June 4, 2020

Charity fundraising – Trust is good, but traceability is better.

Today, we expect to be able to track what we buy. Whether buying gadgets, clothes or food online, real-time tracking gives us peace of mind, reassuring us that our “investment” is on the way and not lost somewhere. So the question is, why don’t we have the same attitude when it comes to charity fundraising?

Today, we expect to be able to track what we buy. Whether buying gadgets, clothes or food online, real-time tracking gives us peace of mind, reassuring us that our “investment” is on the way and not lost somewhere. So the question is, why don’t we have the same attitude when it comes to charity fundraising?

Most of the time, especially in the current pandemic situation we’re experiencing, we donate money without ever knowing how it was spent and if the charity we collaborated with was legitimate. People want to know exactly where their contribution ended up and if it made a difference. The result? Loss of trust in the effectiveness of donations and reluctance to keep fueling this abstract “black hole” with one’s savings. A growing body evidence from the UK, the US and elsewhere suggests that the general public is losing faith in the charitable sector. The former chair of the National Council for Voluntary Organisations, Sir Martyn Lewis CBE, describes the issue as follows:

“In recent years reports of poor fundraising practice have eroded public trust, damaged the reputations of some charities, and unfairly cast a shadow over the charity sector as a whole. This has the potential to make a significant impact on donor giving — and thus the number of beneficiaries charities are able to help”

In order to counter this problem, greater transparency will need to be introduced to the voluntary sector. By allowing donors to track their donation, they can be reassured that it hasn’t been misused and is having a real impact. This gives donors a concrete sense of accomplishment and an emotional link with the beneficiaries of their donations. But it’s not that easy. In the most typical scenario, there are four stakeholders involved in a charitable donation: the donor, the bank(s) facilitating the transaction, the charity and the final beneficiary. So, multiple stakeholders who all need to trust each other. It’s the perfect use case for blockchain, an ideal technology when it comes to ensuring transparency and trust. Although the majority of donation platforms still don’t offer this kind of transparency, some forward-looking organisations are bucking the norm:

  1. Alice: the goal of this London-based company is to show the impact of donations. The interesting thing about Alice is that it enables you to track in real time how and who your money is helping. They have run a series of successful fundraising campaigns in collaboration with St. Mungo, UK’s leading homelessness charity.
  1. Promise is a blockchain fundraising platform that “allows donors to stay connected to the impact of their donation, fostering deeper trust and connection with the cause”. The projects are divided into milestones, and the charity initially only receives the money for the first step. In order to receive funding for the next milestone, people need to vouch for the trustworthiness of the project based on the evidence uploaded to the platform. If a majority votes yes, then the transaction is made and the charity receives the donations to keep going. Many renowned foundations have joined Promise, including English Heritage.
  2. BitGive: Founded in 2013 by Connie Gallippi, “BitGive is the first Bitcoin 501(c)(3) nonprofit, giving it tax exemption status at the federal level in the United States”. Connie Gallippi had previously worked for non-profit organizations in California for fifteen years before hearing about Bitcoin in 2011. She immediately saw the potential of this technology applied to charities, she says in a podcast with Anita Posch. In this sense, she can be considered a pioneer in bridging the gap between the non-profit industry and crypto. BitGive has run projects with Save the Children and Run for Water, but also a recent fundraising campaign to help the people who were hit the hardest by the global coronavirus crisis. In addition to transparency, BitGive offers donors considerable flexibility. Payments can be made via Paypal, Amazon, cheque, or Bitcoin. Thus, whether you are a crypto enthusiast or not, you are welcome to contribute to a cause.

Recent events have highlighted our natural inclination to compassion and to help others, and not only by singing from balconies. We have seen so many creative ways to collect money: the British veteran walking 100 laps before turning 100 years old, famous singers streaming live concerts, athletes engaging in all sorts of challenges, the list goes on. And companies that don’t usually have anything to do with charity have picked up on this trend. Lykke, a Swiss-based blockchain-powered trading company, is offering funding to individuals, teams and companies to develop innovative solutions that address the current crisis by leveraging blockchain and new technologies. Everyone is doing their bit to help, and this new-found solidarity is the silver-lining of this frantic period.

In conclusion, the traceability offered by blockchain technology clearly is a useful asset in the Non-Governmental Organisation (NGO) sector. BitGive, Alice and Promise are paving the way to the future, but getting the message out to a wider audience can be a challenge. At THE RELEVANCE HOUSE, we recognise the potential of blockchain to bring more transparency to the NGO sector and support companies that aim to innovate in a sector that is highly necessary but has been damaged too many times.

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