In this blog, I’ll be explaining a bit about blockchain and also why it can be useful for non-profit organisations. Aspects, such as better security and improved efficiency, are major points of strength for the blockchain system.
But first, what is blockchain?
To put it simply, blockchain is a system in which digital transactions are grouped together in ‘blocks’ which contain details of these activities. These are stored in a network of other blocks which are formed in a linear fashion; each block is added to the end of the chain. The entire blockchain is simply a recorded history of digital transactions. Because of this network, the transactions are very secure and do not require a third party to resolve them or mediate any disputes, which leaves no space for hackers.
For more information on how blockchains work, here is the link to a previous Bristol Pound blog which gives a very helpful breakdown.
There are many advantages that come with using blockchain. Firstly, the blockchain system allows for transparency and accountability which are particularly important for non-profit organisations. For non-profits, there needs to be an extremely high level of trust between the donors and themselves; we ultimately need to know where the money is going when the company is being funded. Otherwise, this leaves room for deliberate corruption or major mistakes with finance; the blockchain system ensures that this kind of detrimental impact is much less likely to occur because it is so secure.
In fact, according to a survey done by the Charities Aid Foundation (CAF) in 2018, 21% of Britons don’t believe that charities are trustworthy (for more information on this issue, check out this article in The Guardian). This can be correlated with the downward trend in the amount of money being donated to charities. This provides more evidence to show that regaining the trust of the public is even more important right now; this system aims to do just that.
The blockchain system means that everything can be tracked and traced with ease. So, for example, if donors wanted to be reassured that their funds are going to the right places, the nonprofits can simply make their ‘wallet addresses’ public, and can track the funds in real-time. This is important because it reestablishes the donors’ trust and the credibility of the non-profit organisation itself. Not only is it quicker for resolving issues or queries, but it is also more accurate; published reports can be difficult to validate, but the ‘blocks’ are pieces of information that can be accessed/ looked at to see if there are any problems.
UNICEF has also gotten involved in the blockchain system in the hopes that it can have an even greater impact on helping children and young people around the world. They, themselves, acknowledge that there is great efficiency and also transparency in blockchain technology which can help achieve the goals of the organisation. A good example of this is the Digicus Project, in Kazakhstan, which focuses on exploring how the technology can be used to facilitate payments between UNICEF and its partners. The fact that a major global organisation is using the blockchain system to improve transparency and efficacy, is a great indication of the useful path which this system provides.
Here’s a link to UNICEF’S Digicus Project in Kazakhstan: https://www.unicef.org/innovation/blockchain/digicus
Although it may seem like quite a complicated system that is also difficult to implement, blockchain for non-profits could prove to be extremely beneficial, overall, and I’m interested to see how it will be used in the future.