By: Emie-Claude Lamoureux, PR Director at MLG Blockchain Consulting
The vast amount of focus that blockchains have garnered in the past couple of years has been primarily on reforming financial services. Despite the hype within the financial sector, blockchains can empower various industries, specifically those that work with large databases and collaborate internationally with multiple organizations. The nonprofit sector is one such example, and I believe that nonprofit organizations can improve and enhance the exchange of data through blockchains. Understanding how this technology is shifting and digitizing the nonprofit and humanitarian services sector is crucial to empowering your organization and creating efficient processes to further your impact.
What do we mean by blockchain technology?
While the blockchain is most commonly understood as the technology that underpins cryptocurrencies like Bitcoin, it is now a term widely used to represent an entire new suite of technologies that record the exchange of data over a decentralized ledger. Blockchains can simplify the management of trusted information and valuable assets.
On this ledger, transactions are recorded chronologically, forming an immutable chain, and can be either private or anonymous, depending on how the technology is implemented. This ledger is distributed across participants in the network— it does not exist in one place. Instead, copies exist and are simultaneously updated with every fully participating node in the ecosystem. Each “block” represents transactions of many types.
Source: Zach Church, “Blockchain, Explained.”
Removing Transaction Fees
As mentioned above, the financial services sector is being completely remapped with the introduction and advancement of blockchains. However, the same structures can be compellingly applied to the nonprofit sector. Given its ability to record and keep track of assets, blockchain technology allows nonprofits to remove third-parties, or a middle person, from the equation. By cutting out centralized banks or remittance services, not a cent will be lost to banking transaction fees, allowing humanitarian aid to reach its intended recipients in full. The World Bank says transaction fees average 7.45% annually, and blockchain technology has the potential to significantly reduce that number. By greatly reducing the complexity and length of the transaction chain, blockchain technology can help nonprofits know how much assistance is being provided and that it is reaching beneficiaries in the most efficient and effective way possible.
Reparing Reputation by Tracking Donations
The report of the High-Level Panel on Humanitarian Financing in 2016 stressed the need for more transparent humanitarian financing, allowing all actors to “follow the money” from donor to recipient. But current reporting practices do not systematically track funding this way. By using blockchain technology, nonprofit organizations and even individual donors would be able to trace their donations as they move through the transaction chain. With each transaction being recorded and verified on the immutable ledger, the blockchain can provide quality traceable data that can identify where donations are being misallocated. Not only can this significantly reduce losses to corruption— which, in 2016, accounted for thirty percent of all development aid— but it can increase trust between organizations and donors.
The use of blockchain can increase credibility for nonprofits since donors are then equipped with the knowledge that organizations are going to be held accountable for properly disbursing funds and are capable of directly funding a project. The traceable, transparent and accountable system brought forward by implementing blockchain technology can be a significant way to increase donations by solidifying trust between all parties in the giving ecosystem.
Other Use Cases for Blockchain Technology in the Nonprofit Sector
Helping displaced persons regain their digital identity
Around the world, nonprofit organizations can confront a fundamental problem during crises: how can displaced populations without government identification receive the services they need to lead a secure life? A blockchain-based identity system, like the one the World Food Programme piloted in a refugee camp in Jordan, is a use case that brings enhanced security to vulnerable populations.
Securing land titles for small-holder farmers in the Global South
According to the United Nations Food and Agriculture Organization, land records in many Sub-Saharan African countries are dated to the periods of colonization, and ownership of most holdings remains unclear. Not surprising, the process of owning and transferring land property typically involves multiple interactions and a long paper trail. Recording property titles on a distributed ledger can be a significant way to help resolve disputes by eliminating multiple titles for the same piece of land, help to reduce corruption, and empower land holders. Similar projects are being launched in Latin America as well as the former Soviet Union.
Collecting and analyzing data in risk-prone regions
Peace Tech Labs is a nonprofit that works to reduce violent conflict using technology, media, and data to accelerate and scale peacebuilding efforts. They are using blockchain technology to help provide early warnings of social and economic disruption due to volatility in fragile and emerging economies. Their offshoot, Ground Truth Global, is adopting the technology to collect data and provide early warnings of conflict or instability through mobile networks.
The First Steps to Intergrating Blockchain Technology
The first step to introducing your nonprofit to blockchain technology is education. Start exploring how a distributed ledger system can be most useful for your mission and understand the strategic value behind it. Remember that blockchain technology does not need to uproot your system— rather, it is designed to supplement it by cutting costs and increasing efficiencies. Focus on addressing true pain points your nonprofit currently faces, whether it be static registry, dynamic registries, and more.
Managing and using local, regional and global databases can be very challenging, even for the most advanced nonprofits. If your nonprofit is paper-heavy or you have inefficiencies relating to information storage and sharing, consider using a blockchain company with a suite of structured and easily accessible record keeping for organizations and individuals. This creates an ecosystem for secure transfer, authorization, integrity and authenticity of your data.
Finally, to explore how blockchain technology can help make your impact go further, consider opening your first digital wallet— a public address where you can receive funds in cryptocurrency. A crypto wallet can enhance the security, traceability and transparency of your donations, and this crypto wallet used by the Sinai Health Foundation is a great example.
About the author:
Emie-Claude Lamoureux (@eclamoureux) has a degree in Public Relations from Mount Saint Vincent University. She has worked with Festivals Kelowna, Agnico-Eagle Mines Ltd., Cirque du Soleil, Futurpreneur Canada and Co-founded L'Autre Couleur, a digital marketing agency that caters to sustainable and social impact companies. She now works as the PR Director at MLG Blockchain Consulting and is the Editor-in-Chief of Bitcoin Canada.