has been donating $5 per order to EatBCH. “It is transparent, efficient charity,” said co-founder Matt Aaron. “We love that EatBCH is using the power of cryptocurrency, borderless cash to feed people in need.” “Our customers love the fact that they can see via the block explorer a link to the donation made on their behalf.”

Jose added: “When we started this project we said maybe we can accept regular donations in fiat with bank accounts as an alternative. But we simply couldn’t, and cryptocurrency was the only solution.”

Because of international sanctions, Venezuealans are locked out of traditional payment methods and providers like Western Union and PayPal, he explained. “There is no chance of opening a US bank account so I can receive payments from outside,” Jose told Decrypt. “We are simply locked out of the international world. So our only solution is cryptocurrency.”

He added: “I think cryptocurrencies are a better choice than regular financial methods for donating to charity.”

And Jose is not the only one who thinks that.

Changing the charity sector with crypto

Other projects looking to shake up the charity sector by using cryptocurrency are starting to pick up momentum.

One such project is Giveth, which aims to re-engineer charitable giving, by creating an entirely free, open-source platform built on the Ethereum blockchain. Giveth claims that their system cuts out bureaucracy and provides donors with a high level of transparency and accountability.

“Unlike most things, with crypto you can get financial privacy, but you also get transparency—and you get that by default,” said Giveth founder Griff Green.

There is no real use for crypto in just transferring money around Griff Green

“Just being able to transfer money around is not the be all and end all,” he added. “There is no real use for crypto in just transferring money around.” What’s more interesting, he said, is the ability to create economies.

Still, there is one challenge for crypto projects looking to overhaul the charity sector, Green said: “The biggest problem that people run into is that no one in the charity space uses crypto; only nerds use crypto.”

Grassroots funding for Kenya

One organisation busily engaged in creating economies with crypto is Grassroots Economics, a non-profit foundation based in Kenya. Grassroots Economics works to provide vulnerable communities with alternative currencies, via the blockchain and mobile payments, so that they can take an active role in their own economies.

Grassroots Economics founder, physicist and economist Will Ruddick, moved to Kenya over a decade ago from California. He told Decrypt that the charity sector in Africa currently wastes a lot of money with little effect. “The charity sector has a huge impact problem, which has led toward cash transfer or Cash and Voucher Assistance as an emerging modality—essentially dumping cash on vulnerable communities,” he said. “This has opened up the charity sector to faster and more efficient forms of digital vouchers using crypto.”

Grassroots Economics has most recently partnered with the Red Cross and digital wallet provider Sempo to create Community Inclusion Currencies (CICs). CICs enable communities to develop their own media of exchange that can connect to other communities in regional markets and provide a gateway to national currencies via a push button feature phone. As many as 1,000 businesses adopted them in a single week in Kenya.

“Blockchain gives communities the ability to define and manage a shared financial commons which fundamentally strikes at the heart of poverty,” said Ruddick.

Though it seems big charity may take a while to fully latch onto using crypto – be it for donations or for creating informal economies – things are moving in the right direction.

“For me, for the nonprofit sector and for public goods funding in general, cryptocurrency is the bee’s knees,” said Green.