How cryptocurrency is transforming the nonprofit sector

How cryptocurrency is transforming the nonprofit sector
Written by
Josh Murchie

Since our founding in 2017, Little Phil has been helping nonprofits unlock the benefits of the blockchain. We’ve even partnered with leading NFT project, Xillion, to bring in new revenue sources for our charity partners.

However, sometimes, when you’re working at the forefront of a new technology like the blockchain, it’s easy to forget how confusing and intimidating it can be for someone new to the space. 

So to break it down, and help our nonprofit partners navigate this new frontier, we’ve decided to pull together a quick explainer for those interested in the potential of this space. 

Understanding cryptocurrency

Cryptocurrency is a form of digital money that utilises cryptographic protocols to safeguard transactions on a decentralised ledger called a blockchain. In blockchain, decentralisation refers to the transfer of control and decision-making from a centralised entity (individual, organisation, or government) to a distributed network. 

Decentralised networks strive to reduce the level of trust that participants must place in one another, and deter their ability to exert authority or control over one another in ways that degrade the functionality of the network.

In a decentralised blockchain network, no one has to know or trust anyone else. Each member in the network has a copy of the exact same data in the form of a distributed ledger. If a member’s ledger is altered or corrupted in any way, it will be rejected by the majority of the members in the network.

Where is cryptocurrency being used?

Cryptocurrencies are being used worldwide in a variety of different ways. Some businesses accept Bitcoin and other cryptocurrencies as payment for goods and services, while others use it to power their internal operations. A growing number of people are also using cryptocurrencies to store value and make purchases outside of their home country.

However, some of its most valuable applications have been discovered in Australian charities and the charitable sector as a whole.

The impact of cryptocurrency on the nonprofit sector

The unique, decentralised nature of cryptocurrency has led to a surge of opportunities for nonprofit organisations.

Cuts out the middleman

One of the main advantages of cryptocurrency is that it allows for direct transactions and settlement between two parties without the need for a third party. This cuts out costs associated with traditional financial institutions and can be especially advantageous for nonprofit organisations that are looking to fundraise or receive donations.

Improved transparency

Cryptocurrencies are transparent by design, meaning all transactions are recorded on a public ledger known as a blockchain. It provides donors with a clear understanding of how their donations are being used and helps to prevent any misuse or embezzlement. This increased level of transparency can be highly beneficial for nonprofit organisations.

Increased efficiency

Cryptocurrencies are also much more efficient than traditional currencies due to their processing. Settlements happen almost instantaneously, meaning less time is wasted processing and transferring money. This increased efficiency can be a great boon for nonprofit organisations that are looking to save time and money.

Donations without borders or limits

Cryptocurrencies are a decentralised form of currency, meaning they aren't bound by geographical borders. This opens up a whole new world of possibilities for nonprofit organisations that are looking to fundraise or accept donations from around the world. This is a huge benefit for nonprofit organisations looking to fundraise or receive donations from people worldwide. Additionally, cryptocurrencies are not subject to any limits, meaning donors can donate as much money as they want without worrying about exceeding any caps placed on them by their banks or financial institutions.

Better reach for nonprofits

Cryptocurrencies also provide nonprofit organisations with a new way to reach out to potential donors. By accepting donations in cryptocurrencies, nonprofits can tap into a whole new pool of potential donors who may not be familiar with traditional donation methods. Additionally, online platforms that deal in cryptocurrencies can help bridge the gap between donors and nonprofits, making it easier for donors to find the right organisation to donate to.

New and unique ways to give

Charitable and nonprofit organisations are discovering a wide range of new applications for cryptocurrencies that could have a significant impact on the sector. They're coming up with new and creative ways to take advantage of crypto's capacity in both connecting with donors and monetizing their initiatives.

Some of these applications include using cryptocurrencies to:

  • Power online donation platforms;
  • Accept donations from around the globe;
  • Fundraise for specific Causes or projects;
  • Reward donors with unique perks or privileges; and
  • Create new forms of digital currency specifically for charitable giving.

The possibilities are endless and it will be exciting to see how nonprofit organisations choose to use cryptocurrencies in the future.

What are the risks?

As with any new technology, there are always risks associated with its implementation.

In the case of cryptocurrencies, some of the main risks include:


Volatility refers to the fluctuations in value that can occur with cryptocurrencies. Due to their speculative nature, prices can rise and fall rapidly, which can be risky for donors who are looking to donate a set amount of money.

Lack of regulation

The lack of regulation around cryptocurrencies is also a major risk. Because they are decentralised, no one governing body oversees or regulates them. This can lead to a number of problems, such as fraudulent activities or theft.

Potential for fraud or theft

Another risk associated with cryptocurrencies is their potential for fraud or theft. Due to their anonymous nature, it can be difficult to track down thieves who may attempt to steal from nonprofit organisations. Additionally, there is no guarantee that cryptocurrencies will maintain their value, which could leave donors out of pocket if the currency's value decreases after they donate.

Lack of consumer protection

Finally, one of the biggest risks associated with cryptocurrencies is their lack of consumer protection. Unlike traditional donation methods, there is no guarantee that donors will get their money back if something goes wrong. This could leave nonprofit organisations vulnerable to fraud or theft.

In summary

The benefits of using cryptocurrencies for nonprofit organisations are clear. While there are some risks associated with their use, these can be mitigated by taking the necessary precautions. Cryptocurrency provides a new way to reach out to potential donors, accept donations from around the globe, and fundraise for specific causes or projects. 

While still in its early stages, it has already shown great potential for use in the nonprofit sector. Its unique advantages have led to a surge of opportunities for organisations looking to improve transparency, efficiency, and fundraising. With continued development and adoption, cryptocurrency could very well become the go-to asset in the landscape of charitable giving.


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