Philanthropy’s Blockchain Uptake Is Slow, But Future Is Bright

Based on the findings from the research, it appears that the nonprofit sector’s embracement and understanding of new technologies, specifically blockchain, align closely with the enterprise sector’s experiences. Since enterprises don’t frequently disclose their internal struggles and outcomes related to technology adoption, this study offers valuable insights that resonate with the anecdotal information I encounter in the industry.

Among charities adopting blockchain technology, approximately 70% noted improved real-time monitoring of funds, including donations and expenditures. Approximately half of these organizations reported that implementing blockchain simplified the donation process and decreased administrative costs. Additionally, around half of the charities using blockchain technology saw an increase in both the frequency and amount of donations due to heightened donor trust in the organization and giving process.

As a crypto investor, I’ve analyzed the data carefully, but I must admit there were some letdowns as well. The most significant disappointment was that only around half of all entities reported reduced transaction costs. It’s plausible that high Ethereum Mainnet fees might have played a role in this, and unfortunately, not enough charities have yet taken advantage of the transition to more affordable Layer 2 networks.

As a blockchain analyst, I’ve observed that one of the key selling points of this technology is its capacity to connect the origin of financial contributions with their subsequent applications. This concept has gained significant attention in the public sector, and charities are exploring its potential for enabling donors to see a tangible connection between their donations and the resulting positive impacts. However, initial evaluations have been underwhelming: only 32% of charities utilizing blockchain reported finding it helpful in aligning donations with impact and outcomes.

Further findings from charities indicated that the influence of recognition and reward NFTs was limited at most. It appears that we are yet to discover effective methods to attract, retain donors, and integrate them into a thriving community and ecosystem where they experience appreciation, incentives, and engagement. These aspects are vital for charities aiming to maintain their impact and they have parallels in business environments as well. Devoted, active, and contented donors or clients are the ones who consistently return. The researcher, Daniel Mihai, has firsthand knowledge of this issue since he is the founder of Anu Initiative, a social enterprise that links donors with the consequences of their donations using non-transferable NFTs.

In my conversations with Daniel, philanthropic groups consistently expressed dissatisfaction with blockchain tools that extend beyond transactions. The implementation and maintenance of these tools proved challenging, often leading to adoption difficulties. This scenario resonates with our interactions with IT directors in enterprises. Due to limited resources, they seldom have the financial means to acquire new intricate skill sets needed to implement advanced technologies.

Although the study revealed sluggish advancements and acknowledged challenges, my interaction with Daniel left me hopeful. Notably, the proportion of charitable organizations adopting blockchain technology is projected to almost double: around 10% of the polled participants intend to integrate this technology within the next one to three years. Moreover, it’s quite astonishing that only 4% of respondents express opposition towards it, considering the rampant fraud and corruption unveiled during the previous crypto market crisis.

Among the 72% of charities without implementation plans, the primary hindrance is often a lack of education on the subject. In fact, for each potential advantage – such as cost savings or enhanced transparency – over 80% of non-adopting charities consistently expressed ignorance regarding the benefits and reasons behind adoption. This signifies not an opposition, but rather a lack of understanding.

Based on my experience working with several non-profit organizations and serving on their boards, I firmly believe that addressing usability issues should be our priority before embarking on a campaign to increase awareness. Non-profits typically operate under tight budgets and rely heavily on volunteers. They lack the resources for large IT departments and seldom have access to innovation funds. Thus, the adoption of our product by non-profits serves as an excellent benchmark for evaluating its simplicity and reliability.

As a seasoned crypto investor, I’ve noticed that the landscape of enterprise IT has undergone significant changes over the past few decades. Fifty years ago, companies had an in-house team of software developers who wrote their own software from scratch. However, times have changed, and now, most enterprise IT systems are built on pre-existing packages. Instead of focusing on new development, today’s IT departments in enterprises primarily deal with integration and process control.

As a crypto investor, I firmly believe that to boost mass adoption of cryptocurrencies, we need to simplify complex blockchain solutions by adopting application integration models that businesses are already familiar with. This shift is taking place as industry leaders like PayPal, Stripe, Wise, and others integrate crypto payments into their standard offerings. At EY, our goal is to follow this trend by providing standardized Application Program Interfaces (APIs) for enterprises to easily connect their applications for supply chain integrations and procurement processes.

It’s striking how a multitude of blockchain-focused philanthropic organizations have arisen to support the global nonprofit sector. Notable examples include Endaoment, The Giving Block, Gitcoin, GainForest, and Charmverse, as mentioned by study participants who have experienced their positive impact firsthand. The future of charitable giving appears promising with these innovations leading the way.

If you’re interested in obtaining a copy of the comprehensive study findings, kindly send an email to Daniel Mihai at daniel@anuinitiative.org.

Based on my professional experience and expertise in the field, I would like to share some thoughts that are not necessarily endorsed by CoinDesk or its affiliates. My perspective is shaped by years of research, analysis, and observation in the cryptocurrency industry. However, it’s important to keep in mind that this opinion is mine alone.