Use of Blockchain Technology in the Charities and Non-Profit Organization Sector


With the world reeling with a new virus threat Covid-19, Charities and NPOs around the world are engaged in raising funds for helping the victims and organizations involved in treating the victims. Many genuine charities are unable to raise enough funds to meet their objectives due to lack of public trust.

However, as charities and NPOs are perceived as sectors which are at ‘High Risk’ of being abused for money laundering, these organisations often having difficulty in establishing a brand of legitimacy.

Last year the UK Charities Commission investigated eight linked charities which were involved in a money-laundering scam. The Commission identified that of the funds donated to the eight charities, a small proportion of the payments were confirmed as legitimate charitable donations, many of the other payments were from overseas accounts which were connected to a website offering fake erectile dysfunction medication for men and slimming aids to customers in Austria, Germany, Switzerland and France.

Chinese charities have also been haunted by issues such as corruption, money laundering and other financial crime. Many Chinese charities have been accused of not providing access to the beneficiaries of the funds raised from the charitable donations as well as routing the funds to a different cause; for example, Charities which were set up to help young girls, but in reality gave money to young boys - one of which used duplicate photos to encourage people to donate to impoverished children.

Charity 9958, a project under China Charities Aid Foundation for Children (CCAFC) which raised funds for the heart surgery of a young girl, Wu Huayan, but never paid the amount to the beneficiary. Wu Huayan died and her death sparked public outrage and investigation into the charity.

These examples have raised increasing concerns about the credibility of Chinese charities which has impacted legitimate charities who are trying to raise funds for legitimate causes. Blockchain and other digital ledger technology, however, offers a solution.

Blockchain technology as a solution for Charities and NPO Sector

Crypto-Philanthropy refers to the use of Blockchain technology to facilitate charitable contributions. It helps many organizations raise funds and receive donations through direct decentralized transactions.

Blockchain technology is being adopted by various charities around the world to provide greater transparency into funds being donated and the ultimate use of the donations.

  • Highly visible and traceable transactions The decentralized nature of Blockchain technology helps to create better trust between the donors and Charities. Donors can track all their transactions from the beginning to the end and are able to verify where the funds went. The recipients receive maximum amount of the money donated on a real time basis since expensive transfer mechanism are bypassed.

  • Transactions at Higher Speed and Lower Cost Every transaction executed on Blockchain is recorded in near real ti