How Blockchain Can Change the Way NGOs Operate for the Better

Non-governmental organisations, or NGOs, which aim to tackle some of society’s most difficult and pressing issues, often encounter problems of their own, while trying to solve the problems of others. NGOs run into difficulty in terms of gaining and maintaining the support of the general population as well as from larger donors, raising funds, and ensuring transparency around how their organization functions. These are influenced by changing societal opinions on how best to approach given issues, by doubts on whether donations to such organisations are truly making their way to those in need, and by doubts as to whether the small amount one can offer is likely to have any effect at all.

It is estimated that worldwide, there are 10 million NGOs, and that in 2017, charitable organisations received $410.02 billion USD. Unfortunately, much of this was lost due to corruption or financial inefficiencies, thus leading to increased distrust of the sector. Blockchain technology, with the wealth of features it can offer, can provide a solution to many of these issues. The use of blockchain would alleviate many of the doubts that deter people from donating, such as corruption and mismanagement of funds, thus encouraging people to continue donating to important causes they believe in.

In many ways, it is important to consider what makes people want to donate, or what might make them hesitant, as this can help to explain what effect given scandals and accusations against NGOs might have on donations and support. In recent years there have been a host of examples of corruption and sexual misconduct scandals impacting the public image of various NGOs, whilst simultaneously casting doubt on the efficacy of NGOs as a whole. In cases such as the OXFAM scandal earlier in 2018, or Greenpeace’s financial scandal in 2014, where £3 million GBP of funds was lost, it is clear that the public trust in NGOs is greatly affected by such events. Doubts arise both in terms of where donations end up, and who is leading the organisations they have chosen to donate to. Where large organisations may be able to survive the wave of doubts that follow such scandals, smaller, local organisations are likely to far more affected.

What can be learned from scandals which affect NGOs is that accountability and transparency are crucial to ensure that an NGO be able to carry out the mission and vision it was created to do. Blockchain technology can offer just the tools that are needed to make this possible. As the data in a blockchain is secure, immutable, and, if it is a public blockchain, publically accessible, the activities of an NGO would become transparent to the public. When the donors are able to see not only that their donations are indeed being used for the correct purpose, but exactly how their funds are being used, it is likely that any distrust that has built up around NGOs would be significantly diminished. It is important to note that this would not be limited simply to funding issues, but to any other activities of an NGO, all of which are crucial.

Indeed, using blockchain to record the use and management of funds within an NGO is not the only way that blockchain can have a valuable effect on the sector and can similarly play an integral role in promoting social impact investing. Crypto funds have the opportunity to harness the power of blockchain not only to create a safe, secure, asset pool for investors, but also to then donate a percentage of that profit to social impact projects, all of which is traceable through blockchain technology. The combination of blockchain with investing allows for both investors and recipients to see and trace the transactions of funds on their journey to the project in question. Blockchain’s immutable nature means that the movement of funds is recorded and unchangeable, allowing for a greater level of trust. The blockchain and cryptocurrency industry can and should be exploited for social good.

Blockchain technology can offer the NGO industry the means to regain the trust of the public. Social investing in all its forms is benefitted by a technology that offers an immutable ledger of transactions, increasing trust and transparency in the charity and NGO space, both for investors and recipients. As with most things, people need to know that they can trust an entity to do as they have promised, and to feel that they can do so in full security. When there is transparency and accountability, there will be increased confidence in the capabilities of NGOs, less fear of corruption, and a higher likelihood of regular donations, even of small amounts. Ultimately, NGOs will be able to do their jobs better and that’s good news for everyone, regardless of whether they’re on or off the blockchain.