Transparency and Accountability in Non-profit Sector
By: Caritas Project
Tags: Oceans, Funding, Charity, Blockchain, Conservation

How can Crypto help?

Technology is and has been the best thing since sliced bread, it has improved efficiency all over the world, helping people connect from miles apart, sending people to the moon and more. So why haven’t charities adopted such technologies to help them in their missions? The brilliance of cryptocurrency can help charities show that they are ethical that they are compliant and that they truly want to help. Cryptocurrency is technology at its finest, it is a form of payment that is completely transparent and you can see transactions from start to end, so you know where your donations are going. Since the implementation of cryptocurrencies charitable donations have considerably risen. A report by Fidelity Charitable shows that in 2017 the organisation received $69 million in cryptocurrencies, almost 10 times higher than the previous year. This is a huge advancement in just one year. Not only does cryptocurrency bring back a much needed sense of trust to charities, but it offers another outlet for people to donate. The crypto-community is growing at an exponential rate, thereby opening doors for another industry to provide donations.

The Root of the Problem

It is understood that cryptocurrencies can help and that the current system is somewhat flawed. But how serious are the flaws? Realistically, you are not giving money to anyone if you don’t believe there is a good reason to. A rise in mistrust amongst charities has put a dent in donations, with media outlets shaming certain charities it causes drastic aftereffects on even the most honest charities. A traditional charitable focus is to increase turnover, and it has been the case that success and turnover go hand-in-hand. We can see this from PwC’s examination of charities, their annual report for Excellence in Reporting Charities award initially sets out to improve transparency. However, charities are shortlisted for the award due to their turnover size rather than the scale of impact. This has created a false ideology that the bigger the financial size the more successful a charity is. This flawed misconception is one of the overriding issues with mistrust in charities today.

Additionally, another problem that charities face which inevitably lead to a public mistrust is over the income that charity bosses earn. Over the last few years charity executives that are paid over £200,000 a year has risen! Executives that are paid over £300,000 per year has also risen and even one unnamed executive is earning a staggering £850,000 + per year. This statistics are absurd for a charity or even any executive to earn. So when the everyday person, with an average annual income of just over £28,000, contemplates donating to charities, it seems slightly controversial that the executives of charities are earning up to over 20 times the amount, and expect them to donate.

“People won’t donate if they feel that charity pay is excessive. It is important charity funds help the most vulnerable in our society. I am concerned that charity bosses still don’t get it.” — Charlie Elphicke

Blockchain Benefits

Beyond the fact blockchain technology, with its inherent transparency concept, will help increase trust in charities, there are range of additional benefits. This new currency initiative can help charities in numerous ways other than financially. It can, for example, donate computing power for charities to mine cryptocurrency themselves. This further increases accountability and transparency for charities. The magnitude of benefits are ever increasing, from spreading awareness, opening up new means of payment to helping charities themselves earn cryptocurrency. This initiative is already being undertaken by UNICEF as it allows you to donate to its Australian branch via giving away part of your computing power in order for it to mine the currencies.

Transparency could increase donations to up to 50% according to Giftcoin. They surveyed over 2,000 consumers where half of them were adamant that their donations only go to paying salaries and not to helping others. Many of the consumers believe that their payments are going towards salaries, marketing and/or office rent which leads them to either not donate or donate less often. The study also showed that 1 in 6 would donate more with the option of more transparency, therefore it is pivotal that charities open up, adopt a transparent outlook for the greater good of wellbeing

The Important of Transparency

Making charities more transparent and thus more accountable, may just be the turning point of donations. It is evident that donations and donors would increase, awareness would increase and in turn charitable practices would increase with more transparency.

“In general, transparency will ultimately increase public trust and confidence in the sector by making stakeholders more informed about the work of charities and making it more difficult for people to misuse donor dollars.” –Hubcreative

The importance of transparency is especially important due to the fact that millennials are more inclined to avoid wasting their money on charities. They believe that their donations will end up doing nothing but paying off salaries. So how can they show more transparency? Firstly, the adoption of cryptocurrency shows the destinations of transactions, it is a currency that is inherently transparent. Additionally, other factors that can be adopted are: tighter controls on expense policies (for travel, meals and other costs), regular financial reports that can be reviewed, verification of your charity that shows it is officially registered and explanations/plans of how fund reserves will be used.

For the Greater Good

Therefore, as discussed, it is more than possible for charities to become more transparent, more accountable and in turn, expect more donations. Cryptocurrency is at the root of these changes and charities can highly benefit from the implementation. It is important that we make our charities more open to donations, more accessible through newer communities and even open to additional donations (such as computing power). Charities need to take a step in the 21st century and use the incredible resources that the world has to offer. These implementations are a positive step forward to a more ethical society and a society that endorses the greater good. It is time to end the mistrust and make our charities more accountable, more transparent and therefore more open to donations.

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