The Typical Nonprofit ‘Arc’
To understand how smaller nonprofits could benefit by leveraging blockchain, it helps to understand the typical “arc” of most small nonprofits.
Generally, they start from the heart. A family member, friend or loved one goes through some unpleasant experience and a well-meaning founder reacts by asking, “What can I do to make sure no one else has to go through with this?” Their answer is to start a nonprofit.
Their hearts may be in the right place, but often founders have little or no money - nor any idea how to launch and market a nonprofit. So, the nonprofit settles for old-school solutions like purchasing mailing lists and sending out flyers via snail mail in hopes of capturing attention. This is far from efficient.
For big, fully established charities, this is rarely a concern. High-profile charities are top of mind for most givers, even though only a percentage of annual contributions may actually go the cause itself. The rest can be swallowed by the massive infrastructure needs that come with running a globally-recognized nonprofit.
Why Nonprofits Should Leverage Blockchain
Blockchain can help reformulate this arc.
Blockchain, by definition, is decentralized, it means there is no single point of entry. No “home office” is required (except for tax purposes). So, for a relatively small investment, a blockchain-based nonprofit can have a regional, national or even global presence.
Since all entries in a blockchain ledger are recorded on a public ledger, it helps nullify any trust issues around how contributions are spent and who can access those contributions. A blockchain ledger can be audited at anytime, meaning accountability is baked into the business plan.
Then there is efficiency, which is essential for every business. In the case of small nonprofits, efficiency often means managing the many intermediary costs that can drain a charity's coffers.
But - as is often repeated - blockchain “eliminates the middleman”. For nonprofits, the middleman are the bankers and payment processors who squeeze themselves between good samaritans and good causes. Blockchain makes bankers and payment processors unnecessary, allowing more of the contributions to go directly to those in need.
Perhaps the single biggest reason nonprofits should consider adopting blockchain is because doing so automatically expands the contribution landscape.
Contributions can be completed in dollars, pesos or marks, but blockchain opens up the possibility of cryptocurrency contributions. For nonprofits, this should be especially attractive because crypto - unlike traditional currencies - are cheaper to process.
The Future of Charitable Giving
Unprecedented transparency and efficiency tell only part of the story. Blockchain can also be used to get the word out.
Right now, decentralized apps (DApps) are being built on the that can give these small, unsung organizations the visibility they need.
How will they work? Well, imagine waiting in line to buy a pizza. While waiting, the DApp on your phone identifies a nearby youth center or animal shelter in need. As you tap into your cryptocurrency wallet to pay for your dinner, you donate the spare bitcoin or ethereum to a good cause.
This isn’t some far off scenario. Thanks to blockchain, it’s a concept that will be here sooner than you know and, on behalf of small nonprofits everywhere, let me be the first to say “thanks”.
Brad Robertson is the founder and CEO of Polyient Labs, a Phoenix-based, early-stage blockchain incubator created to help identify and foster blockchain innovations. He also helps run a Phoenix-based nonprofit aimed at helping children with autism and other developmental disabilities.
Last modified on Monday, 24 June 2019