Charitable Giving — Blockchain Case Studies
Here are more details on the case studies discussed in our “Blockchain Applications: Charitable Giving” article.
Case Study #1: World Food Program — Syrian Refugees, Jordan
The World Food Program (WFP) is increasingly delivering assistance in the form of cash transfers, and has been trialling blockchain as a means of making these transfers more efficient, transparent and secure.¹² In January 2017, WFP initiated a ‘proof of concept’ to confirm basic assumptions around the capabilities of blockchain in authenticating and registering transactions in Sindh province, Pakistan. Taking lessons learned, WFP built and implemented a more robust blockchain system in refugee camps in Jordan.¹³ As of October 2018, more than 100,000 people residing in camps redeem their cash-for-food assistance through the blockchain-based, Building Blocks, system.
For refugees living in camps, Building Blocks is integrated with UNHCR’s biometric authentication technology that allows refugees to identify themselves at the local supermarkets using cameras placed at the cash register.Once identified on the UN database, a query is sent to the family account kept on the WFP blockchain, and the bill is settled. The Building Blocks program did not affect how refugees and retailers operated and interacted, as it mainly replaced the functions of financial services companies that processed funds. The WFP blockchain has a full, in-house record of every transaction that occurs at that retailer, ensuring greater transparency and security over transfers. It also provides greater privacy for the Syrian refugees, as identification and other personal data is no longer shared with financial service companies. The processing and settlement of transactions without an intermediary has made transactions quicker and cheaper. Bank and other fees previously paid by WFP have been reduced by 98%.¹⁴
The Building Blocks program also helps people without government identify documents or a bank account develop a financial and legal history that, in the future, can be used to get a job, permanent home and other necessities. The program has been so successful that WFP hopes the program will cover all 500,000 Syrian refugees in Jordon by the end of 2018.¹⁵
As a final note, Robert Opp, Director of Innovation and Change Management at the WFP, admits that a similar outcome could have been achieved using a shared and distributed database rather than a blockchain system. However, the goal is to expand the program to include other programs and aid agencies. At that point, blockchain features of transparency, security, and privacy will be critical to improving value from data and efficiencies across all aid agencies.¹⁶
Case Study #2: Alice Funding Platform — St Mungo’s, United Kingdom
Alice is a social funding platform that uses results-based financing to incentivise charities by only paying them when specific goals are achieved.¹⁷ The performance of each project is publicly available, making it easier for donors to identify and help scale social projects that actually work. Sharing impact data on the platform is expected to significantly reduce due diligence and reporting costs, and help social organisations collaborate more effectively.
The first live project on the Alice funding platform is a pilot run by a UK homelessness charity, St Mungo’s, to help 15 people sleeping rough in London rebuild their lives. In this pilot, the Alice community is effectively crowdfunding a project to support 15 men and women who have been living on the streets for a long time. St Mungo’s is looking to provide personal support to each person and create four steps to achieve the goal of permanent housing. The charity is asking for £3,500 for each person but breaks up funding into smaller goals. Alice leverages blockchain smart contracts to increase transparency and accountability. Donations are accepted but ‘frozen’ until the charity proves they have achieved the social goals. In this way, donations are guaranteed to make an impact or donors will be able to get their money back.
For example, the first goal set by St. Mungos is to place individuals in temporary homes for which £200 is needed per individual. The Alice platform is used to raise £200 from donors but only after an independent ‘validator’ verifies that the person has been placed in temporary housing will the Alice platform release the £200 to the charity. The second goal is to help someone stay in a temporary home for 3 months. The donation is £750 per person but it will only be paid to the charity if the validator verifies the person stayed in temporary housing for three months. Subsequent goals are similarly structured. According to the website, the appeal has funded 3 out of 15 people to date.The objective is that the Alice platform can be used by different charities to encourage transparent donations, and reduce administration and transaction costs.
Case Study #3: Amply — School Subsidies, South Africa
The Amply project is another example of a results-based financing platform built with blockchain technology. The Amply platform helps school teachers to digitally capture the school attendance records required to get subsidies from the government.¹⁸
In South Africa, approximately two-thirds of the 6 million children under the age of 6 live in poverty, many lacking a form of proper identification. This makes them practically invisible to the government and social services such as subsidies to attend early childhood development schools. Moreover, in order to receive subsidies from the local government, these schools have to apply for subsidy payments through quarterly reports that include a daunting amount of paperwork, bureaucracy and a submission process prone to errors.
“Sometimes we travel all the way to the department just to find an error on the form requires us to re-do the quarterly report. Sometimes the paperwork gets lost at the department and we need to re-submit”.¹⁹
The first iteration of the Amply mobile app enables schools to automatically gather their attendance data and submit it to the Department of Social Development. Every morning, a teacher or principal logs each child’s attendance in the app. Underlying the app is blockchain infrastructure and smart contracts, through which a third-party evaluator can verify the claim of attendances made by the service provider. Since the pilot began in November 2016, the project has recorded 81,168 attendances for 3,327 children across 87 Centres and 122 service providers.²⁰ Amply reports that it has saved teachers over 4,000 hours every month.²¹
The blockchain framework behind Amply helps keep an immutable record of school attendance that can automate payments by the government. The data collected is also expected to help develop an identity record for children as they move from school to school and for the Department of Social Development to help provide other services.
Based on the Amply Pilot, Trustlab established the ixo Foundation to to further develop the open-source protocol. The foundation has partnered with major organisations including Singularity University’s SU Ventures, Gold Standard, Microsoft Research and others to build applications of these protocols that will enable projects to cost-effectively collect, factually verify and share impact data.²² On 8 December 2018, the foundation mined the first block of the ixo public blockchain and plans to use impact tokens to create a global ecosystem to fund, deliver and evaluate projects.²³ ²⁴
Case Study #4: BitGive — Chandolo Primary School Water Project, Kenya
BitGive has been accepting bitcoin for crowdfunding charitable projects since 2013.²⁵ They have partnered with Save the Children in the Philippines and West Africa, The Water Project in Kenya, and Medic Mobile in Nepal to raise bitcoin. Donors can donate bitcoin directly to BitGive or to specific projects on their donation platform, GiveTrack. Successful projects include the Chandolo Primary School Water Project in Kenya that raised BTC 1.2 (approx. US$15,000) in January 2018 to build a rainwater catchment tank, latrines and training.²⁶ BitGive report that less than 1% of donations is spent on fees.
In a recent podcast, the founder of BitGive, Connie Gallippi, talked asked about her experience in non-profits and how that motivated her to start BitGive.²⁷ She had seen the entire non-profit sector affected by negative media headlines even though most people and organisations were doing good work. Ms Gallippi said the goal of BitGive was to support existing organisations by leveraging bitcoin and blockchain technology to make them more efficient and effective, and to create tools for accountability. Using bitcoin, has allowed charities to bypass banks and governments, and make transactions faster, cheaper and more secure. The transparency of the bitcoin’s public blockchain has allowed donors, non-profits and the public to see what happened to the money and how it was used in real time. BitGive uses photos, video and other data to regularly update donors on the impact and progress of projects rather than rely on traditional annual reports.
Ms. Gallippi acknowledged that transparency is only maintained as long as charities hold their funds in bitcoin. Once donations are transferred into local currency or paid to a service provider, they are no longer reported on the bitcoin blockchain. However, despite not solving this ‘last mile’ problem, she maintains that the savings in fees and faster transactions have been significant. She also believes that the benefits of seeing money move in real-time has been revolutionary.
BitGive’s biggest problem to date has been the lack of bitcoin ecosystems in developing countries. For that reason, they have only run projects in countries where it is possible to use and convert bitcoin. BitGive is currently testing the next version of the GiveTrack donation platform.²⁸ The new version integrates with Uphold, a financial services online platform, to allow users to receive, hold, convert and transfer over 30 different cryptocurrencies and traditional currencies. They are hoping that this will improve the ability for charities to receive and make local payments. In the past, BitGive has only been working with selected charities and did not have the capability to work with additional charities. They are hoping that the updated GiveTrack platform will help them increase the number of charities they can work with in the future.
Case Study #5: AIDChain — AidPay and AidCoin Cryptocurrency
AIDChain is a giving platform that charities can use to promote projects, collect and manage donations. It is currently being used by various charities including World Wildlife Fund (WWF) Italy, Japan Relief, Cool Earth and Alice for Children. AIDChain is developing multiple blockchain-based solutions to make donations trackable and efficient in the charity space.
AidPay is AIDChain’s a payment gateway that allows charity websites to accept donations in 23 different cryptocurrencies in a similar way to how they currently accept donations using credit cards and PayPal.²⁹ AIDChain has also issued its own cryptocurrency token called AidCoin.³⁰ It can be bought and sold on certain cryptocurrency exchanges like any cryptocurrency, however, its value is derived from driving AIDPay and the AIDChain ecosystem.³¹ All donations that go through AIDPay are converted to AidCoin which then allows charities and donors to track and manage donations using a single cryptocurrency.³² AIDChain incentivises charities to pay service providers in AidCoin in order to enhance donations trackability.³³ Once a service provider has been paid in AidCoin, they can exchange AidCoin to local currencies via a currency exchange.
The AIDChain platform and AidCoin token are conceived and developed by CharityStars, a Swiss charity fundraising company that facilitates celebrity auctions for charities. Since its inception, CharityStars’ team of 25 professionals has worked with 500+ charities including UNICEF, Save the Children and WWF to raise over US$10 million. CharityStars aims to promote the use of AidCoin through its auction platform and ecosystem of charities, donors and events.³⁴ CharityStars currently allows donors to pay in AidCoin, bitcoin and ether via its website.
AidCoin reported that its first-ever entirely blockchain-based charitable campaign was arranged by AidCoin and CharityStars in support of Alice for Children, a Kenyan charity for educating kids living in slums.³⁵ CharityStars launched a charitable auction to raise €15,000 which they converted to AidCoin (315,000 AID) and donated it via AIDChain to the Alice for Children’s project.The main goal of the fundraising campaign was to buy a power generator for the Italian Food Academy in Nairobi where kids can train to be chefs. AIDChain allows the public to see that of the 315,000 AidCoin donated, 252,000 AID were paid to the local power engine vendor, and 63,000 was paid to AIDChain as a 20% fundraising platform fee.³⁶
AIDChain wants to gather donors, charities and service providers to create a single, global platform for full transparency. Their goal is for AidCoin to become the preferred method to donate and access the ecosystem of services provided by the AIDChain platform. By keeping funds in AidCoin, rather than immediately converting donations to local currency, participants will be able to track donations and charity spending through to the ‘last mile’. That is, there will be full transparency over how charities spend their funds all the way to payments made to service providers, vendors and other recipients.
However, solely using AidCoin through this platform has its drawbacks. Firstly, the generator vendor that sold the generator to Alice for Children was paid in AidCoin, and it was expected that the received AidCoin would be cashed out for local currency using the partner exchange, Bitfinex. It is worth noting that Bitfinex only exchanges AidCoin for bitcoin or ether and that the vendor would need to use another exchange or payments platform to exchange the bitcoin/ether to Kenyan Shillings. This highlights some of the shortcomings of developing new cryptocurrencies for developmental aid. Until AidCoin becomes widely used, users take on the risks of price fluctuations and costs of trying to exchange AidCoin into local currency. Potential participants in the market will need to be educated about complex concepts like cryptocurrency, wallets and exchanges. To combat this barrier, AidCoin went to Kenya to help Alice for Children learn about cryptocurrencies, find vendors who would accept AidCoin payments, and walk them through the process. However, this will be difficult to scale across many projects unless larger organisations adopt and use the AIDChain platform and AidPay. It is also not clear how the AIDChain platform prevents charities from creating fraudulent vendors or causes, as there does not appear to be any verification processes outside of the payment process. Nevertheless, the project is still in its early stages and AIDChain and AidCoin have ambitious goals.
Other organisations like the ixo Foundation are also planning to issue tokens to drive social impact data and economies.³⁷ The ixo blockchain integrates financing, service providers and data evaluators who confirm social impact data and outcomes. Whether token models succeed will depend on many factors, like whether or not these organisations can create value for the tokens and create incentives for active market participation by all the stakeholders (donors, charities, vendors and other stakeholders). If they do succeed, it could result in never before seen efficiencies and transparency for the social impact sector.
Disclaimer: This is not investment advice or endorsement of any blockchain technology, cryptocurrency or specific provider, service or offering. Blockchain technology is an early stage technology that is constantly changing and has many unknowns. Cryptocurrencies are speculative, complex and involve significant risks — they are highly volatile and sensitive to many factors. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service before making any decisions.
Written by Dr. Denise Tambanis for the Blockchain Philanthropy Foundation, supporting global charities and accelerating humanitarian initiatives through blockchain technology. For comments and questions regarding this article, please contact the author.
[12] https://innovation.wfp.org/project/building-blockshttp://unconfirmed.libsyn.com/the-un-world-food-programmes-blockchain-based-food-vouchers-for-syrian-refugees-with-robert-opp-ep017
[13] In the early test of the Building Blocks in Pakistan, the transactions were slow and the fees were too high. WFP decided one of the problems was that the system was built on the public Ethereum blockchain. The current version of Building Blocks runs on a “permissioned,” or private, version of Ethereum. https://www.technologyreview.com/s/610806/inside-the-jordan-refugee-camp-that-runs-on-blockchain/
[14] Cost savings from reduced bank fees amount to approximately US$40,000 per month.
[15] https://www.technologyreview.com/s/610806/inside-the-jordan-refugee-camp-that-runs-on-blockchain/
[17] http://www.alice.si
[18] http://www.amply.tech,http://unicefstories.org/2018/04/11/unicef-innovation-fund-graduate-trustlab/
[19] http://www.amply.tech/field-testing-the-amply-dapp/
[22] https://ixo.world/ecosystem
[23] https://medium.com/ixo-blog/the-ixo-blockchain-is-live-welcome-to-a-new-world-of-impact-3a9811dd2e39
[24] https://ixo.foundation,https://ixo.foundation/wp-content/uploads/2018/08/ixo-Technical-White-Paper-w-Cover-Version-3.0-8-December-2017-1.pdf
[25] https://www.bitgivefoundation.org/past-projects/http://unchainedpodcast.co/how-donating-crypto-can-help-you-save-on-taxes-ep94
[26] https://thewaterproject.org/community/projects/kenya/rainwater-harvesting-wash-project-4833https://www.givetrack.org/view/13/chandolo-primary-school-water-project/updates
[27] http://unchainedpodcast.co/how-donating-crypto-can-help-you-save-on-taxes-ep94
[28] https://d1i1964a5wuyjt.cloudfront.net/2018/11/BitGive-FAQ-11.18.pdf
[29] At present, AidPay is only available on AIDChain and CharityStars but is expected to be available for all charities when testing is completed. https://www.aidchain.co, https://www.aidcoin.co
[30] AidCoin raised approximately US$15 million when it issued coins in January 2018 as part of an initial coin offering (ICO). https://www.coingecko.com/en/ico/aidcoin, https://www.aidcoin.co/assets/documents/whitepaper.pdf?v=3.30,https://medium.com/aidcoin/aidcoin-ico-closes-in-record-time-what-to-do-now-and-next-steps-986ab89695bd
[31] As of 13 November 2018, 99% of exchange transactions are for AidCoin against Bitcoin. https://www.coingecko.com/en/coins/aidcoin/trading_exchanges
[32] AidCoin is held in a software program otherwise known as a ‘wallet’ that lets holders manage their cryptocurrency holdings. The wallet stores information about your cryptocurrency holdings and lets you send and receive cryptocurrencies. The AidCoin wallet is also used to track and manage donations.
[33] When the WWF came on board in August 2018, it committed to spend the funds raised in cryptocurrencies without converting to fiat. https://www.charitydigitalnews.co.uk/2018/08/23/wwfi-opens-to-blockchain-based-aidcoin-donations/https://irishtechnews.ie/wwf-now-accepting-donations-on-the-blockchain-thanks-to-aidcoin-welcoming-the-new-era-of-transparent-giving/
[34] https://www.prnewswire.com/news-releases/charitystars-announces-4m-usd-presale-raise-for-aidcoin-to-increase-donation-transparency-660298453.html,https://www.aidcoin.co/assets/documents/whitepaper.pdf
[36] AidCoin’s medium post shows the fee was paid to CharityStars whereas the AIDChain page shows the fee was paid to AIDChain. It is not clear whether this fee was paid to AIDChain or CharityStars, who usually charges 15% to promote and operate each charity auction. https://www.aidchain.co/project/a-power-generator-for-a-school-in-nairobihttps://medium.com/aidcoin/aidcoin-to-showcase-the-first-ever-entirely-blockchain-based-charitable-campaign-in-africa-2e4af8c80419
[37] https://ixo.foundationAnother organisation, Giftcoin is a blockchain funding platform that attempted to raise funds and issue tokens in April 2018. While they appear to still be operating, they have not reported any substantial updates since they postponed the token sale due to US regulatory concerns and lack of confidence in the market. https://www.civilsociety.co.uk/news/crypto-donation-platform-postpones-token-sale-and-returns-funds-to-investors.htmlbl
