According to the World Bank Global Findex Database, over 2 billion adults globally are either unbanked or underbanked meaning they lack basic financial services like a bank account or lending services. The recent global COVID-19 pandemic further exacerbated the numbers of the unbanked population due to lockdowns and economic disruptions, which could impact reaching the UN’s Sustainable Development Goal #1 – “end poverty in all its forms everywhere,” – to which financial inclusion is a key enabler.
The absence of financial inclusion goes past money transfers and global spending. Some issues arising from financial exclusion are the shortfall in channels to give to charity and the absence of philanthropy projects in the developing world. Individual giving remains the largest source of philanthropic funding across the world, accounting for over 60% of total giving. The lack of financial services for those in need hinders efficient charitable activities across developing nations while transparency and accountability also suffer.
Luckily, blockchain technology brings about a new, transparent, and decentralized way for the unbanked population to join the financial economy. By leveraging blockchain’s decentralized and transparent nature, organizations are developing innovative approaches to reach the unbanked and revolutionize charitable giving.
Impact of Blockchain on Sustainable Charity and Philanthropy
Blockchain technology has the potential to create a major shift in the financial landscape, particularly for the unbanked and charitable giving. This technology broadens financial access, offers low transaction fees, and helps individuals to take control of their financial lives. Moreover, blockchain tech also introduces transparency and security via its tamper-proof records which makes sure financial transactions are secure and auditable.
All these benefits improve the financial lives of the unbanked and change how philanthropy is conducted. There is a great opportunity for blockchain projects to make a real societal change and maintain sustainable development.
During the lockdown period in 2021 and 2022, charities widely adopted blockchain and crypto as a potential way to reshape the landscape of philanthropy. According to The Giving Block, a crypto-based research firm, the total amount of donations via crypto amounted to $2 billion as of January 2024, showing the impact the technology is playing in the ecosystem. Notwithstanding, over 56% of US charities are now accepting crypto as a form of donation.
How blockchain provides solutions to philanthropic giving
Individuals and charitable companies are moving towards decentralized giving for several reasons.
First, unlike traditional charities, which may consume a big portion of donations in administrative costs, blockchain eliminates the need for intermediaries and complexities, meaning individuals can donate directly to their favored charities or non-profit organizations. For instance, The Giving Block automates the process of donating crypto making it easy for non-profits to accept crypto without dealing with issues around price volatility, wallet management, or chain of custody.
Secondly, blockchain platforms such as Philcoin improve how philanthropic communities connect, engage, and raise funds. Via PHILApp, an all-in-one mobile application, individuals can interact on a social platform, enabling them to connect with people around the world, post engaging content, create their own causes, and contribute to their communities. Philcoin’s approach incorporates peer-to-peer philanthropy, allowing users to directly support causes they care about. This model emphasizes transparency and efficiency in the distribution of funds, which can be especially impactful in emergency situations or ongoing community efforts. By minimizing administrative costs, Philcoin’s model is designed to build trust and increase engagement in charitable giving.
Finally, blockchain-powered smart contracts automate the distribution of funds based on predefined conditions, ensuring that donations are utilized efficiently and in alignment with the donor’s intent. For instance, if a donation is made to fund the construction of a school, smart contracts can be set to release funds in phases: after the land is acquired, after construction begins, and when the project is complete, ensuring accountability at every stage. Philcoin’s use of smart contracts provides this level of transparency and trust, making sure that donations are used as intended, and empowering donors to feel confident about their contributions.
A transparent and auditable charity program could help build the trust of donors, especially those who may be wary of traditional financial institutions.
How blockchain can shape the future of charitable giving
The convergence of Web 3 solutions and charity amplifies the need for more organizations to adopt the technology for easier management and auditing of donations. As philanthropy becomes more digitized, blockchain technology could further empower individuals with greater control over their data and online interactions with charity organizations.
Platforms like Philcoin are at the forefront of this shift, addressing challenges such as transparency, community engagement, and direct funding of causes. By using decentralized tools, Philcoin sets a new standard for how blockchain can make charitable giving more efficient and impactful, providing a template for how philanthropy can grow.
Blockchain offers donors a more direct and personalized engagement with the causes they support. By using smart contracts and decentralized platforms, donors can interact directly with beneficiaries, track the impact of their donations, and even participate in decision-making processes.
Beyond smaller platforms like Philcoin, larger organizations such as Binance, via its Binance Charity are also making an impact. The company has set forth a framework for mega-crypto companies to give more to needy communities and make an impactful societal change. The company has raised over $90 million, impacting the lives of over 2 million people across 54 countries. Binance Charity has helped with various issues including homelessness, education, the war in Ukraine, inspiring women in tech, climate change etc.
There is great potential in connecting blockchain and charity, as the technology continues to mature. By allowing easier access to financial services and fostering transparency in charitable giving, we can achieve a more equitable and inclusive economic system.
