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Bitcoin Charities: Forward Thinking for Future Charities

Op-ed - Bitcoin Charities: Forward Thinking for Future Charities

Bitcoin is changing the way we think about money and transactions, and during its brief existence has changed the way not only businesses operate, but has also been instrumental in setting new standards for charities. The cryptocurrency gets a bad rap as being a tool of drug dealers or other unsavory criminal elements, but it has changed thousands of lives through its application in unconventional charities (recently dubbed “Bitcoin charities.”) These charities shatter preconceptions of what a deflationary currency can be used for and how aid gets directly to those in need. Bitcoin charities run more efficiently, help the individuals assisted be more self-sufficient, and avoids the high fees and inconvenience of payment systems such as PayPal.

Sean’s Outpost, Bitcoin Not Bombs, and Fr33 Aid have used Bitcoin to feed, clothe, and medically aid those in need on the local and global levels. Accepting Bitcoin makes for swift confirmation times that allow charities to get the funds they need immediately so they can get to work efficiently. These Bitcoin charities are also thorough about documentation, something mainstream charities will need to adopt if they want to survive in the emerging crypto-economy.

It’s easy to straw man cryptocurrencies as currency for criminals, but there’s a growing narrative that it is not only being used to help people, but vastly outpaces older forms of aid. When the City of Pensacola discussed outlawing homelessness in an attempt to hide growing poverty, a man named Jason King reacted by setting up Sean’s Outpost, a Bitcoin funded homeless outreach charity. The ordinance eventually passed. When Bitcoin reached $50 in February of 2013 and speculation over its value increased, King cut to the heart of the matter.

“Hey, obviously this is a very interesting time to be in Bitcoin right now, but if you guys want to argue over whether this is reality or not, one Bitcoin will feed over 40 homeless people in Pensacola right now,” King said. “If you guys want proof Bitcoin is real, send them to me, I’ll cash them out and feed homeless people.”

And then he did exactly that; the operation has since expanded and has provided over 20,000 meals for the homeless in the region. Sean’s Outpost has built a reputation for being one of the most well documented Bitcoin charities, posting pictures of the meals and projects fueled by Bitcoin.

Additionally, through Bitcoin donations only, King bought nine acres of property named Satoshi Forest that will be converted into a permaculture, alternative energy based homeless sanctuary. While officials try to hide the problems the city is facing, King and the activists at Sean’s Outpost have shown that issues of poverty can be solved through direct action and the generosity of Bitcoin users.

Bitcoin Not Bombs, another Bitcoin nonprofit which helps start-ups accept Bitcoin, has used Bitcoin donations to clothe hundreds of people in California. Through their Hoodie the Homeless campaign, people could donate Bitcoin for hoodies that would be given to those facing harsh winter conditions. There was a tremendous outpouring of support and Bitcoin Not Bombs made sure to get footage of where the Bitcoin donations went so you were absolutely sure that your Bitcoin clothed people in need and didn’t line the pockets of CEOs. Davi Barker, the Campaign Navigator of Bitcoin Not Bombs made an excellent point in his article about the project.

“One man in particular sticks out in my mind,” Barker wrote. “His name was Doug, and although he’d never heard of it, the design of the hoodie interested him. After a brief explanation of what the digital currency was, his eyes lit up as he realized the potential. Of particular interest to him was the ability to manage an account from a smart phone, giving financial freedom to those who cannot open legacy bank accounts. Some of the advantages of Bitcoin for homeless people are obvious. A major problem homeless people face is robbery. Having no home means having no security, which means it’s difficult to ever accumulate enough wealth to change their conditions. Bitcoin is uniquely difficult to physically steal.

Bitcoin not only helps charities reach individuals more easily, but also empowers them with control over their wealth. Homeless populations face unique circumstances and greatly benefit from using a currency that provides additional security and flexibility.

The effectiveness of Bitcoin charities in addressing the needs of individuals is not limited to local cities or regions, though. Fr33 Aid, an educational organization that does outreach about medical aid and is run by volunteers skilled in the medical profession, used Bitcoin donations to get aid to those affected by the recent typhoon in the Philippines. They fed and cared for thousands of Filipinos, and photographed their work so that donors could see their donations in action. The campaign is still active and can be donated to, and more people globally are seeing the need for wider acceptance and implementation of Bitcoin.

Bitcoin also solves the problems faced by smaller charities when it comes to processing fees. Teresa Warmke of Fr33 Aid ran into hurdles using PayPal to get funds to the Philippines. While Bitcoin is still on the verge of breaking into the mainstream, it is far ahead of other money transfer services. Warmke noted her problems with PayPal.

“The next day though I was sending over $3K with the first full day of donations received, plus my matching contribution. This time it resulted in them flagging me as potentially fraudulent, and then they only allowed me to do an e-check, which takes about a week longer than usual, or credit card, which carries hefty fees…The next day, though, they defaulted to credit card for the next payment rather than transfer or e-check, which resulted them gouging me for a fee to send the donation. Have I mentioned lately how much I HATE PayPal? Way to gouge people trying to send money to one of their oldest friends to help folks in the Philippines!”

PayPal ended up refusing to refund the exorbitant fees despite them overriding defaults on their account set by Fr33 Aid. Bitcoin allows users to select miner fees which speed up transaction confirmations, but these are optional. This built-in feature means you can expedite funds for a very small fee or choose no fee if that suits your needs. Also, there is no entity that can withhold Bitcoin from the needy if they decide that an account needs to be seized or payments delayed. The speedy response meant that Fr33 Aid was able to tackle remote parts of the Philippines that larger aid organizations could not reach. This efficiency adds to Fr33 Aid and others being on the cutting edge of charities.

Documentation of donations is imperative, especially when it comes to sending funds internationally. Not all charities do this, however, and in times of national disasters, even the most seemingly reputable charities have documentation issues or misallocation problems. The seamless ability of Bitcoin to transcend borders means organizations get to work immediately without having to wait on slower payment processing companies. The way in which some charities collect donations is outdated; Salvation Army still doesn’t accept credit cards despite innovations like Square that make it easy for people who don’t carry cash. Like cash, older charities are becoming ancient because of their antiquated methods of collecting funds.

Through meticulous documentation and direct action eased by the nature of Bitcoin, Bitcoin charities like Sean’s Outpost, Bitcoin Not Bombs, and Fr33 Aid are laying a solid foundation for future charities. Innovation by Bitcoin charities is building momentum that will only increase and if older charities don’t jump on the Bitcoin bandwagon and become more transparent with their donations, they will be left behind.