Until 2011 conscription was mandatory for German men who had the option to refuse military service and instead do a civil service either home or abroad. Paul Drey is a German male who decided to go abroad as part of a development aid program when he was 19. He hoped to have the opportunity to contribute meaningfully to the community and was sent to Senegal. Reality on the field was different, he spent over a year in Senegal for his civil service assignment working for a German nongovernmental organization which he picked from a list on the website provided by the ministry.
The time he spent with the organization made him continuously grow disillusioned, because there wasn’t a single developmental project being carried out as was described to the public back home. He lived in a dilapidating community with neglected infrastructure and the donations that were made to the community from Germany, where either looted or rotted away in their containers. He was finally sent to a hospital in Thiès, where he served as a volunteer and it also involved many duties that he wasn’t properly trained for or even equipped to carry out. This goes to show how philanthropy without accountability, transparency and traceability can be mismanaged.
In our previous article Blockchain for Good: Building Trust and Transparency in Social Change we gave a very simplified meaning to what blockchain is and how it works. It is essentially a decentralized system in which contracts can be implemented ensuring accountability, traceability and transparency. With all its great features, blockchain and AI can and are changing the way philanthropy is carried out. According to dataprot, There was a 70% increase in charity scams in 2020, The United Kingdom (U.K.) National Fraud received 196 reports about fake fundraising for Ukraine crisis victims, In 2020, 200,000 new websites were registered for fake COVID-19 crisis fundraising.
With blockchain for social good and AI we have a new found possibility, this possibility is that of eliminating the middleman when it comes to the distribution of aid and letting targeted communities carryout impact projects by themselves. With this new way of philanthropy and the distribution of aid, we can ensure a reduction in the number of scams and accelerate sustainability since donors and the recipients of donations will all have access to a copy of the public ledger which permits them to hold stakeholders accountable.
How blockchain and AI can better philanthropy
1. Elimination of Intermediaries
Traditional philanthropic activities often involve multiple intermediaries such as banks, charities, and government agencies, which can add layers of bureaucracy and overhead costs. Blockchain for good and AI allows for direct transactions between donors and recipients, cutting out the middlemen and ensuring that a larger portion of the funds reaches the intended beneficiaries.
2. Transparency and Accountability
Blockchain's distributed ledger technology provides an immutable and transparent record of all transactions. Every transaction is recorded on the blockchain, allowing donors to track the flow of funds in real-time and ensuring transparency in how donations are used. This transparency fosters trust between donors and recipients, as well as accountability in the management of funds which makes philanthropy to be more sustainable.
3. Reduced Costs
By eliminating intermediaries and streamlining the donation process, blockchain reduces overhead costs associated with traditional philanthropic activities. Without the need for banks or other financial institutions to facilitate transactions, donors can contribute directly to communities in need, maximizing the impact of their contributions.
4. Faster Aid Delivery
Blockchain for social good enables near-instantaneous transfer of funds, regardless of geographical boundaries or banking hours. This means that aid can be delivered quickly to communities affected by emergencies or crises, without delays caused by traditional banking processes. In times of disaster, for example, blockchain-based donations can provide immediate relief to those in need, potentially saving lives.
5. Inclusive Access
Blockchain technology contribute to sustainability in that it allows anyone with an internet connection to participate in philanthropic activities, regardless of their location or financial status. This inclusivity empowers communities to directly receive support from a global network of donors, bypassing traditional barriers to access aid.
6. Decentralized Autonomous Organizations (DAOs)
DAOs are blockchain-based entities that operate without centralized control, allowing members to collectively manage funds and make decisions through smart contracts. DAOs enable communities to pool resources and allocate funds based on democratic principles, ensuring that the needs and priorities of the community are prioritized in social impact projects.
7. Tokenization of Asset
Blockchain enables the tokenization of assets, allowing individuals to represent ownership of physical or digital assets as tokens on the blockchain. This tokenization facilitates fractional ownership and transferability of assets, enabling communities to leverage their assets for social impact projects, such as crowdfunding projects or community development programs.
Case study: UnBlocked Cash Project
In recent years, the global population needing humanitarian aid has grown due to climate-induced disasters, compounded by the socio-economic impacts of the COVID-19 pandemic. Oxfam's UnBlocked Cash project (UBC) addresses this challenge by leveraging blockchain technology to directly transfer funds to communities in need, cutting costs, reducing delivery times, enhancing transparency, and accelerating sustainability. The initiative provides e-voucher cards for beneficiaries to purchase goods, utilizes smartphones for vendors to receive payments, and employs a centralized online platform for fund distribution and monitoring.
With support from Oxfam, Australian fintech Sempo, and ConsenSys, the project has scaled across the Pacific, assisting over 35,000 beneficiaries in Vanuatu alone. It has attracted interest globally, with pilots in Venezuela and upcoming deployment in the Solomon Islands. The project promotes transparency by utilizing digital currencies and empowers communities by involving local vendors in economic recovery efforts.
Additionally, it prioritizes gender equality by targeting women as primary recipients of aid, fostering economic empowerment. Beyond humanitarian assistance, UBC stimulates local economies by enabling vendors, including those in the informal sector, to participate in digital transactions. Recognized for its social impact, the project has received prestigious awards and support for further scaling beyond the Pacific region.
Overall, blockchain for good and AI empower communities to directly receive funds for social impact projects, bypassing intermediaries, reducing costs, and increasing the speed of aid delivery. By leveraging blockchain's transparency, efficiency, and inclusivity, philanthropic efforts can be more sustainable and have a more significant and immediate impact on the lives of those in need.
Resources:
- https://www.nytimes.com/2023/12/20/opinion/ngo-germany-senegal.html
- https://www.oxfam.org/en/unblocked-cash-project-using-blockchain-technology-revolutionize-humanitarian-aid
- https://www.spydra.app/blog/unicef-day-blockchain-and-tokenization-redefining-humanitarian-aid
- https://www.antiersolutions.com/crypto-token-development-for-disaster-relief-charitable-contributions-empower-humanity/
- https://jhumanitarianaction.springeropen.com/articles/10.1186/s41018-018-0044-5