A new report from Nasdaq highlights speed and accountability as two of the reasons that more philanthropic organizations are utilizing cryptocurrency and blockchain technology to make their efforts more efficient. The report said that when charitable organizations partner with crypto companies, the charities can amplify their reach and impact.
"For philanthropic organizations, it is no longer a question of if they’ll start accepting crypto donations, but when," Nasdaq wrote in the report.
According to Nasdaq, crypto's "revolutionary features," powered by blockchain technology, enable donors to trace their donations, increasing accountability, and allow "smoother operations" across different regions. Utilizing crypto also enables charities to cut banks out of the process, which is key for servicing underbanked or unbanked areas. Providing donations in crypto instead of cash also reduces taxes, hidden fees, and the risk of theft, the Nasdaq report said.
The Nasdaq report said that education is vital to ensuring recipients have the financial literacy skills needed to make the most of the donations they've received. "This education aspect is the part that makes projects truly impactful and sustainable in the long term, as organizations are not only providing fish but teaching people how to catch their own," the report said. "Recipients have access to a new financial system forever and are at the center of a technology and banking revolution." The report highlighted Binance Charity's partnership with CARE International in Kenya, through which individuals receive financial education alongside crypto donations.
Through the initiative, members of the Kenyan Village Savings and Loans Associations (VSLA) received blockchain-based e-vouchers and were employed as Community-Based Trainers (CBTs) who educated other people in their villages about crypto and blockchain, according to the report. In a survey, 98% of project participants said the crypto vouchers were an “excellent” or “good” "vehicle of support."
Margaret Ogare, one of the project participants, said in a video shared by Binance on X in December that the VSLA initiative helped her community recover from the economic impacts of the pandemic. "The businesses were almost crumbling, but because of the work they gave me, I was able to stand again," Ogare said in the video.
Members of the public might experience skepticism toward charitable organizations after hearing allegations of funds being mismanaged and seeing large administrative costs, so crypto donations present a solution to increase visibility and assure people who have donated to a charity that their donations are accounted for, Binance, the largest crypto exchange in the world, said in a blog post. Yannick Naud, UNICEF Luxembourg's innovative finance officer, said blockchain is appealing because of the ability to create smart contracts, which can guarantee that donations are not misused or misallocated, according to the blog post. “Web3 and blockchain technology provide more transparency, accountability, and traceability in the donation process, which is crucial for building trust with donors," Naud said. Naud added that incentives can be added through the blockchain, such as rewarding donors with tokens that they can either donate to other causes or use to vote on how the charity uses the donations it receives.
