Many nonprofits have started accepting donations in the form of cryptocurrency, including the Alzheimer's Association, the American Cancer Society, Autism Speaks, local chapters of Boys & Girls Clubs, CARE, Make A Wish International and Ronald McDonald House Charities.
Helen Hai, the head of Binance Charity, the philanthropic arm of the largest cryptocurrency exchange in the world, told Monetary Brief that crypto donations have several benefits compared to fiat donations including speed, transparency and lower transaction fees.
"The emergence of digital assets has revolutionized our financial interactions, impacting not only investments and banking but also transforming the social sector," Hai said. "Major nonprofits are increasingly recognizing the value of crypto donations, particularly for supporting humanitarian efforts and providing aid to refugees."
Hai cited the following key benefits of crypto donations in comparison to fiat donations:
• Speed: Crypto transfers provide a fast and secure alternative to fiat, ensuring quick access to financial aid without the delays or complications associated with traditional methods.
" Unlike international wire transfers that can take one-to-five business days or even longer, crypto donations arrive instantly, enabling immediate support," Hai said.
• Transparency: Blockchain technology records every transaction, making crypto donations transparent.
"The public nature of blockchain ensures a higher level of transparency for donors," Hai said. "This transparency fosters greater trust and accountability among donors, as they can track the flow of funds."
• Lower fees: Crypto donations often involve lower transaction fees compared to fiat donations.
"Traditional methods of donation often incur high cross-border transaction fees, reducing the overall amount of the donation," Hai said. " In contrast, blockchain-based networks like BNB Chain can have significantly lower transaction fees such as just $0.1 per transaction, allowing a larger portion of the donated funds to directly benefit the recipients or charitable organizations."
• Efficiency and inclusivity: Crypto donations can contribute to financial inclusion, particularly for unbanked and underbanked individuals who lack access to traditional banking services or identification.
"Direct crypto giving provides an opportunity for these individuals to receive and utilize funds through digital wallets, requiring only a mobile phone or internet connection," Hai said. "This inclusivity expands the reach of aid efforts and ensures that vulnerable populations can access the support they require."
Emphasizing crypto's possibilities, Hai said the borderless nature of crypto donations plays a crucial role in supporting refugees and displaced individuals.
"Cryptocurrencies transcend geographical borders, making it easier to deliver financial aid to recipients in different countries," she said. "This eliminates complexities and delays associated with international transfers, facilitating quick and efficient help. It is essential to ensure the availability of sufficient infrastructure, such as access to digital wallets via mobile phones or internet connections, to enable vulnerable individuals to benefit from crypto donations. By embracing crypto donations, we harness the advantages of this transformative technology to make a significant and positive impact on humanitarian causes, refugee support and global aid efforts."
Members of the public might be skeptical of charitable organizations after hearing allegations of funds being mismanaged and seeing large administrative costs, so crypto donations present a solution to increase visibility and assure people who have donated to a charity that their donations are accounted for, Binance said in a blog post. For example, the humanitarian organization Mercy Corps has partnered with Binance Charity to use Web3 solutions to facilitate donations to refugees in Uganda while increasing transparency in supply chains.
The number of charitable organizations on Forbes' list of "America's Top Charities" that accept donations in the form of crypto has increased from 12 in 2019 to 49 in 2022, according to a Binance blog post.
Yannick Naud, UNICEF Luxembourg's innovative finance officer, said Web3 is appealing because of the ability to create smart contracts on the blockchain, which can guarantee that donations are not misused or misallocated, according to the blog post.
“Web3 and blockchain technology provide more transparency, accountability and traceability in the donation process, which is crucial for building trust with donors," Naud said. Incentives can be added through the blockchain, he said, such as rewarding donors with tokens that they can either donate to other causes or use to vote on how the charity works with the donations it receives.
