Before Satoshi Nakamoto published his white paper and launched Bitcoin in 2009 the concept and potential of blockchain was widely unknown outside of minute academic and technological circles.
A little more than ten years ago blockchain was an unborn phenomenon waiting to be unleashed in commercial markets. Fast forward ten years and the exchange of digital information without use of external partners or middlemen is not only a revolution for currency exchange and economic transactions it’s also a godsend for the nonprofit sector.
The easily verified and accessible nature of blockchain makes for an ideal financial vehicle for the nonprofit and social sectors to conduct and monitor business development. Blockchain technology solves complex issues that the nonprofit sector encounters in its daily operations.
Non-government organisations, particularly in the third world and developing nations are known to be subject to corruption at various levels top to bottom.
Blockchain, by the nature of its technology, encourages exchange transparency. A donation can be tracked and traced by the buddy philanthropist from nose to tail. NGOs operating in rouge government states can avoid traditional banking systems that have been known to levy large transaction fees, block or hold incoming funds.
Blockchain allows funds to flow freely from peer to peer without the financial filtration factor normally associated with NGOs and traditional banking systems.
Solving problems by digitalising emerging economies
The 2021 military coup in Myanmar saw banks closing following the declaration of a national state of emergency and the detention of the de facto civilian leader Aung San Suu Kyi who had won a landslide election victory. Hundreds of civilians, including women and children, were killed in the resulting demonstrations. Lines of people were photographed in queues desperately trying to get their hands on their money.
Of course the average person in Myanmar doesn’t hold cryptocurrency, but this is a perfect example of a situation where a source of capital uncontrolled by political events and government forces could have been essential for individuals in times of chaos.
For many westerners living in stable economies cryptocurrencies are a source of speculative investment. For individuals living in politically turbulent environments blockchain technology could well be a matter of life and death.
Globally, about 1.7 billion adults remain unbanked—without an account at a financial institution or through a mobile money provider. In 2014 that number was 2 billion. And nearly half of all unbanked adults live in just seven
Organisations such as The Stellar Foundation are helping to solve this problem by bringing banking solutions and cross-border payments to emerging economies. A good example being a recent announcement they made of a $3 million USD Enterprise Fund investment in Tribal Credit, a US-based fintech platform providing financial services for digital-first SMEs in emerging markets.
“Our entire mission is about empowering startups and SMEs in emerging markets with access to financial services.” - Amr Shady, Tribal Credit CEO
Despite the reluctance of some governments around the world to accept the arrival of cryptocurrency and blockchain technology it is becoming clear that to the average person this new form of trading is a friend rather a foe, and it will stay rather than go.
Nations will begin to embrace the new technology once its worth is demonstrated by partners in the nonprofit sectors during times of unrest and natural disaster.
A smarter response to disaster relief
2015’s 7.8 magnitude earthquake in Nepal damaged or destroyed the entire infrastructure of the capital city and surrounding provinces. Schools and classrooms were hit especially hard with the quake displacing 1.5 million school children nationwide. Traditional banking institutions in the country’s capital Kathmandu were disrupted and/or overwhelmed by the event.
“We knew we had to build the permanent structures quickly in order to retain the students as well as get back to the pre-earthquake enrolment numbers." - Headmaster of Sanjiwani Secondary School in Dhulikhel
Students, especially younger female students are vulnerable to exploitation and human trafficking during such disasters. The combination of economic weakness and the proximity to the Indian border has put Nepali women at special risk of sex trafficking during relatively stable times over the years. After the earthquake hit, and with little aid or resources finding their way to the people, this risk multiplied dramatically each passing hour.
NGOs operating with blockchain technology are better prepared to respond rapidly during those first 48 hours following a natural disaster. The donations arrive instantly, and with the correct platforms in place, reach the needy. While a few nonprofits may have a reserve of funding for such disasters most operate on a hand to mouth basis owing to the overwhelming complexity and mass of the problems they face.
As we can see NGOs or non-profit organisations operating outside of state or government control running social and humanitarian programs face a wide range of tasks from creating awareness of their programs, advertising, educating people on the ground about their purpose, identifying the neediest and delivering their programs.
With over 10 million NGOs operating worldwide and billions of dollars being regularly transferred, blockchain technology is bound to be a strategic solution to both the delivery of aid and the accountancy transparency of nonprofit organisations.
The case for blockchain to stamp out corruption
Corruption and money-laundering occurs in all corners of society and while the advent of blockchain technology will reveal corrupt kinks in what is a wholly legitimate enterprise, if the whole corporation is corrupt from top to bottom then market forces should intervene and push the rouge players out of the marketplace.
Bogus NGOs raising funds for bogus causes will always exist while ethical players choosing to subscribe to more transparent forms of accountancy should naturally, in time, receive the lion’s share of the nonprofit market.
In the mean-time charity scamming is big business. In 2019, Americans donated almost $450 billion to various charities both domestic and internationally. Charity scammers are active in all fields of aid relief from helping veterans, to disaster relief, to more recently collecting in response to the coronavirus pandemic.
Some charity scammers operate outside the law while others are registered and licensed nonprofits operating with shady intent and dubious distribution networks. These organisations are set—up like the real thing reaching out to the public by direct mail, email, social media, telemarketing or even door to door marketing.
With beautifully designed websites illustrated with images of poverty and disaster the kind-hearted are often hooked by bogus campaigns. Cybersecurity company DomainTools recently identified over 100,000 companies with COVID-19 related domains as probably fraudulent. ACFE reports that organisations suffer average losses of $150,000 per investigated case due to occupational fraud and corruption.
Corruption in the nonprofit sector will always exist but with blockchain technology no corruption of data by mismanagement or miscalculation of funds is permitted to occur. Blockchain does not allow data to be modified, altered or tampered with. Once this is widely understood a level of trust among donors should naturally evolve. Money donated will be processed and delivered to the correct beneficiary for the right cause.
Real world use cases - incentivising regenerative farming in Cambodia
A recent example of this technology in action within the nonprofit sector is SmartAgro, a setup that works with Cambodian farmers working in remote regions of the country. Donations are sent direct to the beneficiary using Stellar blockchain.
The farmers access the money using cyber wallets and use funds to activate regenerative farming techniques such as crop covering. Many different species of plant and foliage perform different ecological functions while protecting the topsoil from erosion, increasing fertility and suppressing weed growth on these remote Cambodian farms.
Integrating no-till agriculture and cover crops into cropping systems is one step towards a transition to an environmentally friendly production system that can provide solutions rather than create more problems
The founder of SmartAgro, Marc Eberle, is working to introduce new farming methods that benefit the planet whilst also yielding better results.
At SmartAgro farmers are supported and coached in farm field schools where water and soil management skills are taught alongside the crop covering. There are two opportunities each year to plant cover crops enabling biomass to filter back into the soil ensuring sustainable and regenerative growth rather than current methods such as slash and burn. This process is environmentally friendly, helping both the farmers, the land, and the surrounding communities.
While the challenges facing the nonprofit sectors are vast and wide the solutions are reachable if we are to embrace and implement technologies such as blockchain and socially aware programs that combine traditional methods of support harnessed by new methods of money transfer.
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