Now, blockchain technologies are poised to enhance cross-industry transparency via improvements to charity and donation programs.
I spoke with Changpeng Zhao, CEO of the cryptocurrency exchange company Binance, which runs the Blockchain Charity Foundation (BCF)–a wing of the company that’s devoted to global sustainable development. He shared how blockchain technologies can enhance transparency within a huge range of industries by making donation and charity systems easier to track and understand.
The Trouble with Current Donation Systems
There are so many disparate industries these days that it can be challenging to find any commonalities beyond death and taxes. But here’s one thing most industries have in common: At least some people and organizations within said industries are likely to participate in charity or donation programs.
That’s good news for society, but there’s just one problem: Donation systems notoriously lack transparency, which can lead to corruption and wear down the public’s trust–thereby decreasing the odds that people and organizations will continue to donate to worthy causes.
After piloting disaster relief donations via a campaign for West Japan flood donation, Zhao is intimately familiar with the lack of transparency that pervades so many charity programs.
“It was quite hard to push money to the ultimate beneficiaries–to identify who they are and who needs help,” Zhao says. Because the process of collecting and distributing donations is generally an opaque one, Zhao says not many people can understand where the money goes unless they’re provided with a detailed written report.
“Everyone sees one layer of transaction,” Zhao says. “The people who donated to us trust us to make good use of the money, but they no longer know where the money went until we publish that report.”
Zhao is concerned this can limit people’s willingness to donate. “In addition to being worried that the money may or may not be put to good use, the lack of transparency also reduces the sense of personal achievement,” he says. “If you can see where the money is going, that will help a lot in terms of personal feelings of achievement–so that’s very important.”
All of this helps explain why the BCF is committed to developing a fully transparent charity platform.
Making Charity Programs More Transparent
Zhao and his BCF maintain that employing blockchain technology within the charity ecosystem will yield a more efficient and transparent system and enhance the odds that donations will be distributed to those most in need.
“When it comes to the BCF program, our aim is to focus on transparency through this tracking portal,” Zhao says. “We want a completely transparent system.”
“Looking at the UN Sustainable Development Goals, the first few in the list could all be easily enhanced with a more transparent charity program,” Zhao says. “This increased transparency will prompt people to donate more and that will help a number of the initiatives including poverty, health, quality of education, gender equality and more.”
Rather than advocating for a specific charity, the BCF aims to help all charity initiatives via its blockchain charity platform.
Making Donation Systems More Transparent
In order to establish a fully transparent charity system, it’s necessary to track donations through multiple layers of donors, charity programs, NPOs, local supporters, and the ultimate beneficiaries.
That’s a tall order, but Zhao says Binance’s blockchain donation portal is capable of achieving it.
“As long as all of the transactions stay on-chain (done via cryptocurrency), blockchain tracks everything automatically,” Zhao says. “The job of the BCF portal is to collect the information on the blockchain and present it in an easy to understand manner. You can see the number of transactions of the incoming donations and the number of outgoing transactions for beneficiaries. And in between these two, there could be multiple layers for NPOs, local partners… etc., so we can track all of those in an easy to visualize way.”
The emphasis here is on easy to understand. Revealing oodles of data in and of itself doesn’t enhance transparency; it’s making that data accessible and understandable by all parties involved that provides greater clarity within donation systems.
The Importance of Education
In order to onboard more charitable organizations, governments, corporations, and grassroots communities, Zhao says the BCF first has to educate people about the value of the blockchain and cryptocurrencies.
The foundation is approaching this effort in several ways. For starters, the BCF is beginning to partner with universities and governments to educate teens and university students about cryptocurrency, blockchain, and so on.
“We also try to push very hard for the ultimate beneficiaries to accept cryptocurrency, so that will be a good way [for] people to learn,” Zhao says. “If users receive donations via crypto and these users need to learn about cryptocurrency or require help installing a wallet to receive the donation, there is a high incentive to learn that.”
Zhao is also hopeful that an increasing number of people and organizations from far-ranging industries will get on board with the blockchain in pursuit of a transparent charity platform.
“There [are] a lot more people that understand blockchain… [compared to a] few years ago, so today it is easier to push,” Zhao says. “I think the most significant challenge in expand[ing] BCF’s impact is really just educating people on blockchain. The more people who understand blockchain, the easier it is for BCF to push our impact.”