Why charities should embrace blockchain – report

Why charities should embrace blockchain – report

The charity sector will be left behind while the future happens around it unless action is taken to embrace blockchain technology, claims a new report from industry thinktank, Charity Futures.

The report, titled ‘Nothing to Lose (But Your Chains)’, serves as both a call to action and an investigation into the potential applications of blockchain technology for charities and social enterprises.

Charity Futures commissioned Asheem Singh, former director of policy at Acevo, to write the document. His findings start with the premise that blockchain could have a revolutionary influence on the charity sector, one as impactful as the internet itself. However, he stresses that, to date, the sector has been too tentative in exploring that potential.

“There are currently too few examples of blockchain use in the charity sector. The sector urgently needs to engage with the technology, given that it is revolutionising sectors – like banking – that charities already rely on,” he writes.

Despite the sense of urgency, Singh is quick to point out that blockchain has promise, but is not a silver bullet that will rectify charities’ longstanding problems. Neither is it without its pitfalls, he says, echoing some other recent reports that have focused on the technology’s slowness and complexity – issues that are being addressed with new spins on the concept.

Technical issues aside, arguably the key takeaway from the report is that leaders in the charity sector need to come together and work with technologists to ensure they have a voice in the conversation, and that blockchain applications are developed for the sector in a way that charities are at the centre of.

“On its current trajectory, the future of charitable action is developing without the input of charities. Technologists are leading the conversation, yet they do not have the in-depth understanding of the problems facing the charity sector or those they help. Some even see charities as the problem to be solved,” he writes.

Why should the charity sector explore blockchain?

The report suggests that charities should explore blockchain for the same reasons that other sectors are doing so. It’s about tackling inefficiency and a lack of transparency when transferring value. Some decentralised ledger technologies offer a way to mitigate these problems.

With charities, the transparency of financial transactions is particularly important. Singh uses international aid as a prime example, which he says “is ripe for blockchain inspired innovation”.

“Foreign aid distribution by the UK government, currently stands at 0.7 percent of GDP, which in 2016 was £12.7 billion. Yet bureaucracy and corruption are in many cases endemic in certain recipient countries.”

He argues that blockchain can help to resolve these problems, through the creation of transparent, end-to-end supply chains for each individual project. That supply chain can bring together all of the stakeholders involved with moving money, projects, or services around the world, including government departments, fundraisers, and NGOs – not to mention the ultimate beneficiaries of aid.

charity futures report into blockchain potential

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In an industry reliant on accountability and public trust, an immutable record is clearly no bad thing. It could even provide a more tangible connection between donor and recipient.

The report cites a few examples of successful blockchain applications in the charity sector to date, including a pilot run on the Etherum blockchain by the World Food Program in Pakistan, and a scheme from startup Disberse, distributing and tracking funds from the UK to Swaziland for a girls’ education project.

Ultimately, Singh argues, it’s up to the charity sector to build on these foundations, grab a seat at the table, and drive innovations forward using blockchain that are tailored to their needs.

“Charities need to come together, articulate our collective position on this technology in a convincing and dynamic way before it is too late,” he writes. “This must be done using a mechanism that is fit for purpose, with the benefit of our beneficiaries paramount. That is the only way we will ensure that this technology is used for truly humanitarian ends.”