Traditional charities often face inefficiencies due to slow bureaucratic processes, leading to budget mismanagement and lack of transparency in donor fund allocation. Sandeep Nailwal, co-founder of Polygon Labs and founder of Blockchain for Impact, discusses how blockchain technology can revolutionize philanthropy by decentralizing operations, improving speed and transparency, and eliminating intermediaries.

Numerous incidents have highlighted issues within traditional charity models, such as the misuse of funds by nonprofits, as seen with the Wounded Warrior Project's extravagant spending and lack of accountability. This trend extends to other organizations like the Cancer Fund of America and the American Red Cross.

Nailwal emphasizes the need for transparency in fund allocation, citing a 2024 survey indicating high instances of fraud within charities. He believes blockchain technology can address these challenges by recording and tracking each donation, ensuring accountability from donors to beneficiaries.

By leveraging smart contracts, blockchain can automate fund disbursement in real-time, particularly crucial during crises like natural disasters or pandemics. Major charities like the Bill and Melinda Gates Foundation and UNHCR have already integrated blockchain solutions to enhance aid delivery and financial services for displaced populations.

While blockchain offers promising solutions for efficient and transparent philanthropy, Nailwal acknowledges the regulatory and operational hurdles that must be overcome for widespread adoption. Despite challenges, the integration of blockchain technology alongside traditional frameworks represents a path towards a more resilient and effective philanthropic system.