The Transformational Potential of Blockchain for Social Impact Organizations
Blockchain provides foundational technology for almost any applications that benefits from highly secure data communication across fully distributed systems accessible by an unlimited number of participants. Up to this point, blockchain-based technology adoption has been limited to a small set of use cases by almost exclusively private sector entities.
Looking beyond the private sector, I believe blockchain can be incredibly disruptive to social impact organizations (SIOs). Specifically, blockchain applications can increase an SIOs value proposition by introducing radical transparency and responsiveness into its relationship with three key stakeholder types — funders, service recipients and network partners.
A quick primer for those not intimately acquainted with this emerging technology: blockchains store information across a network of personal computers. Since the network is decentralized and fully distributed — no single company or person owns the system. Computers hold bundles of records, or “blocks” submitted by others in a chronological chain. Blocks use cryptography to ensure records can be counterfeited or changed by others — making it incredibly difficult to compromise or corrupt the network.
Let’s take a closer look at how blockchain can impact these stakeholder relationship:
Funders: Blockchain enables radical transparency as core tenet of its relationships with funders. In particular, in human service sectors, the ability to provide highly granular service delivery verification allows funders to very quickly measure grantee performance across a wide range of key performance indicators (KPIs).
Beyond measurement, a fully transparent data sharing paradigm creates a baseline for deeper trust-based collaboration in areas like program design, execution and iteration. This open, two-way relationship may also uncover supplementary areas of engagement or even net new means of monetary or in-kind gifts to support program objective achievement.
Service Recipients: Blockchain may completely revolutionize the relationship between SIOs and their service recipients. When engaging under-resourced individuals, maintaining a complete communication feedback loop can be incredibly time and cost intensive.
With blockchain, SIOs can communicate PII data — like medical results — in a safe and privacy compliant manner. Blockchain also opens up exciting applications in the service delivery verification space. Beyond one-way communication, blockchain applications can enable remote monitoring and verification of multi-phase programs or services. Most importantly, blockchain participation is relatively democratic and accessible to under resourced communities — only requiring periodic access to light SaaS applications accessible on a browser-enabled phone or public computer.
Network Partners: Blockchain has the potential to reimagine how SIOs participate in collaborative data sharing initiatives. Blockchain’s fail-safe data encryption may offer the necessary data safety guarantee to compel SIOs to contribute more granular datasets to open data initiatives.
Higher volumes can dramatically increase the value proposition of such collaborations. A couple examples come to mind. First, larger overall data volumes create more normal data distributions, minimizing skew and generating more accurate population and performance benchmark sets. Larger scale data sharing also increase the value of predictive analytics applications. Increased data scale allows algorithms to ‘learn’ off of more data — generating more ‘expressive’ results with higher predictive accuracy.
A few final thoughts:
Blockchain may potentially have a ‘leapfrog’ effect on technology adoption by SIOs. From the lens of the ‘Innovation Adoption Lifecyle’ in Geoffrey Moore’s ‘Crossing the Chasm’, SIOs notoriously fall into the ‘Laggard’ category. Because blockchain is fundamentally an enabling infrastructure for collaborative applications — it may allow SIOs to simultaneously adopt adjacent innovations like cryptocurrencies and predictive analytics solutions. If this phenomenon occurs, SIOs can radically alters their typical technology adoption pattern and generate incredible new value in terms of increased effectiveness of their programs and services.
The ‘flywheel’ virtuous cycle from Jim Collins’ ‘Good to Great’ also come to mind when looking at the collective effect of blockchain on each of these stakeholder relationships. By introducing swifter, safer communication of ‘mission-critical’ information — blockchain reimagines these relationships as much more transparent and accountable. The two-way nature of the communication creates a virtuous self-perpetuating cycle that can drive ever increasing trust and collaboration — and over time, increased programming effectiveness and overall impact generation.