The role of blockchain technology in promoting stakeholder trust for Australian charities
Creators: name: Christie, Andrea
Publisher: name: RMIT University
Year: 2024
Subjects: classificationCode: 350106
subject: Not-for-profit accounting and accountability

description: The Australian public is increasingly losing trust and confidence in how charities manage their donation activities, according to recent federally-commissioned studies. Several charities have started using blockchain technology as a potential solution for enhancing trust and accountability in their donation governance practices. For example, UNICEF has built a platform which enables users to send and receive cryptocurrency donations (e.g., Bitcoin) and track the movement of each coin in real time. Despite this progress, there is limited knowledge on how blockchain might impact on stakeholders’ perceptions of charities, particularly from a behavioural trust perspective. Consequently, this thesis explores both if and how blockchain might help to develop, maintain, or erode behavioural trust in charitable conduct, when used as an institutional tool to govern charity aid. 

Interviews were conducted with 20 participants from four influential stakeholder groups: (1) large donors, (2) charity managers, (3) blockchain developers and contractors, and (4) regulators. Data was collected from June 2020 to June 2021 and analysed with Nvivo using a grounded approach, in conjunction with a theoretical framework consisting of institutional, legitimacy, and stakeholder theories. 

Analysis revealed that perceived trust in Australian charitable conduct is currently declining due to the following four distinct views: blurred charity identity, media pressure, rule inflexibility, and information and power asymmetry. Blockchain can potentially address these concerns by supporting key governance duties for charities, consisting of aid monitoring, decentralisation, and feedback and disclosure tasks. Overall, blockchain is a potentially useful tool for assisting charities with collecting, managing, and transparently reporting on their aid flows to stakeholders which, in turn, may help them to fulfil a number of key expectations for generating stakeholder trust. However, the use of blockchain can also potentially erode, or have no impact on, stakeholder trust perceptions of charities. This scenario can occur if charities fail to communicate blockchain pilot successes and failures to their stakeholder groups, or if they inappropriately apply blockchain to their donation governance practices without weighing the potential costs against the benefits. As such, blockchain is a tool for supporting low-level governance tasks, with humans ultimately responsible for making high level allocation decisions. 

Study participants shared their lessons on using blockchain to govern aid in their own charity projects. They warned of several key socio-economic barriers that can prohibit charities from using blockchain for this purpose. These include technological design, politics, marketing, digital literacy, finance and logistical challenges.

Finally, the study revealed a sectoral appetite for using blockchain as a formal charity reporting tool, with benefits consisting of compliance automation, transparency, and reduced fraud. However, small-sized charities are likely to lack the resources required to adopt blockchain, which may create an unfair competition risk, along with unnecessary red tape burdens. Ultimately, the federal government is advised to provide charities with industry co-collaboration, funding, education, and training support if they wish to accelerate the use of blockchain among charities. 

The study findings and discussion present significant contributions to both academia and industry. From an academic perspective, the analysis process helped to form a novel conceptual framework for understanding the definition of blockchain as an institutional tool for governing aid, as well as explaining how blockchain can both increase and decrease perceived trust in charitable conduct under various contexts. From an industry perspective, the findings may help to guide charity managers in their decision to incorporate blockchain into their own aid development programs as a tool for promoting trust in their operations. Finally, the findings may inform policymakers about the risks and opportunities of incorporating blockchain in Australian regulatory practices as a formal reporting tool for charities. In conclusion, this thesis offers understanding of how blockchain can potentially help to alleviate behavioural mistrust in charities and, in turn, attract the funding needed to deliver social impact to millions of recipients both locally and abroad.