The Ixo Foundation’s “proof of impact” protocol wants to give investors knowledge that their money is working–and save organizations time and money in evaluating if their programs are working.
As philanthropists and impact investors pour money into social and environmentally focused businesses and projects, a nagging question often hovers over their efforts: Is the capital actually ending up where it is intended, and is it delivering impact in a measurable, tangible manner?
The Global Impact Investing Network (GIIN), an industry group, says that investors committed $22.1 billion to projects that deliver both financial and social and/or environmental purpose in 2016. Philanthropies increasingly believe that putting money into social businesses rather than issuing grants to nonprofits brings bigger, more sustainable, returns. And a wide array of mainstream funders, including pension and sovereign wealth funds, have recently entered the impact investing field. One prominent example from 2017: the $2 billion Rise Fund backed by TPG, a private equity firm, and a host of celebrity investors including Richard Branson and Bono.
However, a lack of measurement and verification standards may be holding back further capital flows in the impact investing sector. GIIN’s survey last summer of more than 200 funders found that 40% see data about performance as a “significant” or “very significant” challenge.Could blockchain technology come to the rescue? The Ixo Foundation, based in South Africa, believes so. It is developing a “proof of impact” protocol allowing data about projects–for example, that a child has been vaccinated or that a tree has been planted–to be recorded on a distributed ledger (a blockchain). This enables the claim of impact to be verified as legitimate and for funders thousands of miles of away to see that their money has been well spent. It also creates a new asset class, a cryptographic token that’s issued as the claim is authenticated, that could become the basis for a more organized, regulated form of investing.
Two unlikely partners – controversial entrepreneur Patrick Byrne and economist Hernando de Soto – have joined forces to create a registry of informal property records using blockchain technology, making the records easier to trace and harder to forge. They join the FT’s John Authers to discuss their new venture.
Danish authorities are researching cryptocurrencies as a way to improve humanitarian efforts.
On December 12, 2017, a report titled Hack the Future of Development Aid was released by the Danish Ministry of Foreign Affairs with help from the Sustainia think tank and Danish blockchain and e-commerce firm, Coinify. The report highlighted some of the benefits that blockchain technology can provide to humanitarian organizations.
The ministry turned to Sustainia to flesh out possible use cases involving blockchain technology. According to its research, the technology can significantly reduce the time it takes transactions to clear as well as costs associated with paper contracts. Corruption can also be curbed by digitized contracts and blockchain-recorded transactions, ensuring that financial aid is properly distributed to those in need.
Moldova, an Eastern European country and former Soviet republic, is planning to use blockchain technology to stop child trafficking.
United Nations recently teamed with blockchain firm World Identity Network (WIN) to explore the use of new technologies and solutions, such as digital identity on the blockchain, to increase the chance of catching traffickers and securing data on an immutable ledger, further making any such trafficking attempts more traceable and preventable.
Digital identification experts from the UN Office for Project Services (UNOPS) recently met with officials in Chisinau, the capital of Moldova, to discuss how blockchain can help solving the exploitation of children.
The United Nations has partnered with the World Identity Network (WIN) to develop a blockchain identity pilot aimed to help curb child trafficking.
Announced during the Humanitarian Blockchain Summit in New York on Friday, the pilot involves participation from the United Nations Office for Project Services (UNOPS) and the United Nations Office of Information and Communications Technology (UN-OICT), a press release indicates.
Storing digital identities on a blockchain, the release states, provides a “significantly higher chance of catching traffickers.” Additionally, securing identity data on an immutable ledger will make trafficking attempts “more traceable and preventable.”
According to Dr. Mariana Dahan, co-founder and CEO of WIN, “invisible” children under the age of five and who do not possess a birth certificate are at “risk” and can fall into the hands of child traffickers. These children are often missed by social programs offered by governments or development agencies.
“Several developing countries are actively looking at more efficient ways to prevent child trafficking. Identification is always at the heart of the solution.”
Charity can be tricky business, especially when you have no idea where your money will end up in the process.
But Bitcoin and the revolutionary blockchain technology behind the cryptocurrency are now being adopted by a number of global charities and non-governmental organizations in order to “improve transparency” and track and transfer funds quickly.
Blockchain Payments Adoption Is Nigh
In fact, the adoption of blockchain as a payments technology may arrive sooner than we expect when it comes to altruistic organizations.