Recently, I worked with an organization that, to my horror, didn’t honor donor intent. In an email message to me, the CFO said something to the effect of “There is no such thing as donor designations at [XYZ Nonprofit].”

Huh? I was confused. Then, shocked. That’s a problem and I immediately said so.

It was a problem for me as a fundraising professional. Not honoring donor designations violates the code of ethics I sign every year as a member of the Association of Fundraising Professionals.

But it was a problem for the organization as well. Staff who witnessed transactions and then saw promises made to donors broken were disheartened. It eroded their trust and confidence in the organization’s leadership.

With the organization I worked with, the problem played out with a major donor who had been asked to give a gift through a family foundation for multiple years. After plans weren’t on track for the first year and the money given wasn’t used as the donor understood it should have been used, the donor understandably had serious reservations about giving again. The organization had to address the mismatch between the donor’s expectations and the organization’s performance. It wasn’t pretty.

It was also a problem for staff morale and productivity. Staff didn’t want to ask for additional gifts if there was a possibility that they would be put in a position in which they would be asking a donor for a gift for a particular purpose and then they would later have to face a disappointed donor in the small community in which they lived.

Blockchain could solve this problem. Grant funders and major donors making large gifts to a nonprofit organization could issue cyber currency via blockchain. The exact intent of the gift could be coded into the currency transaction in an immutable way. When the nonprofit later spent the funds, similarly, the purchases could become part of the blockchain.  Accountability and transparency would be baked in.

Interestingly, most of the focus of cryptocurrency donation discussion has centered around anonymity and several significant anonymous donations have been made via cyber currency. But cyber currency issued through the unbreakable coding of blockchain technology can be used to create greater transparency and accountability. Further, most of the focus on blockchain technology’s use for social good has focused on large-scale international applications. Yet, the challenges of transparency and accountability can be just as significant in domestic, smaller nonprofits.

Already, Nonprofit Tech for Good reports that 11% of all blockchain transactions are classified as philanthropic. Classy’s Scot Chisholm predicts that that percentage will continue to grow.

In December 2018, the Chronicle of Philanthropy published a special issue on nonprofits accepting cryptocurrency. The big take away, from my perspective, was that nonprofits should get ready to accept cryptocurrency in a couple of ways, one of which is by modifying gift acceptance policies to be prepared to receive. Most nonprofits that are receiving cryptocurrency donations do so much like receiving stock. They have an account set up to receive the donations and, then, immediately convert the bit coin or other cyber currency into cash. Receiving cryptocurrency donations can be just as simple as receiving stock. It only sounds and feels more risky because it’s less familiar to us.

Two specific things all nonprofits should resolve to do in 2020 to get ready for what will inevitably be a growing interest by funders in giving via cyber currencies and blockchain technologies:

  1. Charge your board finance committee with the task of reviewing ways to receive cyber currency and convert that currency to cash.
  2. Modify your “Ways to Give” page of your website to communicate how to make a cyber currency donation.

With a self-interest in transparency coupled with a decline in confidence in nonprofits, charitable organizations need to welcome interest in crypto currency and, specifically, blockchain technology donations.

Image Source: Generation – Used with permission.

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