Read views of Infosys experts on how blockchain technology offers an unprecedented opportunity to transform the transactions of the future, how its adoption will create newer value propositions and what is required for its integration into larger IT systems.

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January 3, 2018

BlockCharity

 

In 2012, the United Nations secretary general Ban Ki-moon said 30% of all UN development assistance was lost to corruption. The inefficiencies are brought into focus by issues such as six figure salaries of CEO's, processing inefficiencies, partnerships with controversial organizations and trademark bullying.

In 2015, US charities brought in over $2 trillion in revenue, out of which $373 billion came from charitable contributions. The industry though has problems that have persisted for years, and that prevents many from contributing.

Challenges to charities

The 2016 poll by the Charity Commission for England and Wales found trust in charities at an all-time low having fallen from 67% in 2005 to 57% in 2016.

Many charities are bogged down by overheads resulting in 30% of their revenue being spent on staff compensation and office spaces. Charitable organizations are faced with the harsh reality of losing contributors and reducing contributions as they struggle to restore the faith of its patrons.

Middlemen and growing regulations in international remittances result in delays affecting the availability of resources is crucial especially in regions affected by natural calamities. The use of middlemen creates complex supply chains reducing transparency and increasing wastage of resources while reducing the control charities have over their resources.

The major challenge that charities face is the transparency expectation of donors. Donors have no control or information over the use of their contributions leading to the belief that there has been no impact of their contribution leading to loss of trust.

Blockchain

A blockchain platform connecting charities, donors and locals creates a transparent platform for charities to efficiently manage resources by replicating data across the network and providing access to all the stakeholders. The transparency eliminates fraud and creates trust between the donors and the charities.

Benefits of Blockchain

Blockchain enables donors, regulatory authorities and the charities to track and trace funds from the source to the final recipient providing a verifiable audit trail for the stakeholders. Blockchain also enables the direct transfer of funds to the recipient removing middlemen and eliminating corruption in the system. Blockchain based fund transfer also help the charity cut costs associated with fund transfers further reducing the overheads for the charity.

Blockchain also enables the creation of trusts using smart contracts. The funds for an initiative can be held by the smart contract until predefined targets or conditions are met before releasing the funds to the charity. It can also be programmed to refund the amount if the necessary conditions are not met.

Blockchain Charity Platforms

There are several blockchain platforms which are already being used by multiple organizations to increase efficiency and create transparency in the system.

Blockchain platform, Alice freezes funds using smart contracts until donation goals are achieved or the money is refunded to the donors. Hypergive allows donors to contribute funds to hungry and homeless people through secure digital wallets and enables donors to track funds usage for food at pre-approved retailers.

Aid:Tech eliminates middlemen, transaction fees and fraud by allowing NGOs to disperse digital cash vouchers directly to recipients.

Blockchain Implementations

  • World Food Program Implementation: WFP is using blockchain to disburse funds to 35,000 refugees in Jordan by using iris recognition to identify individuals and disburse food allotments while recording the disbursements on the blockchain.
  • Disberse Project: The charity uses blockchain to help women in Swaziland by transferring funds on the blockchain. This enables them to save 2.5% on fees charged for the transactions which is diverted for the education of 3 more girls a year.
  • UK government: Blockchain platform to track welfare recipients spending to cut down on fraud. The trial began in June with 24 users in association with GovCoin Systems, Barclays, RWE npower and the University College London.

Conclusion

Charities stand at the inflection point of their existence as rising income disparities, natural disasters, and global warming increase the fund requirements while corruption and opacity reduce trust in charitable institutions.

Blockchain creates trust in charities by automating release of funds and tracking funds to the intended recipient. The transparency enables charities to engage with donors and create an impact.

 

Source:

http://www.youkskids.org/the-importance-of-giving-to-charity/

https://fundraising.co.uk/2017/05/04/blockchain-startup-offers-transparency-tool-to-track-donations-to-charity/

https://dappdaily.com/the-charitable-powers-of-ethereum-13d50e4561b1

https://blog.humaniq.co/how-blockchain-will-make-charities-better-368cf6125ce7

https://www.coindesk.com/alibaba-expand-blockchain-charity-project/

http://www.huffingtonpost.com/ameer-rosic-/goodbye-corrupt-charities_b_13207806.html

https://www.coindesk.com/alibaba-expand-blockchain-charity-project/

https://insight.wfp.org/what-is-blockchain-and-how-is-it-connected-to-fighting-hunger-7f1b42da9fe

https://www.fastcompany.com/40423714/how-blockchains-could-revolutionize-international-aid

https://www.fastcompany.com/40457354/how-blockchain-could-transform-the-way-international-aid-is-distributed

https://eandt.theiet.org/content/articles/2017/07/leading-charities-to-harness-blockchain-to-prevent-fraud/

http://www.techrepublic.com/article/uk-government-using-blockchain-to-track-welfare-spending/

https://www.cryptocoinsnews.com/grace-introduces-us-the-new-era-of-charity-fundraising/

https://www.reuters.com/article/us-aid-blockchain/leading-charities-look-to-blockchain-to-reduce-losses-and-track-financial-aid-idUSKBN19X0A1


How to choose a 'suitable' use case for Blockchain

Most of us are getting intrigued by the buzz around Blockchain (especially the market value of Bitcoin contributing to the added curiosity). We relate it to cryptocurreny (Bitcoin, Ether, Ripple etc.), associated public network that operates on the cryptographic protocols and the concept of mining & miners.

We also have been hearing about the disruptive capabilities of the technology and how it has the potential to reshape various business models in all industry verticals. Most popular examples that we hear are in the financial services and supply chain space around transparency and trust!

From what I had read and discussed with some colleagues, I neither fully understood nor was fully convinced of the potential this technology presented for enterprises. So I decided to do a deep dive, distancing it away from crypto currencies and one of its most successfully implemented use case - Bitcoin.

So here is what I understood of a business blockchain network. Blockchain network provides a secured shared replicated verifiable immutable data ledger. Too many adjectives - lets break it down.

Also understood that every organization wants to experiment with this technology, avail the disruptive benefits and is looking for suitable use cases to prove the value of this technology.
So what do we look for in a business problem / use case which could be solved appropriately by Blockchain? Here is what I understood:

1. A business use case for data exchange that has trust issues. From an enterprise standpoint, this is typically where the source of data is an external entity / enterprise. To establish the trust there are a bunch of business verification processes, often manual, are established. Verification steps result in additional operational cost and time. Time of verification delays the subsequent business processes that are dependent on this data.
2. Data storage and view of compliance and risk data which get audited. This could be an internal process of an enterprise typically dealing with financial implication to its consumers and stakeholders. Blockchain would provide a real time view of the data to auditors & regulators who could join the network as a participant to trace and verify the transactions and data.
3. Financial and non-financial asset transactions: Traceability and finality of the transactions executed under defined business rules - referred to as smart contract in the blockchain context. There are multiple participants involved in the value chain and the blockchain network provides a tamperproof ledger that helps to trace and track the transaction to the origination of the asset. The transactions are validated by the network. 

A use case falling in one of the above category would make it an appropriate use case to choose for an enterprise but one must also evaluate the use case against the below parameters to make it desirable, lucrative and adoptable.


Gartner has identified blockchain as one of the top 10 technology trends that will dominate 2018. As we enter 2018, most enterprises desire to experiment with this technology, identifying a 'suitable' use case and advancing to enterprise collaboration is the essential first step!

References:
https://www.gartner.com/smarterwithgartner/gartner-top-10-strategic-technology-trends-for-2018
https://www.hyperledger.org/community
http://blockchain.mit.edu/
https://blog.ethereum.org/2015/08/07/on-public-and-private-blockchains/

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