A group of leading charities are testing the blockchain technology to track donations, ensuring that every donation received goes directly to the cause.
The Start Network, located in the U.K., and which includes charities such as Save the Children, Oxfam and Care International, has joined forces with social enterprise startup Disberse to trial the distributed ledger with tracking humanitarian aid.
Disberse, which launched in September 2016 and is a fund-management and distribution platform, is driving for the transparency and flow of development and humanitarian aid.
According to a statement from the Start Network, it is hoped that the partnership will ‘speed up the distribution of aid funding and trace exactly how it is spent.’ Through the use of the blockchain donors can ensure that every donation the charities receive can be traced from the original donor to its end point.
The statement said:
“It should enable more money within the international aid system to reach the people it is intended to help, with the flow of funding monitored at every stage, and less lost through the process of currency exchange.”
The humanitarian network states that donations can often take weeks to arrive while up to 10 percent of funds received can be lost if banking fees, currency fluctuations and poor exchange rates are bad.
Meanwhile, according to the 80th secretary-general of the United Nations, Ban Ki-Moon, he stated in 2012 that the level of corruption the proceeding year meant that 30 percent of all development assistance didn’t reach those who required it.
“This translates into bridges, hospitals and schools that were never built, and people living without the benefit of these services. This is a failure of accountability and transparency.”
Furthermore, with the misuse of funds it is often hard to hold the aid system to account as there is no way of proving where the money is going.
Of course, with the use of the blockchain it could help cut down on this loss ensuring that funds reach those in a timely and more streamlined manner.
Through the Disberse platform a pilot test has already been successfully completed, which limited the loss of financial aid. U.K.-based charity Positive Women conducted the test which reduced transfer fees to a project in Swaziland. By tracing the flow of funds the team were able to deliver zero losses at the point of entry.
As a result of the losses saved, funds were sent to four schools in the region, which saw three additional students’ school fees being paid.
Now, over the next six months the partnership between the Start Network and Disberse will experiment with the blockchain technology to test a number of small disbursements.
In the statement, Sean Lowrie, director of the Start Network, said:
“This exciting partnership could lead to the transformation needed in the way money flows through the humanitarian system. The Start Network is testing innovative solutions to many humanitarian challenges to enable aid agencies to be more efficient and effective. This new project could catalyse a new way of working, one that is transparent, fast and which drives accountability to taxpayers and those affected by crises.”
The Blockchain and Humanitarian Aid
Even though bitcoin is a widely popular digital currency that is increasing its value, it is its distributed ledger that is being used in many use cases in various sectors.
Primarily employed within the financial services sector, the blockchain is now seen within the healthcare, energy, real estate, fashion, food, education and humanitarian arenas. It is down to its immutability and the fact that people can track and trace records that is making it the go-to technology in our changing world.
It’s because of this that Minneapolis Federal Reserve Bank President Neel Kashkari is reported as saying that the blockchain has more potential of being adopted in the future compared to bitcoin.
And one area that it is showing its potential is through the distribution of humanitarian aid.
So much so, that even the UN is turning its attention to it as a way of tracing and tracking food and money to those who need it the most.
At the end of May, the UN’s World Food Programme (WFP) completed a trial that tested the ethereum blockchain that sent funds to 10,000 Syrian refugees in Jordan. These were sent in the form of digital currency-based vouchers, which were then redeemed at participating markets within five refugee camps around the country.
The success of the trial now means that the agency is extending its program and is aiming to reach 100,000 refugees by August with the entire Jordanian population expected to be on board by the end of the year.
While these are just small steps toward the improvement of aid distribution they could potentially change how and when those in need receive help. The trials already undertaken, however, have already demonstrated the impact the blockchain can provide, which is why many more organisations are keen to explore the technology themselves too.
According to the UN there are around 20 million people on the brink of starvation. Of those the countries of Sudan, Somalia, Yemen and Nigeria are experiencing the worst cases. Of course, while the UN is responding to each humanitarian crisis to the best of the agency’s abilities, it takes time to reach those in dire need.
Through the use of the distributed ledger the UN can not only ensure that aid reaches people who require it the most, but they can rest assured that a misuse of funds is not taking place at any time throughout the donation process.
Yet while the human population is a giving race, the trust and confidence many of them have in charities and what they do is at an all-time low. Once a donation has been given to a charity it’s not always clear as to where that money goes and who actually benefits from it.
But with a technology such as the blockchain donors can now see exactly where their money is going and the impact it is producing on peoples’ lives. The distributed ledger is, essentially, a game-changer for the charity and humanitarian sector.
Featured image from Flickr via Lars Janssen.