Disrupting Donations: UNICEF Accepts Cryptocurrency

Cryptocurrency is a digital currency that is transferred directly through the Internet, between two parties, without the involvement of governments or banks. There are currently over 2,800 cryptocurrencies — the most well-known being bitcoin and ether — with a combined value of nearly $250 billion USD. 

With the launch of the United Nations Children’s Fund’s (UNICEF) Cryptocurrency Fund, the UN agency has become the first to accept, hold, and disburse cryptocurrency to beneficiaries. With nearly $18 million USD pooled, funds will go towards financing early-stage, open-source technology companies whose work impacts the wellbeing of children. UNICEF will disburse donations of bitcoin and ether. Their annual financial statements will now reflect this, with a section outlining cryptocurrency holdings. 

After receiving a cryptocurrency donation in October 2019 from the Ethereum Foundation, UNICEF disbursed the cryptocurrency among three ventures, to the equivalent of $10,000 USD each. Typically, the agency invests between $50,000 to $100,000 USD in startups. UNICEF envisions the next round of investments in early 2020 will be within this range, too. 

A requirement to receive this funding is that startups must spend the cryptocurrency — they cannot cash it out. This may mean, for example, that members of the company’s team are willing to receive their salary in cryptocurrency, or that the company’s service providers accept this as a form of payment. 

The fund is part of a three-year pilot program to explore how digital currencies can further UNICEF’s mission. “It’s about learning and becoming prepared for a digitally financed future,” said Christina Lomazzo, blockchain lead at UNICEF. Lomazzo explained that the pilot will help shape the agency’s approach to cryptocurrency. “How do you deliver aid in an area where bringing in traditional methods is no longer going to work? These are all things this crypto fund will help us explore.”

The fund plans to invest in future companies that will identify how digital currencies can play a role in the future of cash transfers (a sum of cash given directly by non-governmental organizations to people living in poverty). It will also tackle questions around the accessibility of cryptocurrency. 

“Most crypto is built for people who have access to the Internet all the time, and that’s not the case for the world’s most vulnerable,” said Lomazzo. “How can you make transactions with cryptocurrency on a basic Nokia phone?”

While stressing that this is all experimental, Lomazzo highlighted that UNICEF decided to enter this space because of the efficiency of payments through cryptocurrencies; the currency is transferred instantly through online ‘wallets’, and can also be sent anonymously. In addition, the agency would have access to different types of donors who may be drawn to UNICEF because they hold cryptocurrency, and prefer to donate that instead of cash. 

UNICEF does not plan to purchase crypto, but only to disburse it — potentially because the market can be volatile and uncertain for investors.  Currently, four UNICEF national committees accept cryptocurrency donations: Australia, France, New Zealand, and the US. 

Could this move inspire other social impact organizations to embrace digital currencies? Jason Shim, an early adopter of cryptocurrency in Canada’s non-profit sector, thinks so. “The fact that UNICEF is accepting crypto reflects a growing need for charities to be responsive and nimble to emerging technologies,” he stated. “In some ways, it helps future-proof our organization by allowing us to explore, scope out, and implement [new platforms] fairly quickly, which comes in handy for future projects and other platforms that we adopt.”

In 2013, Shim led Pathways to Education to become the first Canadian charity to issue tax receipts for Bitcoin donations. The organization cashes the donations instead of holding onto it. It has since received over $10,000 in cryptocurrency. While this represents a small aspect of their overall donations, it introduces the charity to new donors. Shim explained that the first Pathways to Education cryptocurrency donors were people who held bitcoin, and were searching online for charities who would accept it, as they may not have made a donation otherwise. 

Once the organization implemented accepting Bitcoin donations, they found it straightforward to accept other cryptocurrencies like Bitcoin Cash and Ethereum. “We received an inquiry about accepting Bitcoin Cash and we were able to get that up and running in under twenty-four hours,” Shim shares.

He says introducing cryptocurrency donations presented Pathways to Education with an opportunity to take a minimum viable product approach of launching quickly and iterating with improvements.

Today, a handful of Canadian non-profits accept cryptocurrency, such as War Child Canada, who invest the donations in areas of immediate need, and tech organization Peace Geeks, who empower communities with digital literacy (and who once had a widget on their website displaying bitcoin donations!). However, adoption rates of cryptocurrency is still low among non-profits and charities, making these organizations the exception.

Over the last five years, numerous non-profits across North America have reached out to Pathways to Education to learn how they too can use cryptocurrency. Shim likened non-profits embracing cryptocurrency to accepting credit cards and online donations, which weren’t always the norm, but are now part of the evolving banking processes. 

“The future of crypto remains to be seen, but I think charities need to consider [adopting it],” Shim said. “Technology in general is a very powerful tool for charities — it allows us to be more effective in our mission.”