The rise of cryptocurrency provides charities and not-for-profits with a compelling, but complex, new income generation opportunity. In this short blog we’ll attempt to demystify all things crypto-philanthropic by answering the following questions.

What is the blockchain? Which cryptocurrencies should we care about? Why are people so excited for NFTs (non-fungible tokens)? And ultimately, how can charities understand and maximise the opportunities?

Understanding blockchain

Let’s start at the beginning. The blockchain is the digital ledger on which this new wave of cryptocurrencies and NFTs are stored. Public blockchains provide a secure place to put information that everyone can add to, that no one can change, and that isn’t controlled by any single person, government, or company. So unlike in the traditional world of hard, physical currencies and systems of regulation, there isn’t one individual or company keeping track of everything. The responsibility for doing so is shared between everyone on that network.

As physical notes and coins disappear from society (and it is likely that we will see physical currency all but totally disappear from our economies in the next thirty years) traditional & cryptocurrencies will start to look more and more alike. Crypto is the next chapter in money being digitised.

To support the rise of these new currencies, the most traded of which include Bitcoin, Ethereum, Ripple and EOS, we’re now seeing several platforms enter the crypto-philanthropic space to help charities receive, store and exchange these currencies.

Crypto fundraising platforms

The Giving Block is an online crypto fundraising platform, that is now working with causes across the globe. By using The Giving Block, crypto donors can easily find organisations they want to donate to through the Block’s donation platform and partners.

There have been numerous recent examples of charities working with, and raising money from, the crypto community. Edinburgh Dog & Cat Home has received several donations from the Pawthereum community. The most recent has enabled this animal welfare organisation to partly-fund a new digital fundraising role which will help them further establish relationships in the crypto community.

We are beyond grateful to have received Scotland’s biggest known cryptocurrency donation. 26ETH has converted to $118,000USD or £87,000GBP Thank you @pawthereum Read more: https://t.co/NQNggeXsZB #ETH #PAWTH

— Edinburgh Dog and Cat Home (@EdinDogCatHome) November 15, 2021

Then in 2021, the Children’s Heart Unit Fund, working with The Giving Block platform, received crypto donations worth £38,000. One of the donors had themselves been supported by the charity his whole life, which shows that despite the new technology behind this way of giving, the motivations to give remain the same in crypto.

At the bigger end of the scale, Save the Children were recently chosen by the Munch Token community to benefit from their charitable efforts. This community regularly votes on which organisation should benefit next and has donated over $4 million in total to worthy causes.

Alongside cryptocurrencies, NFTs (non-fungible tokens) have seen a meteoric rise in popularity. These blockchain-enabled pieces of exclusive art and experiences are similar in many ways to the physical art and in-person experiences that have been central to charity auctions for decades. NFTs just bring this giving method into the 21st Century.

Launched in late-2021, Doin Gud is a new platform to watch in the NFT space. However, recent NFT trials have not been without their controversies. WWF launched their Non-Fungible Animal campaign in early 2022 but were met with significant backlash on social media due to the tokens’ environmental implications (despite the charity being very clear that they were using technology that minimised the impact on the planet).

Just 24 hours to go…

Our #WWFTokensForNature focus on 13 endangered species

Releasing our NFTs on the eco-friendly @0xPolygon blockchain, each transaction has the equivalent carbon emissions of a glass of tap water.

Join the discussion: https://t.co/T6l20zFpnA pic.twitter.com/urFOjZRDE7

— WWF UK (@wwf_uk) February 2, 2022

Weighing up the risks and opportunities

As this example demonstrates, there are several risks and ethical considerations when fundraising through crypto and NFTs. As with all parts of the internet, crypto servers come with an environmental cost.  Other big risks include fluctuations in value and the danger of the technology being used as part of elaborate pyramid schemes and money laundering.

Having robust policies, donation terms and conditions, and working with trusted partners is essential. As we have discussed, The Giving Block is doing great work to make this easier and safer for charities. But ultimately, charities should be treating the risks and opportunities in crypto with the same scrutiny as their traditional income streams. Environmental, investment fluctuations and money laundering are all familiar risks in more traditional income generation methods – these should not be barriers to entry for organisations when considering new ways to raise money.

In summary, there is a huge opportunity for charities to engage with the incredibly generous and future-thinking crypto community. The risks do need to be identified and considered, but there are now the case studies and established partners to support. It is a great time to for charities of all sizes to dive into this world and learn more about how they could work with this new generation of donors.

Matt Smith, THINK

About Matt Smith

Matt is head of development & innovation at THINK, a leading international consultancy dedicated to not for profit fundraising.  As an innovation and fundraising leader, his specialist skills include digital fundraising, new product development and facilitation. He is proficient in setting up innovation functions, strategy development and managing large, cross-organisational change projects. 

THINK has been working with charities across the world for over twenty years. Beyond core consultancy services, THINK also offers market intelligence, interim management and specialist forums.

Main photo (top) by Viktor Hanacek on Picjumbo

Edinburgh Dog and Cat Home has been gifted 26 Ethereum, (approximately €97,100) by Pawthereum, a community-run charity cryptocurrency project focused on supporting animal welfare organisations and digitally advocating for animals in need.

The donation is to fund the rescue centre’s pet foodbank service, Paws Pantry, throughout 2022. Edinburgh Dog and Cat Home works with 52 foodbanks and community groups and provides essential pet food, collars, jackets, bedding and other care items to pet owners in need. Over 1,300 animals per month are cared for through this service.

Pawthereum has also committed to donating a further €1,762 ($2,000) per month to the rescue to ensure the ongoing growth of the service as it expands across East and Central Scotland to meet rising demand.

A volunteer run cryptocurrency project on the Ethereum network, it launched in early October 2021. A portion of all $PAWTH token transactions goes to a charity “wallet” that is only used for donations. Pawthereum expects to be able to donate up to $500,000 USD by the end of 2021 to animal shelters and rescues around the world.

Nicola Gunn, director of development and external affairs at Edinburgh Dog and Cat Home, commented:

“Our team’s day-to-day work to ensure vulnerable animals get the care they need is absolutely relentless, and just to know that this has been recognised by Pawthereum is incredibly overwhelming. There really aren’t enough words to thank them for this donation, which will ensure another year of Scottish pets being warm, fed and most importantly, remaining in loving homes.”

Edinburgh Dog and Cat Home first started taking cryptocurrency donations in response to the financial struggles of the pandemic, when other income streams such as events and community fundraising began to dry up. In September 2021 the charity launched a presence on The Giving Block (TGB) and found that they were suddenly able to reach global supporters.

Matt C-Roy, charity coordinator at Pawthereum, said:

“Pawthereum was born out of the idea that cryptocurrencies can be a tremendous force for good in the world. We couldn’t be happier to do our first major donation with a partner as thoughtful and caring as Edinburgh Home. Their community outreach programs help pets stay with their owners during tough times. We’re proud to support that mission and to partner with Edinburgh Dog and Cat Home long term to save more animals.”

[Fundraising Europe] Bitcoin and Blockchain are not particularly widely used as yet for charitable donations. What are the fundraising opportunities for nonprofits?

[Anne Connelly] Giving online using the internet was once unknown too. The idea of incorporating it into a successful fundraising programme was uncomfortable for fundraisers. But now it is a mainstay of a quality fundraising programme. In fact, it would be difficult to find one that doesn’t have online giving. The same shift will happen with cryptocurrencies – it’s only a matter of time before every nonprofit is accepting donations in this form. By examining cryptocurrency donations, fundraising organisations have an opportunity to future-proof themselves.

Bitcoin isn’t new to the fundraising world – the RNLI, for example, has been accepting Bitcoin since 2014. But it’s only recently that charities are really starting to take notice and appreciate the potential of this opportunity to engage new donors.

Anne Connelly, Singularity University

The success of cryptocurrencies has created a new generation of wealthy donors. To understand the opportunity this has created for fundraisers, take a look at the second-largest cryptocurrency platform today, Ethereum. When Ethereum launched in 2014, a single ether was valued at €0.25. At its height in January 2018, Ether traded at just over €1155. To put it simply, someone who invested €215 in Ethereum during the launch would have seen their portfolio grow to nearly €1M in just four years.

In 2020, the University of Cambridge estimated that the current number of active users of cryptocurrency is 101 million people. And this is just the beginning. Just recently, PayPal has announced that it plans to allow cryptocurrency as a funding source for purchases at 26 million merchants worldwide. As we write this, the total value of all cryptocurrencies is over €412 billion and growing.

While fundraisers are generally familiar with the phrase, “You don’t get what you don’t ask for”, when it comes to cryptocurrency, you also don’t get what you can’t accept. So why should charities pay attention? Because many crypto holders have the potential to make a major gift and yet only 4% of charities accept cryptocurrency.  

Who is likely to donate in this way?

Many charities will have a profile for their “average donor”. However, for crypto donations, a perceptive fundraiser will set aside that profile completely. The cryptocurrency community is one of the most distinctive donor communities in the world. 

It is important to understand that the members of this unique community are all working to conceive, build, and grow blockchain technology as a part of a global network of people. Their desire to see the success of this technology is not motivated by personal gain, it’s about believing in, and contributing to something greater than themselves — a quality that is shared with many people in the charitable sector.

To cultivate a gift in crypto, you’ll need to look at the community with a completely open mind about who may be interested in your work and have the capacity to make major gifts. Unlike typical major donor events or galas, at a crypto event, the person with the most capacity to give could be a 21 year old wearing a purple unicorn t-shirt. 

Within the crypto community, there are niche groups a donor might belong to or blockchains they prefer to build on that will tell you a lot about what they care about. Learning about the unique characteristics of the community, donor expectations for stewardship, and what type of projects they will support will go a long way to making your crypto donation programme successful.

What about the risks? There are often concerns as to whether people can really trust digital currencies and whether it’s costly. What are your views?

Historically there was a stigma about cryptocurrencies and blockchain, but today, reputable companies like Microsoft, Facebook, IBM, global banks, and many governments are working with the technology. 

The beauty of a cryptocurrency donation program is that you can set it up in a way that matches your organisation’s risk tolerance. In the same way that some organisations will sell stock donations immediately upon receipt while others hold and manage their own portfolios, each organisation can choose a level that meets their needs. In essence, accepting Bitcoin can be even less risky than accepting donations of cash, as Bitcoin can be immediately returned if an organisation chooses not to keep the funds. 

The best part about a crypto donation programme is that it costs nothing but time to set up, so if you didn’t put it in your budget this year, you can still incorporate it in your plans for the year and get great ROI.

What are the main principles that fundraisers need to understand before getting started?

What fundraisers need to know is this: you can do it. As with anything new, it may take some time to learn, but there are lots of free resources available to help inform you, and the crypto community is very supportive.

It is important to secure organisational support in order to ensure a successful programme. This means educating yourself on Bitcoin, finding advocates within your organisation, and helping executive leadership to understand the benefits. 

From there it’s about deciding what your programme will look like and working with your team to ensure a smooth donor experience from start to finish. Finally, getting a deep understanding of the crypto donor community, where to find them, and what they are passionate about will help you secure a donation. 

What are your top tips for nonprofits hoping to making the most of Bitcoin?

The first step for fundraisers is to become a crypto owner, and a crypto donor yourself. Learn how to buy €1 worth of Bitcoin and try donating it to a charity that is currently accepting Bitcoin. It’s easier than you think and you’ll become a part of a new community of people trying to make the world a better place.

Read more in Bitcoin and the Future of Fundraising: A Beginner’s Guide to Cryptocurrency Donations, co-authored by Anne Connelly and Jason Shim. 

About Anne Connelly

Anne is passionate about harnessing blockchain and cryptocurrencies to transform the lives of people around the world. Anne is Faculty at Singularity University, teaching global leaders how exponential technologies can solve problems that impact over a billion people. Anne previously worked with Doctors Without Borders as a field worker in Central Africa, as a fundraiser in their Canadian and Irish offices, and as a member of the board of directors. As the Director of Fundraising at Dignitas International, Anne set up one of the world’s first bitcoin donation programmes. In 2015, she was given the AFP New Fundraising Professional Award.

Anne has a Bachelor of Life Sciences from Queen’s University, an MBA from McMaster University, and is certified in Strategic Disruption from Harvard Business School. She was honoured as one of CBC’s 12 Young Leaders Changing Canada and one of the Fifty Most Inspirational Women in Technology in Canada.

Main image credit (Bitcoin): Photo by André François McKenzie on Unsplash

You may well have heard of blockchain technology – most likely as the thing that makes cryptocurrencies like Bitcoin possible. However, there is growing awareness that the technology has far wider potential applications.

That is why tech companies, banks and governments around the world are piling money into experimenting with blockchain in everything from supply chain management to voting systems. And the technology also has profound implications for civil society and philanthropy, as we have been exploring at CAF for the last few years.

Explaining blockchain
In short, a blockchain is a distributed public ledger: a way of keeping a record of transactions and ownership within a system without the need for a traditional trusted third party. (In reality things are slightly more complicated- for instance there is growing disagreement between those who believe blockchains must be entirely public and those who want to create private or ‘permissioned’ ledgers- but we can gloss over that for now).

Let’s focus on the key features of the technology and what they enable. In the context of cross-border giving ─ at least in the short term – the main impact is likely to come from three things: disintermediation, non-geographic transactions and radical transparency.

Removing the need for middlemen
A public ledger on which entries are immutable (i.e. cannot be altered after the fact) gives users a trusted shared record to work with. It is then possible to build self-executing computer protocols known as ‘smart contracts’ on top of this which can perform set functions when certain criteria are met (i.e. “If X happens, then do Y”). This creates a disintermediating framework in which you can have trustworthy transactions without the need for a third party, enabling the removal of many traditional middlemen.

Non-geographic transactions
The fact that blockchains are distributed (i.e. they are spread across all users of the system and not kept in any one place) is also important, as this means that they are not tied to any particular geographic location.

Combined with the removal of intermediaries, reducing associated legal and banking costs, this could significantly reduce the cost of cross-border giving. If it is possible to transfer financial value using a distributed framework that is not tied to a particular country, this could avoid the FX costs that currently make up such a large proportion of the expense of moving money internationally. It could also make it easier to get money into parts of the world where traditional financial infrastructure is lacking or undermined by corruption.

Radical transparency
The other major implication of blockchain technology is radical transparency. The ability to create unique and non-fungible units, when combined with the public nature of the ledger, means that assets can be tracked through a chain of transactions. When it comes to philanthropy, this means that a donor might be able to trace their individual gift all the way through a recipient charity and see exactly how it is spent.

This could help reduce fraud and corruption, making donors and funders more confident that their money was being spent effectively. But it could also pose a significant challenge in contexts where keeping the identity of donors or beneficiaries hidden is justifiable and necessary. For instance, a funder supporting gay rights advocacy in a country where homosexuality is illegal would need to ensure that by using a blockchain-based platform they weren’t inadvertently publicising the identity of organisations or individuals receiving grants, and thus putting them in danger of imprisonment.

Putting blockchain into practice
The idea of using blockchain for cross-border giving is already being tested. Large INGOs and aid agencies like UNICEF and the World Food Programme are experimenting with using blockchain for their internal money flows. Meanwhile, start-ups like Disberse are trying to build platforms that can harness blockchain technology to make cross-border payments more efficient, transparent and cost-effective.

These efforts face a number of challenges. There is still little clarity about the regulation of blockchain or cryptocurrency, and regulators and governments around the world are taking widely differing views of the technology. There is also a significant ‘last mile’ problem: even if you move money on a blockchain, you will reach a point where you need to spend it on goods and services on the ground. Unless you can spend cryptocurrency directly, or have some way of turning your blockchain-based token back into real money, it is not much use. This may change in the future if the technology becomes more widespread, but for now it remains a big challenge.

The potential for using blockchain technology to improve cross-border giving is huge. But there are also a number of big challenges that need to be overcome. We need to find ways to bring funders and NGOs together with the tech sector to identify meaningful use cases where blockchain could bring real benefit, and find solutions to some of the challenges. Only then will we have a chance of realising the technology’s true potential for cross-border giving.

About Rhodri Davies
Head of policy at Charities Aid Foundation (CAF), Rhodri leads Giving Thought, – CAF’s in-house think tank focusing on current and future issues affecting philanthropy and civil society. He is the author of Public Good by Private Means: How philanthropy shapes Britain, which traces the history of philanthropy in Britain and what it tells us about the role of modern philanthropy. Beyond that, he has researched, written and presented on a wide range of topics – from social investment to the charitable applications of cutting-edge technologies such as artificial intelligence and blockchain – and is much in demand as an adviser to governments, businesses, charities and philanthropists.

The Bitcoin Charity Battle was started by Niels van Hoorn, Sidney de Koning, Sidney Vollmer and Tessel Peijnenburg to raise awareness among charities for bitcoin. People are encouraged to donate Satoshis (one thousandth of a bitcoin) to a monthly Bitcoin Charity Battle that sees two charities without bitcoin integration go head to head. The charity with the most donations wins all bitcoin donated that month, while the organiser also helps both contestants with an integration, storage and management toolkit for bitcoin.

March’s charities battling it out are Evidence Action, and Against Malaria Foundation.

Donors send bitcoin to one of two receiving addresses. Each address corresponds to one charity, with all bitcoins received on that address viewable on the blockchain. At the end of the month, donations received per charity are added up. The winning charity receives all bitcoin donated that month to both addresses, minus an overhead fee of 10%.

The winning charity receives their monthly prize, financed by that 10%:

– A nano ledger

– All crypto donated that month

– An explanatory toolkit and workshop if needed on how to keep crypto safe, swop it for fiat, and how to make it part of the financial operation of a charity

– Code to embed a bitcoin donation button on any website

– The funds transferred to the charity’s new ledger wallet

The losing charity also receives a nano ledger, an explanatory toolkit and workshop if needed on how to keep crypto safe, swop it for fiat, and how to make it part of the financial operation of a charity, and code to embed a bitcoin donation button on any website.

100,000 Satoshis are worth approximately US$10.

Helperbit partnered with Italian charity Legambiente to raise funds to support reconstruction efforts following the earthquake, as part of a campaign fronted by Legambiente, Libera, Altromercato, Federparchi, Alleanza Cooperative Italiane Giovani, Alce Nero and Fondazione Symbola.

Helperbit provided the infrastructure to create a multi-signature Bitcoin wallet for the charity, with the objective of providing an international tool with greater transparency than traditional fundraising methods. It also provided traditional fundraising support for cash donations received by the campaign.

The wallet is a secure technology for managing Bitcoin with three keys managed by Legambiente and a backup key managed by Helperbit. As well as verifying the amount raised, it also includes a notarisation service. So far, the Italian Bitcoin Earthquake Relief Fund has raised 8.34 Bitcoins from 113 donations

Swiss Re is the biggest supporter of the campaign, and has donated five Bitcoin to the Bitcoin Italian Earthquake Relief Fund. The first beneficiaries of the fund were the owners of Società Agricola Etiche Terre S.S.: local producers of saffron, garlic and black truffle who lost everything in the earthquake. The service enabled the farmers to ask for funds by uploading Helperbit’s first invoice onto the platform, which activated a refund request to Legambiente.

Legambiente was able to verify the request through the platform, and then transferred an amount in Bitcoin equal to the value in € of the refund. The operation was visible in the public Blockchain, and also showed proof of expenditure, with a cryptographic reference to the invoice.

The document certifying the request and the transaction are linked in the platform’s public register, enabling the verification of the sender, the recipient and the reason for the request. As well as offering a higher level of transparency of the process, it notifies the donors how their funds have been spent.

According to Helperbit, Legambiente is the first major non-profit organisation in Italy to accept donations in Bitcoin as well as the first NGO in the world to autonomously use Helperbit’s multisignature wallet to manage Bitcoin.