A new report by Nonprofit Tech for Good suggests that cryptocurrencies are quickly gaining ground as a way of donating funds.
The 2019 Global NGO Technology Report, published last month, polled 5,721 NGOs and charities in 160 countries.
It found that, since last year’s study, the number of organizations that accept cryptocurrency donations has increased by up to 100 percent.
But the numbers are still small. While the number of charities accepting crypto donations has doubled in North America, Europe and Australia, cryptocurrencies still form only 2 percent of total donations.
Africa has the largest amount of NGOs accepting crypto with 5 percent, Asia follows with 4 percent, while Latin America trails with 1 percent.
The report signals that NGOs throughout the world are waking up to the fact that cryptocurrencies present major opportunities, as well as challenges for their sector. But they suffer from a poor understanding of both how the technology works and how it can benefit aid recipients on the ground.
Notably, the survey response indicates that blockchain technology is still not well understood by the vast majority of NGO’s.
Only a median 12.5 percent of survey respondents claimed to understand how blockchain technology worked. African NGOs scored best with 17 percent and Australian and North American charities scored poorly with only 8 percent and 9 percent, respectively, claiming a good understanding of blockchain tech.
The U.S-based non-profit Human Rights Foundation is seeking to counter this, by working with crypto educators and developers such as Jimmy Song to educate NGO workers.
“They want me to teach more people, just, like basics. ‘Here's how you use a wallet, right? Here's how you go change it for bitcoins. And here's how you send it to your operatives,’” Song told Decrypt.
Enthusiasts like Song believe that cryptocurrency has a big role to pay in freeing people, as control over their money is often used an instrument of oppression, as in Venezuela, And he argues that Bitcoin, especially, can promote freedom, as it can’t be taken away.
Blockchain and cryptocurrencies could also boost transparency and trust in the multi-trillion dollar charity sector, and smart contracts have the potential to govern philanthropy.
There’s also the possibility for radical transparency in donations, and greater ease in getting aid money to where it is needed.
Impactio, an NGO project curation and funding platform, is one example of what can be achieved. It’s a recently launched joint venture between the World Wildlife Fund and blockchain developer ConsenSys (which funds an editorially independent Decrypt) to promote transparency in the sector and make sure that good projects get exposure.
But there are challenges too, as cryptocurrencies form a new asset class for giving. Regulations are still evolving, such as those governing anonymous cryptocurrency donations and organizations that use them to support terrorist groups.
If NGOs can realize the opportunities and counter the challenges, cryptocurrencies could play an important role in the future of humanitarian aid.