Blockchain in Charity: Expenditure Transparency, High Speed Help, and Everything Is Lawful

Charity is an industry in which huge sums of money are involved. If in 2013 the total budget

About 60 of the largest Russian and international companies operating in the Russian Federation reached 10 billion rubles, by 2016 this figure had quadrupled, reaching 43.9 billion rubles.

Instead of the poor, for your needs

Considered normal if the charitythe organization, having received a donation, uses about 35% of the total amount of the contribution for its own needs - rental of premises, purchase of equipment, salaries to employees, costs of operating the infrastructure, and 65% gives to needy. But this does not always happen. One of the illustrative cases - the activities of the Red Cross in Haiti. The organization collected about $ 500 million to build houses for families whose homes were destroyed during the 2010 earthquake. According to the organization, the funds were disbursed, they helped provide shelter for 130 thousand people. In reality, only six houses were built.

Destroyed houses of Haitians. If the funds provided by charitable organizations and individuals were used efficiently, many thousands of dwellings could be restored.

It turns out that the construction of one housethe organization spent about $ 83 million, and this is in one of the poorest countries in the world. Since 2010, the Red Cross has conducted several more fund-raising campaigns for Haitians. But, unfortunately, about how effective the use of the collected money turned out to be, is not known anything.

The Red Cross itself does not blame anyone for anything -Most likely, the contributions were used not only for the construction of new houses, but also for the repair of old ones, for the purchase of food to the victims and providing them with medical care. But if the organization could show what the collected funds had spent, then there would be less questions about the effectiveness of its work.

And problems happen not only with the Red Cross. The leaders of charitable organizations receive huge bonuses for the year, which contradicts the very idea of charity. In Russia, some charitable organizations also have questions about the rationality of spending money. For example, the Nezhnaya Pomoshch fund, which, judging by its own reporting, spends only about 3-5% of the incoming funds on administrative expenses, has a website called “Such cases”. It is an information portal of the foundation, the purpose of which existence is positioned as “drawing public attention to social issues”.

Expenditures of the editorial "Such cases" and the fund "Help needed

The editorial staff consumes significantfunds - several million rubles a month. For example, in August 2018, the editorial office spent 6.9 million rubles. In September - the same amount, for October, November and December there is no report yet. In less than a year, the editors received almost 57 million rubles. It turns out that in support of the work of the information portal, “Need Help” takes tens of millions of rubles a year. Perhaps these funds would not be superfluous in helping those in need.

Today's problems

Most often, donors have the following problems:

The lack of visible results of their assistance and information, to whom and in what amount were the money or resources provided. Funds contributed by benefactorsdissolve into the total volume, which causes mistrust, since there is no transparency as such. In most cases, participants in charity projects do not know and cannot know what their money went to.

Significant time delays. A lot of time passes from the moment the assistance is provided until it is provided to the needy. In some cases, the time period is several years.

A large number of intruders. This applies to both individuals who collectfunds for helping a cancer patient to a child on their personal cards, as well as entire organizations that ask to help people, animals, nature, but in fact the funds collected are used for their own needs.

Legal difficulties. Charities in some casescan not take help from people and companies from other countries, which significantly limits the amount of funds raised, and therefore the organization's capabilities.

Benefits of a distributed registry

Transparency. The distributed registry system is completely transparent. At any time, you can follow the path of dedicated assistance from the donor to the recipient.

Lack of geographical restrictions. A distributed registry provides the opportunity to receive assistance from any person or company from any country.

Demonstration of the result. The donor can see the results of his help. As an example, the allocation of $ 1 to charity. An individual or a company that has allocated funds, thanks to the blockchain transaction monitoring system, can see that 10 cents have gone to protect Brazilian national parks, 20 to protect women's rights in Zambia, 20 to provide access to the network to the poorest people, 50 to water purification in Congo.

Reducing the administrative costs of charitable organizations. Blockchain allows you to transfer funds provided by the recipient to the sender directly. There are no or almost no bank charges, tax payments and other expenses.

Increase transaction speed. By minimizing the number of intermediariesthe transaction could be increased many times. It is quite possible to imagine a situation where someone allocates funds for the repair of damaged buildings in Haiti, and the next day the builders set to work.

Compliance with the transaction law. Last year, several hundred charitableUK organizations closed down as authorities suspected them of violating the law. Some organizations laundered organized crime.

Asset accounting. Thanks to the blockchain charitable organizationand its partners at any time can assess the volume and availability of any charitable assets, as well as verify compliance with the conditions for obtaining or using the assets.

Blockchain and cryptocurrencies as the future of charity

Not only the future, but also the present. Over the past few years, many charities have opened acceptance of cryptocurrency contributions. Among others - GiveCrypto.org, BitGive Foundation and Alice SI. These organizations work directly with both donors and acceptors of financial assistance, their activities are as transparent as possible, since the ways of financial flows can be easily traced thanks to the blockchain.

According to Fidelity Charitable, last year wasa record for the number of charitable blockchain transactions and the amount of crypto-help contributed. This organization alone received charitable contributions in the amount of $ 69 million in cryptocurrency (mainly bitcoin). This is ten times more than the year before.

However, it should be noted that to helpvia the blockchain, cryptocurrency is not necessary. If not, you can give the charity organization the computing resources of your computer. In 2018, UNICEF launched the Game Chaingers pilot project. The project participants installed special software, crypto miners, which launched the process of mining "ether" on their computers. At the same time, the mine's cryptocurrency mined 12 thousand computers with powerful gaming graphics cards, which made it possible to get about 85 ETH ($ 36 thousand at the rate during the project).

International case studies

GiveTrack. This platform is called the future blockchain-charity. The developer is BitGive, a charitable organization, one of the first to start working in the blockchain and cryptocurrency realms.

Using GiveTrack, anyone candonate a certain amount from anywhere in the world with the ability to track your transaction from the point of entry into the system to the exit point (providing assistance).

Clean Water. The goal of the Clean Water blockchain organization is to provide clean water to people from any country. The platform offers its own altcoin as a tool for interaction between charitable organizations. The organization claims that all donations go for good purposes; Clean Water covers administrative expenses from its own pocket.

Similar activities are being conducted by the Water Project Foundation, which is currently raising funds to build a rainwater collection tank at the Chandolo Elementary School in Kenya.

Electronic Frontier Foundation (EFF). The American charity EFF was established in 1990. Its main task is to protect civil liberties in the digital world. Since 2013, the EFF accepts Bitcoin donations. True, the organization does not have a platform to track the path of donations made to the system.

Russia is at the forefront of technology

OIN.Space. Domestic startup OIN.Space, along with a platform for organizing donations Elbi has developed an application that allows you to confirm the authenticity of the purchased branded goods, as well as make a charitable donation. The main task is to make the market more transparent for manufacturers and safer for consumers using blockchain. At the same time, buyers of goods can directly participate in charity campaigns. Blockchain allows you to make the process transparent by tracking each transaction.

Leukemia Foundation. The domestic fund has become the first in Russia to form and publish financial statements using the blockchain technology. Thus, it demonstrates the full transparency of its activities. The organization has developed a special platform that allows the donor of the contribution to identify your payment, as well as to assess the main performance indicators of the fund.

The project was implemented under the initiative CharityBlockchain Association. Other funds and organizations that would like to implement the principle of transparency in the charitable sphere can join this association.

In general, the blockchain is a powerful tool thatgave the charity a stimulus for development and improvement. After a few years, the blockchain and cryptocurrency can become the basis of the entire industry, thanks to which the international community will increase the level of trust in the work of charitable organizations. This means that the amount of assistance from organizations and individuals may increase. In addition, we can expect that violations in the distribution of charitable contributions will be much less, because the transaction can be traced without problems.