a BitcoinNews.com series
Part 3: Closing Charities’ Accountability Gap Through Blockchain Technology
Welcome to the third installment of the Bitcoin News Humanitarian Blockchain Series. Charity begins at home, but the growing question being asked over the past few years is, where does it actually go? We try to highlight some of the current solutions being presented by blockchain technology to this essential industry
The track record of the charity industry has been, regrettably, far from exemplary, and in some instances, at worst, disgraceful. Well-publicized scandals over the past few years have seen a decline in public donations to charitable organizations, with some of those intuitions being brought into disrepute by misappropriation of public funds or inappropriate behavior of field staff.
Even now, a US investigation is looking into fraudulent identity activity in Myanmar where refugees fingerprints from amongst the Chin minority are causing confusion as fraudsters purchase refugees’ identities for their own ends. Also, in Bangladesh many Rohingya refugees in safe-harbor there have been registered multiple times and records of family groups have been almost non-existent,
Using Blockchain to clean up the industry is possibly the only way that many charitable institutions can survive, and regain public trust by demonstrating a greater level of transparency and accountability.
The main barriers to success in the humanitarian field have been lowering the impact of administration, transportation and documentation cost on donated funds, and making every aspect of donations totally transparent from source to final delivery of the benefit to the recipient.
Charities have been slow to take up the obvious benefits that can be offered to the industry. In fact, it is no exaggeration to suggest that there could be no more obvious and beneficial use case for DLT than its solution to the accountability problems that charities are currently suffering.
Luckily some organizations are on board, but far too few. The World Food Programme (WFP) has been quick to realise the potential of blockchain solutions. As Bitcoin News reported in the first of its humanitarian series, the uses in Jordan’s refugee camps has been essential, in not only feeding and providing work for Syrian refugees but also creating a renewed feeling of self-worth, particularly amongst female escapees from the war in Syria.
Former UN Secretary General Ban Ki-Moon, as far back as 2011, was trying to deal with how to get donated funds from a source. At the time, a massive $40 billion was failing to reach its intended recipients, the money was diverted to corrupt officials and middlemen. Seven years on, the blockchain is now being used by the WFP to tackle this problem. Gustav Stromfelt, one of the project managers working on the WFP’s program commented:
“We have this rapid ability to understand where our money is throughout the process…It improves transparency, accountability, and communication across the board.”
This UN-supported programme in Jordan uses dollars at this stage, not cryptocurrency, but through DLT every cent is accounted for right up to the purchase and delivery of physical goods.
Charities accepting cryptocurrencies, and there have been many, were badly hit by the drop in the value of Bitcoin at the end of 2017 and much of the funds were seriously diminished before funds could be dispersed. Silicon Valley Community Foundation revealed in its 2017 audit 45% of its investment assets were unable to be turned into cash in 2018 due to government restrictions.
Many of these problems are now being overcome through online mining schemes which benefit charities and straight crypto donations fund by such organisations as Children in Need and others.
Binance, the world’s largest cryptocurrency exchange by 24-hour trading volume, has recently tried to address some of these issues with the announcement of a Blockchain Charity Foundation which aims to plug the transparency gap for multiple organisations with its planned donation tracking system: Binance CEO Changpeng Zhao explains:
“Lack of transparency has been a problem for charities today. Some estimate up to 80% of donations does not reach the intended beneficiaries. With the ability to track every single transaction, blockchain technology seems tailor-made to solve this problem.”
Although the Blockchain Charity Foundation is still at concept stage, Binance suggest that the system will allow donors to give to one or as many chosen charities as they want whilst retaining anonymity if they wish: The company commented:
“Each BCF program will have its unique receiving address(es). BCF may choose to donate directly to the ultimate beneficiaries or work with other charity partners who then distributes the funds to the ultimate beneficiaries. Either way, the funds will be tracked in a transparent manner.”
Solutions to past problems are slowly being presented through new technology, but clearly, more urgency is required to reshape the face of the charity industry and restore public face so that charity can transit from giver to its needy target and arrive at its destination as the donor intended.
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