According to Charity Digital, some charities are starting to accept cryptocurrency in donations, and more are looking into this possibility, given the huge upside that the likes of Bitcoin and Ethereum are currently providing.
The advantages of accepting crypto are big reasons for charities to start seriously looking at this sector, in order to grow the coffers that are likely dwindling due to the present-day health and economic crisis.
Lowering costs is a big one. Given their many decentralised features, cryptocurrencies are great for cutting out all those third parties that want their slice of the pie. Banks are not least among these, so very large savings could be made by circumventing the banks and the high fees that they charge.
Transparency is another advantage. Cryptocurrencies generally run on a blockchain, which provides immutable evidence of transactions. The blockchain can give doners complete visibility of exactly where their donation is going and how it is used.
However, with the advantages do come some drawbacks. Even though Blockchain is inherently transparent, there are ways and means for an individual to cloak their identity should they really want to do so.
Charities do have to uphold their civil and moral obligations, and accepting donations from persons unbeknown to them can open up all sorts of issues. On this particular dilemma, the Christian Aid Foundation said the following in a report:
“Even when donations do not come from sources that fall foul of the law, there may still be questions about their moral status that present a challenge for charities.”
Another issue that comes with cryptocurrencies is that of their environmental impact. A lot has been said in the media about how Bitcoin alone needs the same power for mining, as countries like Finland and Belgium need for all their energy needs.
Given the bleak prospects for our world economies, at least into the short- and medium-term outlook, more charities could be quite likely to go down the cryptocurrency donation road. There will be ways found to address the ‘know your customer’ issue, and in spite of environmental concerns, cryptocurrency is producing too much value to be ignored by charities for long.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.