The success of any charity organization depends on its image among the general public. Confidence that donated funds are actually used to do good and help vulnerable social categories is the key to a charity’s ability to collect money. And this has been a serious problem for Chinese charities recently. But, government officials have come up with an idea to improve transparency and confidence in the way charities collect and use funds: blockchain technology.

Using Modern Technology to Restore Faith in State Run Charities

The scandal surrounding state-run Chinese charity organizations is not new, but the authorities took a long time to react to it. During this time, unanswered questions led to a significant decrease in the amounts of money donated by the general public to charity causes.

But this state of affairs is about to change, at least according to an action plan (link in Chinese only) recently released by the Ministry of Civil Affairs. This plan covers the period 2018 – 2020 and focuses on various fields of activity where the Chinese government plans to use the latest internet technologies to increase transparency in the way social service activities are administered.

The timeline of the plan determines that the ministry will choose the blockchain solution to be implemented by the end of 2018, and that the implementation will be completed by 2020.

How Blockchain Can Rebuild Trust in Charities

According to the plan, blockchain technology will be used to integrate government charity databases starting from nationwide and ending with local level with privately operated charities.

This will ensure a faster and wider transparency of all the donations made to various organizations and services. The distributed network model created with blockchain technology will allow Chinese people to see exactly how much money was collected by charities and how it is used.

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Blockchain Is Already in Use in China

The action plan devised by the Ministry of Civil Affairs is not a foray into unknown territories. Blockchain technology has already been implemented in this country in the private sector – the leading early adopters being large internet companies such as Tencent and Alibaba.

As we have detailed in one of our previous articles, Tencent is experimenting with blockchain technology in order to speed up the process of reimbursing employees for expenses made on behalf of the company. The pilot program has demonstrated that blockchain is a viable option for simplifying the currently difficult and bureaucratic payment reporting system in China.

At the same time, a payment affiliate of Alibaba, Ant Financial, is already using blockchain in its charity activities to create more trust through transparency in the process of collecting and using donations.