The blockchain has the potential to make a huge impact on charitable giving and the work charities do. With research suggesting that public trust and confidence in charities is at an all-time low, should charities be turning to blockchain applications to boost transparency and accountability?
Researchers at the Universities of Edinburgh, Northumbria, and Lancaster have launched a collaborative research project looking into how blockchain technology can help Oxfam. Working with Zero Waste Scotland, Volunteer Scotland and Whale Arts, the Ox-Chain project is exploring how the technology might deliver different ways of engaging donors and support those receiving the donations, in addition to boosting transparency. It has received funding from the Engineering and Physical Sciences Research Council and will run until late 2019.
Professor Aggelos Kiayias, Chair in Cyber Security and Privacy at the University of Edinburgh, explains that it was he and Professor Chris Speed, Chair of Design Informatics at the University of Edinburgh, who came up with the idea for the project two years ago.
“At the time, there were a lot of discussions about charitable organisations and how they didn’t have cost-effective internet processes in place,” Prof Kiayias told Binary District Journal. “Specifically looking at Oxfam, we questioned whether it was possible to use blockchain systems to somehow improve that.”
Keeping in regular contact with various employees of the charity and working closely with Oxfam Australia, Prof Speed said they hope to trial a blockchain application that allows customers and donors to make what they call “conditional donations”, using smart contracts.
“These are simple monetary donations that have conditions to them. For example, I give Oxfam £10. If the US Geological Survey records an earthquake anywhere on the planet within the next seven days, they keep the £10. If no earthquake is recorded, then Oxfam will return the money to me. These simple ‘If This, Then That’ contracts allow donors more control over what their donation is used for.”
The general objective, according to Kiayias, is to give donors a different experience when using a blockchain system, enabling them to have a complete history of the events that took place, the donations that were collected and when the recipients received them.
According to 2018 research commissioned by think tank Charity Futures, Nothing To Lose (But Your Chains) , the charity sector is “behind the curve” on blockchain and is missing opportunities. The report states: “Either charities will be left behind while the future happens around them, or their leaders can step forward and shape it here and now.”
“The charity sector is ‘behind the curve’ on blockchain and is missing opportunities… ‘Either charities will be left behind while the future happens around them, or their leaders can step forward and shape it here and now’”
It continues: “As well as working with and pushing the boundaries of this technology, it is absolutely necessary for groups of technology-savvy charity leaders to come together and work with technologists to discuss, debate and shape its ethos.”
The blockchain could bring “seismic changes” to the charity sector similar to how the digital revolution did, it adds.
The Ox-Chain project
Of course, while it’s easy to assume that the need for charity is negated, that’s not the case with Ox-Chain. The team are not working on something that intends to remove the charity, as it’s not possible to run the system without the charitable organisation involved.
Rather, Ox-Chain acts as a “complementary application to the existing mechanism”, says Aydin Abadi, a postdoctoral researcher working on the project at the University of Edinburgh, speaking to Binary District Journal.
“If they can use the future solution, the technology will bring security, transparency and trust with it, which are lacking in charities,” he added. “In the traditional model, you just give your money and close your eyes and trust them.”
This model, Abadi says, was good initially as there was no other option. However, it’s time to think about that and see what else can be done to improve services. Adding to this, Kiayias stated that the intention of the blockchain is to get some of the workflows from the charity projected onto the blockchain, so the processes it runs are more relatable and directly auditable by the end users.
For now, however, blockchain systems remain a novel approach for global charities, meaning it will take time before they emerge into specific applications, as noted by Speed. Yet, the fact they are looking into ways of understanding how best the technology can be used and when it’s not needed is an important step forward. In turn, working with research groups such as the team involved with the Ox-Chain project helps to reduce unforeseen risks to charities.
“The disruptive nature of blockchains has shifted people’s vocabulary of currency from money to data, and this is extremely helpful in aiding them to design new business models that are fit for the 21st century,” explained Speed. “Our conditional-giving app is one example of how the blockchain has allowed us to rethink how donations can be made in a digital economy. This type of design research is vitally important to open up new ways of doing business and doing charity.”
“Our conditional-giving app is one example of how the blockchain has allowed us to rethink how donations can be made in a digital economy. This type of design research is vitally important to open up new ways of doing business and doing charity”
A Look to the Future
Giving to charities is something millions of us do worldwide. Whether it’s donating to a local animal shelter, giving money to people who are raising funds as part of a challenge, or giving to a well-known charitable organisation, donating to a cause can be an uplifting experience.
At the same time, though, recent controversies have dented that faith so many of us had put in charities. As a result, the level of public trust in charities has dropped. While blockchain technology is still in its infancy, its future impact on how we donate could have profound implications. Indeed, it could be the way forward.
“The use of the blockchain by charities is a natural progression,” said Kiayias. “Something that is really inspiring is the global reach that a distributed ledger may have, especially on the side of the recipient.”
“Something that is really inspiring is the global reach that distributed ledgers may have, especially on the side of the recipient. The way they operate is particularly suited for this type of application”
According to Kiayias, the use of the blockchain by charities is a natural progression. He believes the way “distributed ledgers operate is particularly suited for this type of application”.
“Something that is really inspiring is the global reach that a distributed ledger may have, especially on the side of the recipient,” he added.
Not only that, but in developing countries, where infrastructure is not as developed as it might be elsewhere, the blockchain can be deployed to areas where traditional types of charitable infrastructure are lacking or where it’s difficult to know for sure where donations are going.
“The ability to do that will motivate people on the sending side to be much more engaged, particularly if they see that the level of trust and connection between the two is supported by a system such as the blockchain,” said Kiayias.
Blockchain technology is not just intended to facilitate the transfer of currency. Tokenisation combined with the use of smart contracts means that just about anything can be logged as an asset on the blockchain and can be traded accordingly. For charities, this means there is growing potential for more varied kinds of donations.
Take intellectual property as an example. If an artist made a record with charity in mind, they could tokenise their intellectual property and have it enforced automatically by smart contracts. When tokenised, fractions of that intellectual property could be traded or donated, thus giving a charity the right to a portion of the royalties of that particular track. With a fully operational blockchain, all of this would happen seamlessly, royalties would be paid to both artist and charity and the latter has a more diverse income portfolio.
Illustrations by Kseniya Forbender
To contact the editor responsible for this story:
Margarita Khartanovich at [email protected]
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