How Blockchain will Change Charities Forever
As a charity or aid agency tackling crisis and challenges on a shoestring budget, technology is often not at the forefront of your mind. However, they should be aware of the potential for the open, distributed technology of blockchain to:
- Secure identity
2. Allow for all manner of exchanges from contracts, deals and payments to be done in a secure and rapid manner;
3. Provide a unimpeachable audit trail that facilitates any regulatory compliance
4. Low (to zero) cost to use and can allow all manner of agencies to collaborate
Blockchain is a distributed technology like the internet that allows independent parties to exchange and sign contracts on a distributed ledger. These contacts can be simple like a payment transfer or as complex a ‘smart contract’ as desired.
This blockchain technology doesn’t need centralised institutions to operate which makes it appealing for crisis ridden countries. The applications of this technology are endless, however today we’re discussing the effect of blockchain on charities (i.e. how they are operated and more importantly how they’re viewed by the general public).
There are three main applications of this technology:
- Donations
- Documentation
- Supplying Resources
I will discuss these individually later.
The Charity Challenge
One of the largest risks for any charity is the “miss-allocation” of resources and fraudulent activity. A prime example of this is the recent scandal with Oxfam (fourth largest fundraiser in the UK). £553,479 went missing as a result of fraud and corruption in 2015/2016. (3) This has lead to a massive loss of trust within the general public. Statistics now sit with only half (51%) of the British public believing that charities are trust worthy entities. (4)
Similarly identity theft or know your customer (KYC) requirements can delay/prevent aid distribution and employment opportunities.
Applications of Blockchain
- Donations
Using this technology donors can now send money directly to their cause of choice with out having to go through a centralised fundraising entity. This speeds up the transaction process exponentially while also eliminating the uncertainty of miss-allocation and fraudulent behaviour. As the number of blockchain donations increases charities will feel pressured to implement this technology themselves so as not to become redundant. The effect of widespread implementation of this technology would completely change the public’s trust of charities. Increased public trust leads to more donations (i.e. larger relief efforts).
2. Documentation
In 2014 the World Bank estimated that 1.5 billion people lack official identification (20% of the world population at the time) which is an absolutely astounding statistic. (5) Charities that are unable to properly identify those who need aid will likely misallocate their resources, leading to unnecessary losses of life. Blockchain technology can store basic forms of identification (i.e. name, address, DoB, age, etc.) or more advanced forms (i.e. iris scans, “selfies”, DNA, etc.). Once data is uploaded to the blockchain it can’t be removed or lost, which is especially important for refugees as they may have lost their orginal documentation when they were displaced. It should also be noted that the information is publicly accessible almost instantaneously which is a huge benefit considering the slow operational power of current government bodies.
3. Supplying Resources
According to the UNHRC there are 22.5 million refugees who rely on the support of non-governmental organisations (NGO’s) to survive, mainly in terms of supplying food, water, and medical supplies. (6) The NGO’s themselves need to define and understand where the resources are going to ensure there is no mismanagement. This new technology will allow NGO’s to easily track each package/resource on the blockchain, and also eliminate internal corruption issues as transactions can’t be faked or modified. Recently the United Nations World Food Programme supplied thousands of Syrian refugees with crpytocurrency-based vouchers through the Ethereum blockchain. (6) They saw a dramatic increase in transactions speed and the eradication of fraud/mismanagement.
What Next
Now, what is your next move as a reader who has just acquired this tantalising new information… ACT ON IT. Right now the majority of charities are still run the same way they always have, but if enough people start donating to causes through the blockchain it will become common place just like every other major tech advancement before it. Either centralised entities like Oxfam will become redundant or they will be forced to implement this technology themselves to create total transparency. In the long run I see virtually every major industry implementing this technology, but there needs to be a push to get the ball rolling.
Blockchain in Action
AidChain is a relatively new charity service run on Ethereum’s blockchain which connects users to thousands of charities worldwide. https://www.aidcoin.co/?lang=en. This is a good place to start.
Coins4Clothes is also another reputable charity that exists on the blockchain whereby you can donate with bitcoin cash or donate your old clothes and receive bitcoin cash in return. https://www.coins4clothes.com. It’s a really interesting concept that you should also definitely consider taking a look at.
By spreading the word and donating yourself we can push NGO’s worldwide to implement this technology and add charities to the ever growing list of successful blockchain use cases.
The only way to change the system is to take steps to change it yourself.
“Never doubt that a small group of thoughtful, committed, citizens can change the world. Indeed, it is the only thing that ever has.” — Margaret Mead
About the Author: Cameron Smith graduated Aberdeen University with a MA (Hons) in Economics. Cameron is working with fintricity.com on solving real world problems using token-economics.
Sources:
(4) https://www.express.co.uk/news/uk/758803/Oxfam-scandal-sex-abuse-corruption-deaths
(5)http://documents.worldbank.org/curated/en/375811469772770030/pdf/107276-WP-P156810-PUBLIC.pdf
