Humanitarian Groups Explore Blockchain:
Overcoming Common Obstacles of Providing Aid during Humanitarian Crises

Part II

THE CHALLENGES OF BLIND DISTRIBUTION
To bring accountability to processes which have typically been opaque and corruptible

Many things happen to a donation en route from the giver to the crisis victim who is the intended recipient of the aid. Even when the path of the donation is streamlined, the information about what occurs on that path is minimal and difficult to access. This emboldens potential thieves or grafters who know that their actions are unlikely to be discovered, traced back to them, and result in any negative consequences for themselves. When the donation pipeline from donor to recipient is one long blind-spot with poor records or tracking, a lack of accountability also allows for non-malicious human error to disrupt the path of a donation. While accidental, this creates waste and, like corruption, results in lost aid for the crisis victims. The opacity of the donation process also results in a loss for donors, who want confirmation that their gifts make a difference to a crisis victim in his or her time of need. In summary, the lack of accountability in the traditional donation model fosters corruption, wasteful human error, and a loss of donor engagement. Below is an infographic we have created to help understand the different steps of Humanitarian Aid distribution and how blockchain technology can bring traceability and process efficiency.

Humanitarian aid distribution - how blockchain technology can help
How blockchain could help with every step in the logistics chain of Humanitarian Aid distribution - source: Mosaique, LLC

It is no easy task to determine how much of a donation is lost due to lack of accountability, or of how much potential donation might be discouraged due to this same thing. First, organizations justifiably hesitate to admit lost money or failed initiatives because of how it may discourage donors and reduce philanthropy. Second, such a determination would require an organization to know what it does not know—that is, when the problem is an information shortage, there isn’t going to be much information about that problem. In this situation, the evidence that an accountability problem exists is that so many organizations and companies are attempting to find a solution to the absence of accountability.

The first step toward reducing and eliminating corruption in the donation pipeline is to admit that corruption is a problem. For example, in 2012, a collection of nations pledged sixteen billion dollars to Afghanistan to assist in rebuilding the war-torn country, but the aid was tied to extensive review requirements meant to counter the country’s historically bad governmental corruption. Another clear instance of recognizing corruption was referenced earlier, when the former UN Secretary General announced that thirty percent of UN distributed aid was lost to corruption. However, he did not achieve this conclusion because he had excellent records that pointed out where millions of dollars went missing. Most likely, he worked the problem out backwards, by using the final record of distributed aid and calculating the difference between that and the amount that the UN had sent down the distribution pipeline. Just as for-profit corporations increase their market share and profitability by collecting ever more data about each miniscule increment of their supply chain, the humanitarian organizations which measure success through human impact are learning to improve their own performance by partnering with technology companies to build blockchain-supported aid pipelines.

Blockchain, by nature, produces complete transparency, the very thing which most donor pipelines are sorely missing. Although some detailed information on blockchain can be kept private, blockchain is by definition an open and complete record of all transactions, and it can’t be edited, deleted, or otherwise manipulated. Public blockchains, in particular, are nearly impermeable, since a would-be hacker “would need to take control of more than 51% of computers in the same distributed ledger and alter all of the transactional records within a very short space of time — within 10 minutes for Bitcoin.” By using blockchain to record the complete path of a euro or dollar, donor organizations can see exactly where in that path their aid funds disappear—in a case of corruption—or are mistakenly diverted from the intended recipient—in a case of human error. Blockchain records and displays the who/what/when/where information of every transaction, and it can report back to the donor organization in real time. This immediacy can help organizations reduce the impact of mistakes, while in the current donation model, an error might be discovered only long after the organization has already lost the ability to reverse its effects.

Donor organizations are already benefitting from blockchain’s ability to create complete and transparent records with accuracy and speed. The Building Blocks program, which uses a private blockchain controlled by the World Food Program, includes complete records about how each aid dollar is spent by the Syrian refugees. Because blockchain’s record-keeping is largely automated and does not require the massive manpower of manually entering the details of each transaction, it can easily scale-up its transparency to serve many donor organizations. For another example of blockchain’s ability to handle a volume of transactions, Disberse uses blockchain to serve a consortium of forty-two donor humanitarian partners which each serve crisis victims through legal and medical aid funds and sundry other specialized causes.

Blockchain’s usage is not limited to financial or aid-delivery data. Its structure can serve any project which demands real-time transactional records. The Blockchain for Humanity Global Challenge asked competitors to propose blockchain-based solutions to help counter the child trafficking crisis in Moldova. In this project, blockchain will use a unique biometric authentication (either fingerprint or eyescan) to establish a digital identity for each child. A child’s identity will be linked to family members or other safe adults who are allowed to travel with each him or her. If a child reaches the border and attempts to cross, his or her digital identity will be recorded and can trigger an instant call to the parents or safe adults linked to his/her identity, who can then confirm or deny that the child may be taken out of the country. With accuracy and completeness equal to the recording of any financial transaction, blockchain will also record the who/what/when/where details of any children who are taken out of the country or are attempted to be taken. I In another case of restoring families separated by humanitarian crises, the Refunite organization works to reconnect family members who are separated though events such as natural disasters and violent human conflicts. Refunite’s impact, while substantial, has been limited by the massive scale of the problem—over sixty-five million people are estimated to be displaced globally, and Refunite’s database has only one million profiles. In 2017, Refunite began a partnership with IOTA Foundation, which will use blockchain technology to increase the volume, data integrity, and security of Refunite’s work.

Transparency, accountability, and reliable recordkeeping are sufficient goals in themselves; however, they produce the side effect of restoring faith in processes that have sometimes lost public confidence. UNICEF’s Innovation Fund, which invests in open source technological solutions to humanitarian concerns and crises, includes a portfolio whose investments focus on developing “real-time information” projects. This is another instance of confirming the need for transparency and rapid response in humanitarian concerns by looking at the people who are trying to fill that need; also, the fact that UNICEF features this portfolio on the Innovation Fund homepage underscores how transparency is a point of interest that can immediately engage potential donors. This is part of a trend, not merely an outlier. AID:Tech, which partnered with the Irish Red Cross to bring aid to Syrian refugees in Lebanon, offers two key blockchain-secured products: “Transparency Engine,” which donor organizations can use to monitor aid distribution in real time, and “TraceDonate,” which addresses the transparency concerns of individual donors. AID:Tech explains on their site that donor engagement fell to an “all-time low” in 2016 because “it is nearly impossible for regular donors to gain transparency around the distribution of charity and what effect it is having on improving lives.” This peer-to-peer donation-tracing product is designed to reinvigorate donor interest by using blockchain technology which can provide real-time notifications about the impact of each donation.

Part III to follow: The obstacles of missing identities, or how to provide tools to crisis victims.