Three simple reasons crypto will dominate charitable giving in the future
There is no doubt that cryptocurrency in the charitable giving space is on the rise. With more wide scale adoption, this is something that will come naturally, but there are also many benefits that make cryptocurrencies a winner over using fiat currency to donate to charitable causes.
There is a laundry list of reasons why cryptocurrency is a better option for charitable giving and will eventually dominate the social impact sector in the not-so-distant future. However, for the purpose of this blog, I’m going to focus on three simple reasons why, sooner rather than later, cryptocurrency will be the financial instrument of choice for charitable giving.
1. Cost Effectiveness
First and foremost, accepting cryptocurrency donations has the potential to save charities a lot of money that would have otherwise gone to middlemen organizations such as charitable giving platforms and credit card companies.
In my blog post “Accepting crypto donations in the charitable sector,” I highlighted the exorbitant fees some donation platforms charge to charities. Global Giving, for example, charges 8-15% in fees, while GoFundMe charges 2.9% plus 30 cents per transaction.
Many charities elect to accept donations directly through their website via credit card, but this doesn’t prevent them from paying fees. In fact, typical credit card fees range from 1.3% - 3.5%, and this doesn’t account for the additional cut that goes to the payment processor.
While these fees may seem like a drop in the bucket, they add up over time and can end up costing charities a substantial amount in lost revenue. Ultimately, these fees mean less of your donation goes to the charity, reducing the impact of your donation.
Cryptocurrency transactions, on the other hand, are typically extremely low cost, and cut out the need for a middleman to facilitate the transaction. This would ensure that less of your donation goes to large, often publicly traded corporations, and more goes directly to the charity.
2. Transparency
Most cryptocurrencies, by their very nature, are highly transparent, and thus, easily auditable. This makes it much easier for donors to see how much crypto is going into the charity, which can help hold the charity accountable. If donors see a significant amount of funds going to a charity, they expect to see results, and it helps ensure the charity puts the money to good use on meaningful projects.
While the vast majority of charities do fantastic work, there have been cases of charities fraudulently using funds, or misreporting revenues in the past. These transgressions can cause a breakdown in trust amongst donors, and cast a shadow on the charitable sector as a whole. In a world where the vast majority of donations are made through transparent cryptocurrencies, it can help rebuild trust, as donors can know for certain how much in crypto donations a charity is bringing in, and the impact it translates to.
3. Global Reach
Finally, crypto can open your charity to new markets and help diversify your revenue. Whereas many traditional donation platforms require a credit card or traditional bank account to make a donation, donating by crypto simply requires that you have a wallet with crypto in it. By accepting donations via crypto, it can open charities up to new potential donors that may not have contributed to their cause otherwise.
Furthermore, donating by crypto is simple and efficient, as it enables the near-instantaneous transfer of the funds, whereas typically donations could be held up by payment processors for several days before finally going through to the charity.
So, not only does accepting crypto donations open charities up to a broader, global market, but it also enables a much more seamless transfer of funds from donor to charity.
As highlighted above, these are simply three of many reasons why I believe that cryptocurrency will dominate charitable giving in the not-so-distant future. However, it is not an exhaustive list, and the benefits to charities and donors are vast. More and more charities are accepting cryptocurrency donations every day, just as more donors are choosing to give by crypto. I expect this trend to continue and accelerate into the foreseeable future, as crypto eventually becomes the dominant form of giving.
Do you think that cryptocurrency will dominate charitable giving in the future? Tweet us at @Crypto_Altruism, we’d love to hear from you!
