How to restore public trust in charities?Give them a hands-on framework to achieve transparency with Vantage
Public trust in institutions is crumbling and has been for a while. Despite the waves of “transparency,” “pedagogy,” and other new politico-managerial concepts, the situation is now durably established; some are even wondering if the trust can ever be restored. The good news is that all these issues of trust share many traits, one in particular — they stem from a gross lack of accountability.
THE BLOCKCHAIN’S BENEFITS
The use of blockchain for charities and donation is particularly promising. Indeed, the blockchain first goal was to offer traceability and transparency, so no trust is not required. The cost of administration of charities, aka the part of the spending that is not spent for the charity’s mission seems to be between 26% to 39.3%.
Another fact to have in mind is that all the numbers we have on charities is what they declared. It was of course verified by the competent state intuitions, but it’s a weak verification compared to what the blockchain can offer.
By design, the blockchain is inherently resistant to modification which makes it particularly suited for keeping records and making sure they are accurate. If we consider the specific case of charities, I think using a decentralized solution based on blockchain offer tremendous advantages over the current model:
- As the impacts of the actions are precisely tracked, it makes it easier to make sure the actions are effective.
- Since these actions will have more impacts than those of regular charities, and the contributors will be able to see precise data about how their contributions helped, they will be tempted to give more.
- At a system level, we’ll have a much better overview of what is spent for what. It will allow governments, policies makers, and charities to better target their efforts, and ultimately increase their impact.
THE ISSUES WITH NONPROFITS
When it comes to nonprofits, the reality is sadly no different. Here again, the main issue federating the other one is the lack of accountability. Because of this lack, many other issues arise:
- Some nonprofits simply do not accomplish their mission;
- Others spend too much on the administration, making the nonprofit inefficient;
- In others, some actors use the nonprofit for tax optimization so much that the money can be spent on absurd projects;
- And finally, we have those who take excessive risks and jeopardize the perennity of the nonprofit.
This inefficient management account for the largest share of the 25–40% of revenues that charity spends on administration. It’s not only due to a lack of accountability. A blockchain-based solution, but also to intermediaries, such as payment processors, taking an unreasonable cut.
Hence, charities and donations are a textbook use case for a blockchain. The Vantage Network will be powered by the token, XVT which will have three primary use cases:
- Keeping track of charitable donations
- Tracking the amount donated to each nonprofit
- Tracking disbursements from a nonprofit for goods and services
The implementation of the solution will be entirely transparent. Donors and nonprofits are not required to buy or handle cryptocurrencies directly; they will make their contributions like they’re used to do — with their credit card on a webpage.
Charities must be transparent, even more than any other organizations. A strong focus on traceability of the donations benefits all the actors (donors, nonprofits and the state for tax/control/tracking). Moreover, increasing transparency will help restore trust in nonprofits and fight the public skepticism.
The Vantage platform is self-financing: on every donation, a fee is collected and allocated to the tracking of its impacts.
The XVT token will initially be an ERC-20 (Ethereum-based) token for the ICO. Once the Vantage Network is launched, a 1:1 swap will be performed to switch to NEM’s Mosaic tokens.
New capabilities will progressively be added to the Vantage token, in three main phases:
- Q4–2019 | Core Fundraising Features: XVT donations to charities and reviewing + promoting non-profits inside the vantage portal
- Q1–2020 | Extended Benefactors: Vantage Donation Point — other fundraising entities than non-profits will be able to raise funds on the Vantage Network
- Q2–2020 | Community ICOs: Community-driven ICO ranking system once ICOs are live on Vantage Network + direct donation with XVT tokens
Vantage’s project addresses the main issues currently hindering non-profits and donations. Thanks to the transparency provided by their solution, donor confidence will be reinforced, and the whole process will be more efficient; wouldn’t you give more if you could see down to the dollar what it was spent for? Ultimately, it’s the platform’s user experience that will be the main driver of its adoption.
The registration for the token sale is now open, and the ICO starts in August.
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