How crypto will change the face of charity: Cryptocurrency donations are set to rise as charities embrace the technology’s transparency, immutability and traceability.
By Robert Stevens
Originally published Mar 28, 2020 on decrypt.co linked HERE
- Charities are opening their doors to cryptocurrency donations and crypto projects.
- Leaders from the field see 2020 as a turning point in charitable crypto adoption.
- Charities will increasingly hold crypto donations without immediately converting them to fiat currency.
- Cryptocurrencies and charities seem like a match made in heaven. Transparency, immutability, and traceability: everything charities need to work effectively.
Correspondingly, charities are opening their doors to both crypto donations and crypto projects. Binance has raised millions (albeit, mostly from money it’s donated to itself) for charity projects, and United Nations organizations such as UNICEF have incorporated blockchain technology into many of their work and fundraising campaigns. Countless others have followed suit.
So how will crypto change the face of charity? We asked leaders who straddle the divide between crypto and charity to share their thoughts. Here’s what they said.
Crypto donations will rise
Alex Wilson, of The Giving Block, a platform that helps charities accept crypto donations, is, perhaps unsurprisingly, optimistic. “We think 2020 is really going to be a turning point for nonprofit adoption of cryptocurrencies. We already saw the amount of nonprofits accepting crypto double last year,” he told Decrypt. Still, “double”, in this context, means an increase from, er, 1% to 2%.
However, Wilson said that in the past few years, crypto donations have totaled hundreds of millions of dollars—and when the market’s performing well, charities receive more crypto donations. At the height of the Bitcoin bubble in December 2017, an anonymous do-gooder, “Pine,” set up the Pineapple Fund, which gave away up to $86 million in Bitcoin to various charities over its lifetime.
Wilson said 2019 saw nothing like that, but there were “still a lot of multi-million dollar donations,” like a $4.2 million donation to Carnegie Mellon. “I think as soon as the market picks up, you’re going to start seeing more things like the Pineapple Fund popping back up,” he said.
But the state of the crypto market aside, Wilson said that in 2020 and beyond, crypto donations will rise because those holding crypto, generally millennials and their juniors, have begun to enter the workforce en masse. Charities “want to start building these lifelong relationships with the younger donors who are in their twenties and thirties,” said Wilson. “When they hear stats like ’20% of millennials own cryptocurrency’, that’s really exciting for them because they really struggle to connect with younger donors.”
“That’s why I’ve spent five years working on this,” said Suzanne Pelletier, executive director of the Rainforest Foundation US, a New York City-based charity. “I’m really convinced that the market will just get bigger and bigger and, by default, the size of philanthropy in that group will increase,” she said. More and more use cases are being created, and that’ll create value in the network, Pelletier says, though she acknowledges she’s by no means an authority on the matter. Still, the Rainforest Foundation US isn’t making big bucks from Bitcoin just yet: from a budget of over $3 million, just $17,000 was raised from Giving Tuesday in 2019.
Ettore Rossetti, head of global digital at Save the Children, wonders who the next Pine will be—and hopes that, by continuing to support cryptocurrencies, he’ll persuade the next anonymous philanthropist to send some Bitcoin his way the next time the market surges. The charity first started supporting crypto in 2013 in response to Typhoon Haiyan. Since then, “we haven’t raised millions of dollars” through cryptocurrencies,” he said, but “tens of thousands of dollars.”
He thinks part of the reason for a lacklustre amount of donations is that, though more people are getting into donations, speculators are likely to HODL—their reasoning being that a $100 donation to starving children now could become a $100,000 donation when Bitcoin’s price goes to the moon. If it does.
Charities keep more crypto donations in crypto
“I think we’ll start seeing some of the nonprofits getting more comfortable with actually holding on to the donations and not necessarily always converting them,” said The Giving Block’s Wilson.
For now, the Rainforest Foundation US converts donations in crypto right away. “Our board just decided we’d treat them under the same policy that we have with stocks,” converting them immediately to “decrease our risk,” said Pelletier. However, the charity’s far from stuck in the past: In 2015, The Rainforest Foundation, in fact, created its own token, BitSeeds, which ran for a while on Bittrex before being delisted. Save the Children also converts crypto donations to fiat straight away, said Rossetti.
But Christina Lomazzo, who heads blockchain for the United Nations’ children’s charity, UNICEF, has taken the plunge. In October, UNICEF started accepting cryptocurrencies without immediately converting them to fiat, the first time a UN agency has done so. There were three reasons for doing so. The first, for transparency; the second, to move assets around at speed; the third, to experiment, said Lomazzo.
UNICEF’s just dangling its toes in crypto’s drainpipe for now: to date, it’s made three investments, totalling one Bitcoin and a hundred Ether (worth around $30,000 at the time), disbursed into three blockchain companies who’d already received prior investment from UNICEF. Soon, UNICEF will open a call for another round of funding, and companies will be able to receive up to $100,000 in Ethereum or Bitcoin.
Charities will work with blockchain and crypto more
If donations don’t pan out, the Rainforest Foundation, like a growing number of other charities, is working on integrating blockchain into one of its projects. It’s using blockchain to integrate satellite data for deforestation in the Peruvian rainforest. Then, after training leaders of indigenous communities to analyze that data, the Foundation will have members of their communities collect evidence of deforestation.
Recording tasks such as these on a blockchain, said Pelletier, makes it easy to reward community members on the blockchain; otherwise, remunerating members of communities is “just too onerous a process.” But, “within the next year or two, the communities themselves will have the wallets and the transactions will go directly to that,” she said.
Raphaël Mazet, of Alice, a blockchain company that’s geared around social impact, told Decrypt that blockchain and crypto has a bright future in the charity sector. “Public trust in nonprofits has been declining for years, and it’s starting to affect donation levels, especially amongst smaller donors. Crypto provides a transparent payment trail showing how the money was used,” he said.
He spoke not of the “accountability to donors,” which “can be dangerous if it leads to charities slashing overhead costs to unsustainable levels or catering to donor vanity metrics,” but of the “the operational efficiencies they can gain from blockchain technology: automated reporting, giving agency to their beneficiaries, and scalability.”
However, with charities bracing themselves for a hit to fundraising activities as coronavirus lockdown measures take effect, they may have other things on their mind than crypto adoption.