Giving Compass' Take:

• Divya P S explains a few of the ways that blockchain technology could be used to benefit philanthropy, including cost reduction and increasing transparency. 

• How can funders best advance blockchain for philanthropy? How could blockchain be misused or abused? 

• Learn more about the risks and opportunities of blockchain for philanthropy.

Blockchain technology can be leveraged to build a completely transparent charity system by tracking the donations through multiple layers. This would enable donors to track how their funds are spent and ensure they reach the ultimate beneficiaries.

Potential benefits of Cryptophilanthropy

Reduction of transaction costs
Exorbitant administrative expenses are a red flag in charity. Non profit organizations and charities spend a huge sum for fundraising and marketing activities. Moreover, the usual costs associated with the donations processing and banking transactions are higher. Blockchain-based platforms helps charity organizations to harness the power of peer-to-peer networks by eliminating the financial intermediaries such as banks. This would reduce the transaction costs and transaction settlement time dramatically.

Automating processes with smart contracts
Smart contracts are digital contracts that runs on computerized transaction protocol supervised by a number of nodes connected to a blockchain network. Since blockchain contracts work on a decentralized system between all permitted parties, it can self-execute and self-maintain thereby eliminating the need for intermediaries such as lawyers or notaries. This type of algorithmic philanthropy not only increases trust among supporters, but also make charities more accountable. Automated smart contracts prove beneficial for philanthropies as it ensures the funds can only be used as intended and will be released to their grant recipients only when the conditions are met.

Boosting transparency
Transactions recorded on blockchain network are immutable and transparent ,which makes it easy for all the parties involved to gain a greater clarity within donation systems. Records linked on a blockchain network can be tracked across the value chain. When it comes to philanthropy, blockchain-based platforms allow the donor to track their donations all the way up until it reaches the beneficiary. Having a robust and transparent impact tracking and measurement systems would help in reducing unnecessary costs, eliminating corruption and boosting levels of trust.

Read the full article about blockchain and philanthropy by Divya P S at Medium.