There is no doubt that giving and helping important causes is one of the most rewarding experiences in life. Charity is the fundamental pillar we use to reach people who need financial help.
For the longest time, those more fortunate have given a helping hand to those in need. After all, this is what makes us human and helps us do something positive for the community.
Charities today function as the middlemen between donors and recipients. By using a small percentage of the donations, they manage to run organizations that link the two parties with each other. With the introduction of blockchain technology and smart contracts, the middleman is soon going to be a necessity of the past.
We believe that charities should be transparent and honest in all areas of work, and we intent to do this with ClearAid, a blockchain based, charity platform.
ClearAid is a platform that aims to connect the non-profit community through an easy-to-use interface which allows full transparency and traceability of donations made on the blockchain.
The platform is supported by an ERC20 token, named CAID, which is based on the Ethereum blockchain and serves as the donation method of the ClearAid platform
Trust The public is slowly starting to become aware of the issues that surround charitable organizations.
Just a decade ago the Association of Community Organizations for Reform Now (ACORN) was found to be using large amount of their donations for personal benefit and the Red Cross was unable to answer where the $500 million for the earthquake’s victims in Haiti went. Instead of 130.000 houses, the organization only built 6! (NYTimes, 2008 & NPR.org, 2015)
As years passed, more scandals caught the media’s attention. The unreported donations to the Clinton foundation, the Trump foundation’s charity for veterans that was used to dispute the (now) president’s personal legal disputes and, finally, the extravagant lifestyle of charity leaders of multiple organizations that were all paid by the company’s donations. (Bloomberg, 2015 & Washington Post, 2016)
Trust towards charitable organizations is declining rapidly. It’s only natural given the global awareness of the current issues and the limited transparency. In a research conducted by the Guardian in 2016, it was found that trust and confidence in charities has fallen to the lowest recorded level since monitoring began in 2005 – from 67% to 57%. (Shawcross, 2016) Similar studies in the US show that 1 in every 3 Americans does not trust charities. (Perry, 2015)
The problem here and the foundation of this decline over the years is the failure of charities to prompt trust. These non-profit organizations do not see the uncertainty of public trust as something that will affect their business’ financial models.
As a result, donations will potentially fall even more making it increasingly difficult to regain trust once it is lost. Transparency Transparency is a major link to trust. By being transparent with their operations, priorities and financial expenses, charities show the public that they are honest and allow donors to engage more actively in the process.
While presenting their progress on their own media channels such as websites, blogs and reports and having the recipients of the donations do the same from their side, these organizations face one major problem.
Charities do not have a platform or process to allow donors to track how their finances are spent. Heavily rounded-up numbers and insufficient information on the process are signs of poor transparency and, as a result, a decline in the public’s trust.
With all the issues and scandals that happened in the past decades, it is only natural for people to lose their confidence in charities. Trust and transparency has to be restored.
And this is where the solution of the problem comes in and promises to completely revolutionize the nonprofit sector. The introduction of Smart Contracts through the Blockchain does not only offer full transparency for all donors, but also cuts down the intermediary costs and is much faster to process.
No more middlemen When donating to charity, money has to pass through multiple hands before reaching the recipient. The problem with that is that every middleman, such as the charity organization, the financial institutions, government taxes and other agencies all keep a small amount of this money, greatly depreciating the value.
By using the Blockchain to make these transactions, the recipient will receive the donations much faster and with minimal fees. Transparency Charities are turning to the blockchain and its financial instrument, cryptocurrency, to make donation records easily accessible and accountable.
Transactions made on the blockchain are recorded on the public ledger, which is distributed across hundreds of thousands of computers for anyone, including the donors, to see and verify.
Due to its distributed nature, records on the blockchain cannot be altered in any way. 5 Cost efficient Transactions made on the blockchain are also cheaper than fiat transactions. Donating cryptocurrencies only has a small transaction fee for the wallet or exchange you are sending from. When sending fiat, however, through bank accounts or Paypal, the financial institution will keep a hefty sum as a fee, usually 5-10 times higher than if you paid with cryptocurrency. Blockchain technology is the answer towards more trust and transparency.
However, as mentioned in the previous chapter, non-profit organizations often focus more on helping the recipients of donations instead of developing methods to improve their transparency and, in turn, their trustworthiness. They often overlook the fact that their ability to help people in need is coming directly through the donations made by the public and, thus, if donations keep declining they will be unable to continue their work.
When introducing blockchain technology, however, charities are able to see its immediate benefits, presented above. More trust is created from the donors and, as a result, more donations are coming in. According to Fortune, charities that are already implementing blockchain technology saw an incredible growth in donations during 2017, with some organizations collecting more than 10- fold the donations compared to 2017.
Donors do have more trust in a public ledger technology and, consequently, more are starting to donate in Blockchain supported charities. In order to solve the problems of trust and transparency, we have created CAID, an ERC20 token that will bridge the value of charity with the modern technological developments of the Blockchain through the usage of Smart contracts.
With all the concurrent pressing issues that need charitable support worldwide, companies can no longer rely on traditional financing methods. And while there is always a sense of doubt when it comes to new technologies, by following this example and allowing people to start donating in cryptocurrency, we allow this technology to further grow and develop. The solution is, therefore, simple and easy.
Charities need to implement blockchain technology and, through it, improve their trustworthiness and transparency.
This is why we created ClearAid, a platform that aims to connect the non-profit community through an easy-to-use interface which allows full transparency and traceability of donations made on the blockchain.