Increase Funding Using Blockchain Technology
Nonprofits have played a critical role in global philanthropy during the COVID-19 crisis. However, 77% of charities polled by the International Development Charities Network agreed that COVID19 had impacted their finances.
Even before the epidemic, there was a lack of confidence and openness in the activities of nonprofits. As a result, nonprofits are frequently chastised for failing to be transparent about donation inflows and how funds are spent on programs.
However, most people desire to make a real difference in the world by raising money for the poor and other humanitarian issues. Unfortunately, nonprofits acting in good faith and contributing to philanthropy have suffered due to this lack of trust.
So, how can nonprofits demonstrate enough transparency in their operations to raise the funds they require? Blockchain technology is the solution.
Problems with current nonprofit operations
The internal operations of nonprofits, such as the inflow of donations, the management of funds, and the projects on which the contributions are spent, are not subject to public scrutiny.
Donations have been put to illegitimate use in the past, causing suspicion among donors who, understandably, want verification that their money is being used on legitimate and genuinely helpful programs. Unfortunately, those in need of direct Nonprofit driven assistance are the ultimate victims in such situations.
A more transparent system must be in place to overcome this suspicion with all donations and funds managed.
How can blockchain raise funding and solve problems for NGOs?
Implementing blockchain technology as part of a nonprofit’s operations is an excellent method to solve some of the challenges that Nnnprofits encounter. Operations will be transparent and immutable thanks to integrated blockchain technology.
If we look at any nonprofit value chain, we can see how a blockchain-enabled system could provide transparency at every stage.
Build trust amongst donors
Because every monetary transaction done as part of their fundraising operations is transparent in a public blockchain system, blockchain can bring security and total transparency to any system.
Thanks to blockchain technology, donors, recipients, and internal stakeholders all gain a clear image of the Nonprofit’s internal procedures.
Donors will track their donations and ensure that their contributions are used for the intended purposes, which can be done through social media, email disclaimers, whitepapers, and other methods. As a result, nonprofits will build more trust with donors and raise more funds with confidence.
Avoid misuse and mismanagement of funds
Data is immutable thanks to blockchain. This means that the transactions and other data cannot be tampered with. As a result, any fraudulent or corrupt transactions or activities will never go unnoticed—this aids nonprofits gain donor trust.
Nonprofits can use blockchain technology to collect donations in cryptocurrency, which can be raised even further with crypto portfolio rebalancing tools.
Improve the efficiency of internal processes
Another benefit of a blockchain-based system is that it aids in the improvement of internal processes’ efficiency. Thanks to smart contracts in such a system, internal processes can be managed considerably more efficiently.
Smart contracts, for example, can be used to undertake real-time transaction audits. Furthermore, once a blockchain system is implemented, validating transactions will become simple.
All of these variables assist Nonprofits in improving their operational efficiency, allowing them to focus on generating funds from donors and putting them to good use.
Reduce transaction costs
The use of smart contracts in blockchain helps to reduce transaction execution time. As a result, nonprofit transaction expenses are reduced when transactions are completed faster.
Furthermore, the cost of validating transactions can be very high, and the traceability of blockchain-powered transactions in Nonprofits can help to decrease this cost. This lowers operational costs even more, saving more money for the desired purpose.
How nonprofits can start using blockchain technology
If you’re looking to implement a similar blockchain solution for your nonprofit as well, consider investing in blockchain development companies such as Openledger, Aetsoft, or Blockchain Simplified that specialize in developing tailored blockchain solutions for Nonprofits.
Blockchain technology may be the solution to the current problems nonprofits face worldwide. Blockchain brings in more traceability, security, and efficiency in fundraising operations to empower their mission goals in service to their communities.
To learn more about developing a viable long-term fundraising plan, join us (virtually) for the INFORMATION REVOLUTION: Managing Technology class on Monday, February 28 from 5:30 to 9:30 pm. To learn more about using technology, join us (virtually) for the SUSTAINABILITY – Campaigning to Potential, Part II: Big Gifts on Saturday, February 26 from 1 to 5 pm.These classes are part of the Sunshine Certificate in Nonprofit Management.
Author: Carl Torrence https://learning.candid.org/resources/blog/how-can-ngos-raise-funding-by-implementing-blockchain-technology/