Decentralised finance (DeFi) is the fast-evolving new digital financial infrastructure that, in theory, removes the need for a central bank - like the Reserve Bank of Australia - or a government agency to influence monetary policy.
Most people know of the Blockchain, which forms the basis of this emerging technology - but this is just the tip of the iceberg in terms of how this new field has the potential to revolutionise the way we think about and use money.
Why is this relevant for nonprofits? Here at Little Phil, we are utilising Blockchain technology and DeFi networks to provide charities access to new revenue streams and to engage with a younger generation of donors.
The aim of this article is to provide you with an insight into how decentralised finance is transforming how charities can raise revenue to support people and communities around the world.
With the advent of new types of finance, our society is quickly evolving in terms of the ways we manage and move assets. Technologies such as the blockchain are reDeFining how many of us see money, as well as how organisations are structured and transactions, are conducted.
The blockchain is a powerful, distributed ledger that allows for secure, transparent, and tamper-proof transactions. It supports the use and management of cryptocurrency, among other assets. The potential applications of the blockchain are endless and its impact on our society has the capacity to be far-reaching. Already, there are companies and startups that are developing new ways to use blockchain technology and its potential is only just starting to be realised.
The blockchain has the ability to change how we interact with each other, as well as the world around us. It has the potential to revolutionise everything from the way we do business to how we manage our assets. One of its most impactful applications is in the charitable sector, where we're seeing it reshape the way Australian charities go about raising and managing funds.
Decentralised Finance is a unique and prolific landscape, diverse with opportunities. Because of this, there are various reasons why a charitable organisation may want to take advantage of blockchain technology.
Transparency is a major thing in the world of money, especially when it comes to charitable causes and donations. This makes blockchain technology a perfect fit for not only tracking donations but also the final destination of those funds. With its cryptographic security features, blockchain technology makes it so that donations are handled securely and without any potential for lost funds or misuse. In this way, both donors and recipients can be sure that their money is being handled in an open and honest manner. It also allows for an extra layer of security and anonymity, which can work to build trust between donors and the charities they interact with.
Due to the ever-growing popularity and accessibility of blockchain technology, it is easier than ever for non-for-profit organisations to get involved in and benefit from fundraising initiatives. There are now various platforms that allow for the donation and management of funds through the use of blockchain technology. This removes much of the red tape and hassle that is often associated with donating to charity, as well as creates more opportunities and points of contact through which contributions can be accepted. There are various platforms and services that make it easy for everyone and anyone to donate, from those without much technological experience to those who prefer to conduct their transactions through assets like cryptocurrency and NFTs. This opens up more opportunities for those who want to help out in a charitable capacity, as well as creates a more far-reaching system that allows organisations to source from as much of the global population as possible.
One of the most impressive features of blockchain technology is its ability to manage transactions in a completely streamlined manner. This can be extremely helpful for charitable organisations that often have to deal with large sums of money and complex donation systems. With blockchain technology, all of these processes can be optimised and managed in a more efficient way. With this setup, it becomes possible for charities to manage donations without having to rely on a centralised system such as a bank. This can help to speed up the donation process and make it more accessible for those in need. Additionally, it can also help to reduce costs and fees associated with traditional methods of donation transfer. This not only saves time and money but also allows for more accurate and reliable tracking of donations.
One of the most difficult things about charitable giving is that it often requires dealing with cross-border transactions. This can add a lot of extra hassle and complexity to the donation process, as well as increase the chances of something going wrong. The blockchain helps to mitigate many of these issues by providing a secure and efficient system through which donations can be transferred. This can help to speed up the process of donation transfers, as well as make it easier for charities to work with donors from all over the world. Additionally, it can help to reduce associated costs and fees, making it more affordable for everyone involved.
Blockchain is an undoubtedly promising technology that is sure to change the future of how the charitable sector operates. However, there are still some challenges that need to be overcome before its full potential can be realised. These include things such as the following.
As blockchain technology is still relatively new, there is a lack of standardisation and regulation surrounding its use. This can lead to a lot of confusion and uncertainty, as well as prevent organisations from taking full advantage of its benefits. A better understanding of the technology and how it works is needed in order to facilitate its wider adoption.
Blockchain technology is still unfamiliar to many people, both in the donor and charity sectors. This means that there is a need for better education and outreach in order to increase awareness and adoption. Charities need to be made aware of the benefits of blockchain technology, while donors need to be educated on how they can use it to make their donations more impactful.
The blockchain is still a relatively new technology, with plenty of room to grow and expand. Its potential impact on the charitable sector is already being felt, and there are lots of new ways it will be able to help facilitate and improve donations. With the right strategy and approach, its possibilities for changing the world for the better are endless. Little Phil is staying ahead of this trend, working with key strategic partners, like Griffith University to help define proper standards and regulations within the industry.