By Jeffrey Kowalczyk, CPA CFE CGAP
3 Ways Nonprofits Can Harness Blockchain Technology
Nonprofits do not tend to shy away from technology; in fact, more and more nonprofits are embracing it. For example, TED shares ideas with the world through digital technology, Code For America helps connect cities with coders to help with urban renewal and civic management, and Ushahidi developed software to empower the citizens of Kenya following the devastating 2008 election. These nonprofits are using conventional technology in unique ways to advance their cause. For the vast majority of nonprofits, however, the question is how to leverage technology to improve transparency and accountability. When it comes to how nonprofits and technology intersect, blockchain technology offers a practical solution for all nonprofits to strengthen their infrastructure and mission.
A distributed ledger technology, blockchain systems are a database that everyone can access. Essentially, this crypto-technology enables secure-funds transactions and ensures that data cannot be hacked. Blockchains can improve a nonprofit’s organizational excellence in the following practical ways.
- Data is more secure in blockchains. As transactions take place, they are stored in the local ledger and shared across every record of blockchain, allowing every user an undisputed copy of the history of the asset. The beauty of an un-editable record is its natural defense against hackers and fraud. Also, because blockchain data is distributed rather than centralized, organizations can rely on a genuinely digital transaction environment.
- Blockchain solutions can automate administrative processes and improve cost efficiencies. For example, data audits can reach further, review more processes, and certify results with better efficiency than ever before. Requiring fewer people to perform the same job, blockchain frees up time for professionals to utilize their skills for strategy and development.
- Blockchains protects donor information.
- Blockchain data is secure and These facts assure donors that their financial information is protected and private and allows nonprofits to raise funds across geographic and political borders.
- As nonprofits focus more of their efforts on major donors, they will find that blockchain technology allows them to offer high-net-worth donors increased control and transparency.
- Donor trust is a serious concern for nonprofits. Blockchain’s secure, anonymous, and transparent ledger allows donors to track their donation to the source and recipient, allowing nonprofits to build trust with less effort.
Blockchain technology has a lot of potential, especially when it comes to supporting donor trust. We are closely monitoring how nonprofits can harness blockchain technology and will keep you appraised of new findings and solutions for your organization.
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