Crypto-philanthropy: How Bitcoin and Blockchain Are Disrupting the World of Giving
Many crypto enthusiasts are up in arms about all the cryptocurrencies being donated to the cause of re-building Notre Dame cathedral, recently destroyed by fire, instead of donating to real charitable causes. However, there is a growing trend to use crypto for worthy humanitarian causes.
Growing interest in bitcoin and other digital currencies has primarily focused on private monetary gain. However, concurrently, there is an interesting trend toward leveraging so-called cryptocurrencies for philanthropic purposes. Not only are many charities accepting bitcoin and other digital currency donations, but new philanthropic entities are emerging which use digital tokens and their underlying cryptography-based technology, called blockchain, using effective and ingenious ways. In time these strong experiments have the perspective to change and disrupt the humanitarian sector. in a huge way.
Considering the enormous wealth produced from cryptocurrencies, it only appears right that a few of those who were early adopters, and were rewarded for that, should have ways to pay it forward to those less lucky. There are numerous international organizations accepting crypto contributions and utilizing them to make a positive impact. Developing economies have been opening approximately cryptocurrencies and many charities have actually been trialing bitcoin contributions.
There are numerous reasons why making aid and humanitarian cryptocurrency transfers is attractive to charities. One reason is the speed of delivery and transparency of aid money as it moves down the value chain are attractive, as is the pseudonymity provided to those who would rather not publicize their benevolence.
Over the last couple of years, a number of charities and foundations have been testing bitcoin donations. These consist of such widely known companies as the Red Cross, Save the Children, United Way, the Wikimedia Foundation, and the Electronic Frontier Foundation. Once developed, an online “wallet” permits charity institutions to accept bitcoin and other cryptocurrency contributions and to exchange them for fiat currencies such as the dollar. Sometimes online wallet companies use 0% processing charges for nonprofits, compared to the 2% or more required by conventional contribution processors. This implies that possibly 100% of donations can end up in the pockets of charity organizations or contribution receivers.
Bitcoin contributions to charity are tax deductible
Bitcoin contributions to charity are also tax deductible and offer donors the included benefit of preventing capital gains taxes on the dollar amount value of their cryptocurrency donations.
While it is tough to say how much money has actually been generated through bitcoin and other digital currency donations in the United States, there is evidence to recommend that bitcoin donating is on the up and up. Fidelity Charitable, which houses the country’s largest donor-advised fund, supposedly received $69 million in cryptocurrency donations in 2017, up from $7 million received in 2015 and 2016 combined.
In addition to direct digital currency contributions, there are a range of other innovative and unique platforms and projects underway in the emerging “crypto-philanthropy” space.
Crowdfunding With Crypto
First among these are new crowdfunding platforms such as bitgive, bithope, and helperbit, which allow donors to make bitcoin donations to selected charities for their fundraising campaigns.
In addition, a number of new platforms that leverage the technology underlying digital currencies (the aforementioned blockchain) are being adapted to address the issue of transparency in giving. Blockchain offers an immutable, secure, and publicly available database of transactions accessible by anyone online.
Charity Coins On The Rise
Beyond cryptocurrency donations and tracking, a number of social purpose digital coins have arrived to support specific nonprofit programs and endeavors.
Brixcoin Is A Self-Funded Charity Coin Project
One such newcomer to charity coins is Brixcoin, a coin only developed in the latter part of last year. Through its special projects initiative, Brix reserves 10% of its masternodes rewards to go into its special projects fund set aside for charitable projects.
Brixcoin is self-funded and never even had an ICO asking others to fund the project. All Brix masternode owners have the privilege and solemn responsibility to nominate a worthy charitable cause. Then the Brixcoin masternode owners vote on the SPI (Special Projects Initiative) and the project with the most votes receives the funding. The masternode owners also earn a healthy share of the block rewards paid to the miners. A win win not only for charity but for the masternode owners as well,
Other Charitable Coins
Clean Water Coin, for example, was designed to raise money for the nonprofit Charity: Water. The impakcoin raises money for social effect projects. Pinkcoin, a philanthropy coin which enables investors to both contribute to charity and make a return on their financial investment, is listed on significant cryptocurrency exchanges and has performed well in comparison to other commercially traded digital currencies like Bitcoin and Ethereum (the second cryptocurrency).
Digital currencies such as Pinkcoin can be bought and offered for revenue on these online exchanges, increasing in value when need increases. Investors can also suffer a loss when demand for the coins reduces, but this is the same risk investors deal with when making other social impact financial investments with an expected monetary return.
While most social purpose coins were established externally to fund designated charity causes, at least one has actually been produced by a not-for-profit itself to fund both its own projects or those of other nonprofits. The RootProject has actually provided its own currency, called Roots tokens, which can be sold and exchanged for dollars to help fund self-run or partner hardship reduction projects.
One obvious benefit from the rise in crypto-philanthropy is the availability of new revenue streams for charity. Because direct-to-charity bitcoin donations are relatively easy to manage, bitcoin presents an attractive first-step opportunity for the giver and receiver. Studies show that millennial givers, in particular, want to have greater control over their giving and greater clarity on its impact. Blockchain-based donation systems offer effective systems for both. Importantly, it is expected that one in three millennials will own cryptocurrency . According to a recent study from Edelman, 25% of affluent millennials (anyone between the age of 24 to 38 who has at least $50,000 in investable assets or $100,000 in individual or joint income) are using or holding cryptocurrency. As millennials become the largest group of givers in history, their rising level of comfort with digital currencies and blockchain technologies will likely make crypto-philanthropy more acceptable.
Credibility On The Blockchain
Blockchain-based systems might also help to enhance the credibility of charities. According to recent studies, 1 in 3 Americans are reported to have little faith in nonprofits. In fact, many think that these institutions invest too much of their budgets on overhead and high CEO salaries and too little on the actual charitable programs. Decreased overhead costs due to improved operational effectiveness and disintermediation through blockchain technologies (e.g., direct donor to recipient providing) could really help restore faith in charitable offering amongst skeptical providers. This, in turn, could cause increased philanthropic engagement and an increase in overall providing.
In addition, new charity revenue streams might originate from significantly lucrative blockchain business, many of which have tremendous commercial potential, through the donation of a portion of their earnings and currencies to charities.
In the future more charities, and even foundations could produce their own cryptocurrencies. A charity token exchange, developed exclusively for the trading of charity tokens, may one day bolster a new market-based approach to philanthropy in which both philanthropists and charities make money from trading “digital currencies for good.”