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Hedera Op-Ed: The Charity Use Case

AlexBehrensAlexBehrens Posts: 118 admin
edited April 8 in Community Blog
Over the next ten years, distributed applications (dApps), are expected to take over the world similarly to how apps did with Apple’s app store in 2008. From Uber to Airbnb, expect companies to move to decentralized applications - or be left behind. As DLTs gain efficiency and scalability, many applications involving logistics in networks will likely add decentralization protocols to their programs. One exciting idea thrown around in the Hedera Slack is a dApp for charity. As one of the few industries elusive to technological disruption, charitable organizations generally have yet to be fully digitized. Why is this? Traditionally religious and non-profit institutions are local, regional, and global focal points for people who wish to give and for those who need help. These are also organizations that, unlike business enterprises or general consumer-facing businesses (think consumer retail or consumer financial), technology adoption and integration has been less critical to their success. This is an industry that is ripe for disruption, and distributed ledger technology should be at the center of this.  

The main component of disruption at the heart of DLT networks is that of trust. DLT gives you the confidence to do transactions with strangers online as the ledger will act as a receipt for all to see. At its core, the reason why charity has not adapted to an online format is that trust is very hard on the internet. But as DLT and digital identity companies scale up, enabling trust online is becoming easier and safer than real life. Still, though, some people are skeptical of charities and their operations, and there are reasons to understand this skepticism. A list of the 50 ‘worst’ charities compiled by the Tampa Bay Times showed that of the $1.35 billion in donations only $380 million went to the victims/patients the charities represented. This is horrendous. Those who give sometimes feel as if they are being ripped off by the very organizations in which they are entrusting their money to. Additionally, those persons in need, who these charities claim to represent are getting fractions of the funds donated while the management of these organizations appears to profit. Furthermore, these fraudulent acting charities are taking up a significant market share of the overall charity market, meaning that donations are taken away from potentially more deserving charities. A lack of transparency in charities has created incredible inefficiencies within the system. Those who are deserving may receive the same or less than the borderline, or fraudulent charities. When the technology industry experiences inefficiencies there is a loss of profit when the charity industry experiences inefficiencies there is the potential for a loss of life.  

Much like how DLT will eventually become integrated into most supply chains, it can be implemented into charities to show donors exactly where their dollars went. Right now, accountability and transparency are the charity industry’s biggest problems and the DLT community’s biggest strength. Transparency in the charity process will also likely significantly increase donations if donors can see exactly where their money goes. Imagine if the charity’s website could display contributions on a distributed ledger. The website could act as a portal into the organization, showing the donor exactly how costs were split up between the charity’s operations and the actual projects/recipients. Within a few years, it’s possible that this will become the standard operating procure for charities and most NGOs. Transparency will offer the organizations greater autonomy, public trust, and donations over the long term.  



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