How blockchain helps global agencies tackle fraud

By Horizon State

From the donation box to the open sea, the Red Cross and WWF-Australia want to boost transparency.

Flood-affected people in Sindh, Pakistan, recipients of UK humanitarian aid in response to the 2010 floods. Image: UK Department for International Development

Large non-profits can amass millions in donations - but with such enormous sums, tracking money can be a problem.

Red Cross Australia, for instance, received over AU$87 million worth of donations in 2017 alone. But from 2014 to 2016, US$6 million worth of Ebola aid donations were lost to corruption, the Associated Press reported.

Some global agencies are turning to new platforms on the blockchain to fight fraud and increase accountability. Here’s how.

Tackling fraud with crypto-donations

Red Cross Australia is experimenting with crypto-donation technology to become more accountable to their donors. This allows people to donate with cryptocurrencies, and then track how their money is being used by the non-profits and for what causes. “We're looking at crypto-donations to better understand new supporter segments,” says Caroline Sheehan, Head of Strategy at the Australian Red Cross. Currently, the project is purely experimental and will be launched on a larger scale if it succeeds.

Red Cross are building this in partnership with Horizon State, a startup that builds community empowerment platforms. The company believes that blockchain can be a powerful tool for transparency and accountability for governments as a whole. “The transparency and security inherent to the blockchain technology provides a level of trust that is sometimes missing with traditional methods of donating,” shares Nimo Naamani, co-founder of Horizon State. “With crypto-donations, a donor can know exactly how much of their donation the intended recipient received, and how much was used as operational costs or commission off the top.” This is important, he says, as in some cases up to 40% of the donations go towards covering overhead or intermediary costs.

Humanitarian passport

The Red Cross is also looking at ways to harness blockchain to develop a ‘humanitarian passport’ for volunteers to use across non-profits, according to Sheehan. Humanitarian workers often face reams of red tape to be certified as a volunteer. A blockchain-based passport, which records a person’s full history of their humanitarian work, could cut through this red tape by serving as a one-stop verification tool.

More importantly, the passport saves on time lost while verifying volunteers that need to be sent out quickly on emergency assignments. For one, Save the Children UK started piloting a blockchain-based humanitarian passport in 2017.
“Ultimately, transparency and capability need to be the defining factors for any not-for-profit.”
“Blockchain is one type of solution, but there are other strategic partnerships that we're exploring,” Red Cross’ Sheehan adds. “Ultimately, transparency and capability need to be the defining factors for any not-for-profit.”

From fishing boat to sashimi restaurant

Image: Hernán PiñeraCC BY 2.0

The fishing industry is rife with fraud, which is why World Wildlife Fund-Australia is using blockchain to track whether the produce comes from sustainable sources. In the project ‘Bait-to-plate’, every fish is provided with a tag and QR code - which, when scanned, automatically uploads its location to the blockchain. As each fish moves through the food supply chain, its location is fully recorded till it reaches its consumer.

This means that producers can no longer under-declare their fishing yield, or cover up illegal fishing practices, notes WWF-Australia CEO, Dermot O’Gorman. “We need to see how we could take this to scale and realise the benefits that blockchain can have on supply chains.”

Another non-profit is using blockchain to track the progress of countries taking part in the Paris Agreement. The Blockchain for Climate Change Foundation wants to record carbon emissions on the blockchain, allowing participating nations to declare their exact amount of carbon they produce - improving trust between these nations.

Industry expertise

It is important for non-profits to work with industry partners, which bring tech expertise to the table. Red Cross Australia and WWF-Australia are trialling these blockchain innovations with tech partners from the private sector. “Some of the biggest solutions to sustainability development challenges have been when you get governments, corporates, and non-profits working together,” notes WWF-Australia’s O’Gorman. “The innovation vehicle allows us to do things that we wouldn’t normally do.”

Red Cross’ partnership with Horizon State on crypto-donations has allowed the organisation to take “baby steps on things that we can bite off in an easy way”, Sheehan says. This collaboration is one way for Red Cross Australia to create a trustworthy dialogue with their members.

Meanwhile, WWF-Australia has set up a research team called Panda Labs, which spearheads the organisation’s innovation efforts. The lab explores how emerging technologies can be applied to solve global environmental challenges, and carries out subsequent trials with tech partners.

Panda Labs has partnered with tuna company Sea Quest Fiji and tech companies to trial its blockchain tool for tracking fish. “It’s important not only for non-profits to be able to build those type of skill sets internally, but to know how to partner with tech partners who bring very different skills, ideas and solutions,” WWF-Australia’s O’Gorman notes.

O’Gorman’s team is also partnering with tech experts to use blockchain to manage funds and donations, which is key to increasing accountability. “It's an area that we see as a potential to not only fundraise for sustainable development projects, but also to report back to donors on the impact of the work,” he says.

Blockchain can empower non-profits to solve some of the world’s biggest challenges, but adapting it for humanitarian efforts can be rough sailing. Startups can lend their expertise and agility to navigate these challenges together.