







The global Bitcoin and blockchain boom hasn't just been a gold rush. Charities are also trying to figure out how to use blockchain and cryptocurrencies for good.





The so-called “third sector” has been rocked by recent scandals — from the collapse of UK charity Kids Company, sexual abuse at Oxfam, and sky-high executive salaries — leaving people in the UK now no more likely to trust charities than a “stranger in the street”. It could still get worse: Those watching the sector warn that larger organizations could fall even further from favor among the public and donors.





One of the biggest problems is a lack of transparency. Extensive administration and infrastructure mean donors often don’t know where their money ends up. Some working with blockchain think the technology can help restore people's trust in the work of charities by recording where donations go, information about foreign aid workers’ past posts, and where the charity is spending its money.





“[Blockchain] might not prevent issues, but if they occur, it's easier to track the source of the problem,” said Raphaël Mazet, chief executive of Alice, a company working to use blockchain to improve social fundraising. He thinks blockchain will improve public faith in charities and help them to better manage issues.





“More importantly, blockchain technology can bring about a change of mindset. Failure becomes acceptable in the charity world as long as the sector as a whole can learn from everyone's mistakes and build on them to develop the most effective projects possible.”





But it’s not simply about improving transparency and trust. “All sorts of assets can be recorded on the blockchain, whether they’re physical, digital or intangible, including things like intellectual property and copyrighted material,” said Rhodri Davies, head of policy at UK-based advisory organization Charity Aids Foundation. “This means the range of assets that can be donated will get much bigger.”





Elsewhere, as blockchain technology is added to more of the world’s smart devices, there’s the potential for smart contracts, or software programs that run on blockchain technology, to be used for philanthropy.





Smart devices have down time when their computing power is not in use. This device down time could be used to mine cryptocurrency or help solve complex equations, allowing them to generate revenue. Security is a concern, however. Hackers employing botnets like Mirai can hijack smart devices to mine crypto too.





“Blockchain could make this a reality,” Davies said. “These smart objects are going to be able to generate their own revenue and perhaps even money to give away. For the first time there might be a class of robot donors and artificial intelligence philanthropy.”





For the end user, automated and intelligent donations have begun — though they are still at an early stage. Earlier this year US e-commerce giant Amazon unveiled Alexa Donations which allows the digital assistant to take donations from the user.





The technology isn’t a panacea, however. There is also the “garbage in, garbage out” data problem. In other words, if the information the charity is adding to the blockchain isn’t correct, it could mean more problems. Davies also warned that charities may find themselves struggling to explain to donors why their money is being spent on certain things.





Outside of the traditional charity sector, some of those working with Bitcoin and cryptocurrency have also been pursuing charitable enterprises. Last month, Coinbase chief executive Brian Armstrong launched GiveCrypto.org, a platform to raise funds in cryptocurrency and then distribute them to people in need around the world.





Meanwhile, a CryptoKitty — collectible digital cats that live on the Ethereum blockchain and went viral last year (think Beanie Babies meet crypto) — is being auctioned off for charity, with the proceeds going towards charities related to oceans and wildlife.





“I am excited by the potential of cryptocurrencies and cryptogoods to change, and hopefully improve, the way we raise funds for charity,” partner at Union Square Ventures and early crypto investor Fred Wilson wrote in a blog post.





Direct crypto donations come with problems for non-profits, too, however. The cryptocurrency industry would have to resolve issues around how organizations predominantly tasked with poverty relief would handle speculative assets.





“Cryptocurrency donations would mean a radical improvement in transparency, where people can see where their money is at any given time and let charities interact with donors better,” said Davies. “However, charities would be forced to deal with questions around morally dubious donations, dirty money, and how to manage a highly volatile asset.”





While established charities ponder how to incorporate blockchain technology and cryptocurrencies into their business, many are already experimenting with ways this new technology could cut out unnecessary costs and improve the lives of people around the world. For the time being however, you can expect most of the big charities to stick to cold, hard cash.





Billy Bambrough is a London-based writer.



