How Alice, BitGive, GiftCoin, Giveth and AidCoin are using blockchain to change the way the charity industry works.
In the UK alone, the charity sector spends £1,578 every second or £136.4 million a day on charitable activities.
Charities provide the public with ways to directly support the causes people care about through donations and volunteering. Charitable giving is expected to hit £146 billion by 2030, but it’s not without its challenges.
Transparency, ethics and accountability for the money raised and where it’s going are all ongoing issues. In a recent study carried out by Third Sector, a charity monitor, it found nearly half of those surveyed doubted the trustworthiness of charities.
Could blockchain help remedy some of these pain points?
These 5 companies are helping charities do more.
When you donate money to a charity, do you know what that money is being used for? That lack of transparency has lead to a loss of trust among givers.
Alice wants to change that by incentivising charities to be more transparent.
When a cause is set up on Alice, the performance of each project is publicly available, making it easier for funders to identify and help fund projects that actually work.
As an incentive to charities becoming more transparent, Alice has created a funding program that staggers the allocation of funds based on those charities hitting those goals. If they don't hit the targets attached to certain bits of money, the money is stopped from being funnelled into inefficient projects.
If you wanted to find out how a charity spends your money, you’d have to wade through annual reports, and even then, the categorisation in those reports doesn’t allow you to see precisely what your money gets spent on.
That’s where companies like BitGive come in.
It's first venture, GiveTrack, allows donors to donate using Bitcoin. Once the project is funded, donors can see what and where their money is being used. If the funds leave bitcoin and are converted into a local currency, digital or written transaction information is fed to the GiveTrack platform to show what that money was used for on the ground.
Project status is also tracked by the nonprofit. As a project progresses, BitGive automatically updates donors all the way to completion.
Charities currently have limited options to receive funds. The majority of donations from fundraising campaigns are received using services such as Giving.com which charge as much as 5 per cent in fees to process the money. Pay with a credit card and that’s another 1.5 per cent on top.
Giftcoin wants to remove all that by creating a currency charities can use to move resources around without having to pay fees.
In order to buy into or cash out Giftcoin a 1% fee is charged, which is a fifth of what the current competition offers. All Giftcoin currency is fully trackable, too, so charities and donors can see where cash is going and what causes it's being used for.
The charity sector is a centralised business. In order for donors to give money to beneficiaries, there’s an intermediary, in most cases a charity that manages the movement of money and resources.
But what would happen if that centralised system became decentralised and donors and recipients can connect directly? That’s what Giveth wants to find out.
It's a radically new way for charities, their recipients and donors to organise. It does this by creating a decentralised altruistic community (DAC). In this community there are three main actors:
Anyone can occupy these roles and form their own community, allowing civic projects anywhere to create their own platforms for giving and let anyone, anywhere contribute.
As we’ve seen with the above companies, there are a lot of different areas blockchain can help charities be more transparent. But there’s a risk that too many innovations segregate charities, or that wealthy charities create blockchain solutions, leaving less wealthy ones behind.
That’s where AidCoin wants to help.
It does that by providing a number of different services:
This one-stop-shop approach allows companies access to cryptocurrencies while simultaneously being able to develop their own products on top of AidCoin's open-source platform.
As global charitable giving is set to continue growing, so the need for greater transparency increases.
Millennials and younger generations are increasingly asking for companies to show how their money is being spent. In a recent poll conducted by The Millennial Impact Report, a US research firm, 84% of millennials donate to charity, but 38% believe that only a small amount will go towards the actual cause.
However, 60% of millennials said the ability to see the direct impact of their donation has a significant bearing on their decision to give.
These projects could help the next generation, and others give more.