Blockchain Nonprofits: They Can Even the Playing Field

Decentralized tech has become a mainstay for both multinationals (Toyota, IBM, FedEx, IBM, etc.) and big nonprofits (The United Way and  Save the Children. The  United Nations is using blockchain to aid Syrian Refugees and combat child trafficking).

It makes sense big organizations would migrate to blockchain. The technology is cost-efficient, transparent and more secure than centralized record keeping. It also offers an audit-ready, immutable record that fortifies trust across the enterprise.

Any single one of these perks would make a CFO smile.

But it’s not just big organizations that benefit from blockchain. Smaller organizations – more specifically, smaller nonprofits — should embrace blockchain.

Negotiating the Nonprofit Landscape

I admit. I am biased.

Not only have I been involved in a variety of small nonprofits over the years, but I also helmed a blockchain incubator. I know first-hand the challenges facing small nonprofits and I am an unabashed cheerleader of blockchain technology.

I know most smaller nonprofits begin as labors of love. Something unfortunate happens and a well-intentioned founder reacts by starting a nonprofit to address a problem.

But, in many instances, that’s as far as it gets. The newly-established non-profit has little money, so hiring someone to properly market the effort or balance the books isn’t an option. These are just two reasons at least half of the nonprofits out there fail.

There are other challenges facing new nonprofits. For starters, in order to solicit contributions, they need to establish credibility and win the hearts and minds of charitable consumers and organizations. This is especially tough in today’s increasingly-crowded nonprofit landscape. (Going toe-to-toe with big, established charities can also undermine a small organization. Understandably,  household-name charities tend to capture the generosity of givers, but, in many cases, only a percentage of annual contributions actually go to “the cause”. Much of the money raised by big organizations is spent on infrastructure costs.) 

Blockchain Can Help 

For nonprofits hoping to earn funding, recognition and the ability to compete, blockchain can help.

Let us count the ways.

As mentioned, blockchain is decentralized. It doesn’t require a single point of entry. That means for a modest investment, a small blockchain-based nonprofit can create a massive footprint.

Blockchain can also expand the scope of contributions. Donations are the lifeblood of small nonprofits and blockchain means forward-thinking charities can explore contributions that come in the form of cryptocurrencies. This will require them to jump through some technical hoops, but it’s worth considering because the transaction fees associated with crypto dollars are significantly lower than those charged for traditional currencies.  And, as any nonprofit can tell you, transaction fees add up.

Which brings us to another check in the “yes” column: blockchain can eliminate needless middlemen – bankers, payment processors, attorneys – from the picture. Because blockchain offers a transparent, peer-to-peer ledger, it renders these intermediaries unnecessary.

And the same transparency can also strengthen a nonprofit’s credibility, which is key if you are soliciting funds. If an organization deploys an open ledger, all contributions are transparent. Givers can see where their money goes and how it is spent. (While at the same time protecting the anonymity of the giver.)

Finally, blockchain can be used to get the word out. There are dozens – if not hundreds – of small nonprofits flying below the radar in nearly every community in the country. Blockchain can help put them on the radar.

Decentralized apps – Dapps – are now available that make charitable giving as easy as buying lunch with your smartphone. By adding an organization’s name and mission to a Dapp displaying local nonprofits, even the most minuscule nonprofit can take its rightful place alongside bigger charities. Blockchain can help democratize charitable giving, ensuring there is room for everyone.

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