A leading Chinese charity has run into a storm of criticism after it said it raised 1 million yuan for a young woman hospitalized due to severe malnutrition, but only transferred 20,000 yuan to the hospital before she died several days ago.

The case has incited widespread fury both domestically and internationally in the past few days. It has led many to consider blockchain technology as a solution to China’s opaque charity industry since blockchain could enable donors to track where their money is being spent by charities.

The public outcry came after news reports disclosed that the 9958 Rescue Centre, a project of the China Charities Aid Foundation for Children (CCAFC), raised 1 million yuan for the woman named Wu Huayan for her recovery but only transferred 20,000 yuan to the hospital.

Local media said Wu was born into a rural family in 1995 and had lost both her parents. Wu lived with her poor relatives and spent money she received from a college scholarship and government allowance to pay hospital bills for her ill brother. She stopped eating proper meals and weighed only 22kg when she was admitted to hospital last October. Donations poured in after the story of the 24-year-old woman’s life was reported.

While a friend of Wu said the family did not know about the fundraising by the charity and another report disclosed that the charity group often pick patients who are in a critical condition and have a poor family that are illiterate or incapable of checking donations from charity groups, and they have a pattern of postponing the transfer of donations to those in need so as to get interest income.

In the eyes of the public, this is a charity platform that takes advantage of an unlucky girl to launch a donation, after which the platform charges a 6% management fee. That is to say, Wu got 20,000 yuan for medical expenses, while the platform charged 60,000 yuan of management fees for the public donations, but where will the remaining 920,000 yuan go?

Against the backdrop of growing trust issues in charitable organizations, blockchain enthusiasts are calling for a blockchain-based solution.

Blockchain, in essence, is a shared database, and the data stored on the blockchain cannot be tampered with or forged. It can be traced and transparent. Based on these features, blockchain can be potential solution to the crisis of trust in many industries.

What can blockchain bring to charities?

Real-time monitoring, open and transparent

As long as there are middle men managing funds, there is no way to ensure donations will get to their intended destination. All information onchain helps increase accountability within organizations and prevent future misuse of these funds.

Everyone watches

With the distributed storage technology of blockchain, the data is migrated onchain and each donor serves as a node. Once there’s a need to change the data, it must be done with consent from more than half of the nodes. This not only prevents charities and platforms from changing data, pocketing donations and cheating donors, but also allows the whole process to be better monitored.

Identity verification

Blockchain technology can be used to effectively verify the identity of the applicant and trace where the raised fund goes, to prevent people from forging identities to swindle money with public sympathy.

Increase efficiency

Blockchain has the potential to solve this issue by offering a secure, reliable, and efficient way to manage donations and allow for efficient workflow. With the use of smart contracts, organizations don’t have to rely on intermediaries to confirm transactions and can proceed faster than they would in the traditional workflow model.