tamryn headshot 120X120 circle

Tamryn Stowell

Corporate Advisor

Charities Aid Foundation


BLOCKCHAIN - A THREAT TO EXISTING PHILANTHROPY?

05 January 2018

This article was originally on Linkedin’s Pulse website on 20 December 2017. The original article can be found here.

Blockchain as term has entered mainstream conversation but often with little knowledge of its application and implications.

The Charities Aid Foundation recently hosted an event exploring the relationship between Blockchain and philanthropy. The key learning from the day was that blockchain has value beyond the movement of cryptocurrency.

Blockchain has many uses and applications from creating transparent supply chains; connecting donors and beneficiaries; developing decentralised governance for groups and organisations; and of course the financial value of reducing transaction fees and transfers.

All of these applications can have a large impact on the way that stakeholders interact, the value of intermediary organisations (such as CAF), and autonomy of the individual. So what are the implications of ‘decentralised markets and services’?

Rhodri Davies, key speaker and brain behind the Giving Thought think-tank, highlighted that the decentralisation which blockchain offers could actually create a reversion to person to person philanthropic behaviour.

Growing populations, development of technology, and urbanisation have created a super-interconnected world but, more often that not, have built barriers between donors and beneficiaries.

With these 20th century developments, trends moved towards authorising third parties, or intermediaries, to organise and disseminate funds and resources on our behalf. Blockchain offers a way back to direct funder to donor interaction, even across continents.

Decentralised giving, with no need for an arbitrator, means that the intermediary position, in theory, becomes obsolete. There is no need for a bank or an organisation to connect you to local, on the ground development work on the other side of the world. You can achieve this through an immutable ledger system which offers a transparent, accessible way of reaching out with a higher level of personal autonomy. With a growing trend towards localism is this the new, best option for philanthropic giving?

Well, yes and no.

As Paula Fabiani, head of CAF’s affiliate office in Brazil IDIS, mentioned – donors through blockchain can be anonymous. Although blockchain transactions can be tracked and traced once in the system, at entry point the origins of the money and its journey are unknown.

For any organisation this creates concern for anti-money laundering compliance and donor assurance. Regulators, technologies companies, and businesses are aware of this and are constantly working towards a rigour by which blockchain can be subsumed into every practice and take account of these issues.

The Financial Conduct Authority in the UK is one of the most progressive regulators when it comes to blockchain technology and have a sandbox by which new methods and blockchain applications can be tried and tested.

At the event, Disberse, a financing organisation focused on delivering aid globally and operating on a blockchain platform, make a distinction between trust and confidence. Whilst the transparency that blockchain offers can increase consumer confidence, this must not be mistaken for trust. Trust, they pointed out is developed between people and is personal. And therein lies the value of the intermediary.

Organisations such as CAF are trusted to authenticate, support, and offer a human level of communication between donors and causes, and directly connect them when appropriate. Blockchain transparency will become a value-add to the very human desire to create a better world, and will help ensure that progress towards this is achieved.

And it is companies like Alice, who are utilising blockchain for this transparent and accountable method of tracking impact with smart contracts between donors and charitable beneficiaries, that are taking advantage of the blockchain system to help deliver confidence in transactions and trust in organisations.

So, blockchain is not the death of philanthropy as we know it, but a new strong tool to ensure that all who engage in this sector are transparent and accountable.

Want to know more? Talk to our team on 03000 123 300 or email us at venturesome@cafonline.org and we’ll be happy to help.

RELATED CONTENT

Nine misconceptions about social investment


Are you an organisation looking to secure funding? Have you considered social investment or want to understand how it could help your organisation?

Loan finance - are charities missing an opportunity?


Is your charity thinking about loan finance, but feel that you haven't quite got enough details to make an informed decision?

Meet the team behind CAF Venturesome


An introduction to our team, who have a wealth of expertise in helping charities access social investment.


Charities Aid Foundation © 2018 | Registered Charity Number 268369
25 Kings Hill Avenue, Kings Hill, West Malling, Kent ME19 4TA Telephone: 03000 123 000
10 St. Bride Street, London EC4A 4AD Telephone: 03000 123 000

Anti-Slavery and Human Trafficking Statement