Charities Aid Foundation (CAF) has published a report which examines the opportunities and risks presented to charities which choose to use Bitcoin and other cryptocurrencies.
Giving a Bit(coin): cryptocurrency and philanthropy is part of CAF’s Giving Thought series of discussion papers.
Bitcoin could yield even greater transparency for charities. Because each Bitcoin is unique and all transactions traceable, donors could track exactly how their money has been spent.
Such transparency could, on the other hand, encourage donors to become more prescriptive about how even small donations may or may not be used. This could prove an administrative challenge to charities.
Reduced currency charges
Cryptocurrencies, according to the report, could help charities reduce the costs of currency exchange when transferring funds between countries.
Some early adopters of Bitcoin have generated substantial funds from the currency, so charities that accept Bitcoin might appeal more to these wealthy innovators.
Bitcoin is of course not the only cryptocurrency. There are at least 559, according to Coinmarketcap.com in February 2015.
The 15-page CAF report even explores the possibility of creating a purely social currency which could only be spent on projects aiming to achieve social good.
Charities accepting Bitcoin
Rhodri Davies, leader of the Giving Thought policy programme at the Charities Aid Foundation and author of the report, said:
“It’s clear that there are a lot of opportunities for charities when it comes to using cryptocurrencies, and some organisations have already begun to take advantage of them to raise money. The possibilities for charities really being able to tackle the age-old problem of transparency, helping donors see exactly how their money is being spent and the impact it’s making is profound.
“However, we shouldn’t lose sight of the fact that these kinds of currencies are still in their infancy, and charities should be wary of the potential risks that may arise as they develop.”
Image: Bitcoin logo – by Mom91 on Shutterstock.com
Get free email updates
Keep up to date with fundraising news, ideas and inspiration with a weekly or daily email. [Privacy]