Impact Investing, Philanthropy, Humanitarian Aid, and Blockchain
Money goes where ideas grow. The relationship between creatives and investors is the nexus for game-changing plays… especially at a time when we need to push Sustainable Development Goals to the forefront with a focus on global solutions. Venture Capitalists are not the only ones who ignite these ideas into useable technologies, we now see a myriad of crowd-funding, ICO’s, and other forms emerging. This is the same idea that humanitarian organizations employ when they get people to make monthly donations to their various causes. It works to a degree but accountability, efficiency, follow-through, and in some cases corruption put a considerable drag on the system. Enter Blockchain, the immutable public ledger that cuts out arbitrage and makes the whole process transparent for investors, creatives and NGO’s.
All of the relationships listed above are reciprocal, so we have to consider the benefits for each of these topics from multiple sides. I will do my best to give examples and cover this, but it will also require your imagination to think of ways that this idea can be applied. This is one of the most exciting things about the era we are living in at the very dawn of Blockchain, public ledger, smart contracts, and crypto-currencies. This new form of community, that provides peer-to-peer networks of verifiable trust is revolutionizing all aspects of how we do business, and exchange/create value globally.
Investors and Donor Bases are the financial life-blood to non-profits, entrepreneurs, start-ups, inventors and creatives of all kinds. What investors are most concerned with is return on investment (ROI) which translates as money for a venture capitalist. For an Impact Investor the return could be in a non-monetary form… maybe they get bragging rights for funding a cutting-edge technology, a program that helps people or addresses an important environmental issue. For monthly donors to a charitable organization maybe the “return” is a photo of a family in a third-world country they have adopted or a monthly update and a tax write-off. For each of these examples, the exchange goes both ways, the rewards also go both ways. Recipients of funding need new tools to quantify, and report on their successes to their donors/investors.
“Alice is a platform that brings transparency to social funding through blockchain technology” -www.alice.si
Blockchain allows reciprocal exchanges to occur in real time, transparently through a secure dashboard that cuts out middle-men, and lag-time for reporting. The transparency also does a number of other amazing things for all involved parties. For one it can cut out expenses and time spent on reporting necessary data/statistics back to investors or donors. It can also restore investor, donor confidence, which will open the gates for more funding. It also makes all transactions easy to review and compare, allowing best practices to emerge across competitive markets (see examples below). The end result is a public, transparent assessment of cost-to-impact-ratio for non-profit executives, investors, and donors to chart and maximize efficiency.
Examples are as limitless as the human imagination. Here are a few, but maybe you can add your own ideas in the comments below and we can grow the list… Say there are 50 organizations addressing hunger/housing issues in third world countries on the blockchain. Vendors of goods and services can see where non-profits are purchasing and offer better/cheaper services or products to make the field more efficient and competitive. Perhaps one vender is in closer proximity and can offer their good or service cheaper because it is less distance for shipping, manufacturing, less carbon foot-print, or other aspects of the supply-chain. Donors can now monitor and track every penny spent, while also comparing to see which non-profit or NGO is the most efficient. Non-Profits and NGO’s can now reduce their costs and increase their impact. The ability to communicate and explore best practices across borders, and between non-profits and NGO’s as well as the ones who support them can be increased exponentially.
GiveTrack is a platform that nonprofits use for taking donations and sharing with donors exactly how their contributions are used while tying donations directly to a project result.
Venture Capitalists can utilize the transparency of the Blockchain to make sure their money is being well-spent. This offers them a new level of engagement with the entrepreneur or inventor and allows them to play more of a role in the creative process. Many times Venture Capitalists have extensive networks in other areas of business, technology, and enjoy being more hands-on.
If investors are able to track in real time how capital is being spent, what are the best vendors to invest in, they may be able to offer beneficial insights that increase the success of their venture. Blockchain increase the ability for this exchange between investor and entrepreneur to be more collaborative, and also takes some of the burden of reporting back to the investor off of their plate. Of course the rules of engagement between investor/donor and entrepreneur, non-profit, NGO can be customized to meet everyone’s needs, Blockchain allows this agreement to be executed through smart-contracts in a peer-to-peer, frictionless way that is transparent.
Beyond ICO’s, tokenization that utilizes various forms of crypto-currency can also bring this reciprocal relationship to new heights. Vendors, or values-driven Blockchain Companies can offer incentives in any direction of this exchange. Think in terms of coupons. A solar company can offer tokens to an NGO that is doing sustainable development in a third world country. The tokens can be used by the NGO for their projects, OR they can be used as an incentive gifts to people who may choose to donate to that NGO, or non-profit. The token can be redeemable for a discount when the organization, or donor decides to buy solar panels, which also drives business to the values-aligned solar company.
By partnering with Blockchain startups, consortiums of entrepreneurs or artists can also offer tokens in a similar way that Kickstarter offers rewards for different donor-levels on their campaign. Values-driven Blockchain startups can create incentives to have their clients make token investments in social impact funds, or disruptive technologies. These tokens (think coupons, or airline miles) can be offered or redeemed through networks of conscious, sustainably-driven companies.
Humanitarian Aid is needed in places like Syria, and other war-torn countries and to address environmental disasters after floods, hurricanes, tsunamis, volcanic eruptions, or earthquakes. When these aid organizations make their business fully transparent on Blockchain, they will increase donor confidence, AND engagement. Imagine the corruption that has been exposed in numerous NGO’s in the last decade, the enormous waste in government aid programs, and the poor accounting. Blockchain can resolve that very quickly while also increasing the cost-to-impact-ratio, and fielding out best practices.
What do you envision? We have an unprecedented opportunity to collaborate within the Blockchain space. Maybe you are an entrepreneur with an idea to reduce carbon, or a humanitarian, a venture capitalist looking for a new project to invest in, or a philanthropist. Whatever vantage you sit at, we need you. This is a collaborative process, a reciprocity between intelligent, creative people who care about each other and the the planet. This is a community effort where your voice is valued!
The first generation of Blockchain startups were plagued with pyramid schemes, sloppy code, and an absurd focus on speculation and a crypto-currency bubble. The next wave of Blockchain that is sprouting up everywhere is more values-driven. True leadership in the Blockchain community will come from companies that innovate in addressing human and environmental solutions including the United Nations Sustainable Development Goals. Don’t be distracted by the crumbling systems of an outdated centralized-power paradigm. It’s time to become the change we all dream of in this emerging decentralized, transparent, secure Blockchain realm of reciprocal value exchange.