#Goodstart
#Goodstart
Blockchain and Outcome-based Donations: Alice
Trust in the charity sector is in crisis.
6 houses took one charity 5 years and $500m to build in Haiti. How can you make sure your money doesn’t end up that way?
Alice is leveraging blockchain to transform the way that charities ask for and spend our donations: making measurable outcomes the priority.
Dani from Alice explains how.
Okay,
Speaker 2:welcome to the good podcast. I'm Bonnie Nelson with another amazing story of how blockchain is being used to change people's lives. Just in the charity sector is in crisis. We've all seen too many examples in the last few years. A major charities misspending our donations, most obviously in Haiti where one charity took five years and half a billion dollars to build just six houses. Today there's apparently over$1 billion out there and additional donations that people would give if only they felt that they could trust the charities that were there to spend that money. This plus the advent of more tech savvy, younger generation is driving a real shift in charitable giving, shifting from the throwing money into wishing well if you like to, wanting to see their money deliver tangible measurable outcomes and this is a shift that is now starting to touch individual givers. Just like you and I, Alice is at the heart of that shift using blockchain and smart contracts. They're starting to form a new technology backbone that helps to make outcome based giving, simple and accessible for all of us using their platform. For example, you could give$100 to make sure that someone had a place to sleep for the night and your money wouldn't be touched until there was concrete verified evidence that that it actually happened by helping all kinds of charities to start fundraising based on real tangible outcomes. Alice isn't only trying to shift the mindset of an entire industry, but it's also helping to put the beneficiaries of our spending right at the heart of the ecosystem. Equally. It's also helping to automate rip out back office costs for charities and to add new levels of trust to an industry that really, really needs it. The end objective really to make sure that every dollar we give is and transparently delivering meaningful change for those who really need it and restoring faith in an industry that desperately needs our support. It's a real pleasure to have Danny from Alice here today to talk us through exactly how that works in practice. So Danny, thank you you
Speaker 3:very much for joining us today. I'm really excited to have you here and to be able to talk about the whole theme of, of transparent giving. Definitely. So thank you very much for having me. To give you a bit of context as to the problem, uh, trust in the charity sector is absolutely implementing worldwide. So since the Haiti crisis in 2010 where Red Cross was famously founded, only built six houses, I think in the five years after the crisis, um, having had half a billion dollars in donations and you can see why people are disenfranchised and why they change the way that they actually kind of feel towards charities over the course of their lives. So we very much believe that actually we can rebuild trust, especially amongst young people who are slightly more skeptical and cynical by showing them exactly what their money achieved. This is happening against the context of historic lows in terms of giving, you know, I think one of the stats that always stands out to me is that levels of giving now a growing lower than they've ever grown well below global GDP growth rates. I think it's 1% growth year in 2016 and equally there's I think$1 billion out there of money that people would give if they felt that they could actually trust institutions they were giving to is that, does that right, exactly. They're not having the reliable income that they once did because there's no proof. It's, it's almost like a wishing well you just give you a mentee to assess and charity and you never really think as to what that charities use your money for. Alice, our mission is to let any social funders see exactly where their money achieves. It is a kind of cultural shift as well. And it's just a shift in how people see giving. So the actually, even if it is a donation, you do get something in return. You see the beneficiary's progress, you see exactly, uh, how efficient your money's been spent. And rather than focusing on things like the executive salaries and, and really classic kind of things that disenfranchise, uh, give us at the moment because there's not much else to kind of go by. Actually you start judging a charity based on how much impact it has, which is vitally important. To give you an idea as to how that works. You give your money. If the project succeeds, as it says in the project description, then you see exactly the impact that your money's had through the milestone achievements. Now we like to have these outcomes rather than outputs so that you can see exactly the number of beneficiaries or the type of beneficiary that you've held. If you don't see the project achieved will actually you get your money back. Because we use the same model that grant funders do with charities, which is payment by results. So actually the money is held in escrow until the charity achieves exactly what it says it will. And upon validation, the money's kind of drawn down from escrow and given to the charity. Every project on Alice has a third party validators. So to give you an example, a pilot project was with some mangoes, which is a homeless charity in the UK, and the validator is a kind of trusted institution. So in that project it was the mayor of London's office. And it can be a a team or it can be a person where it can be a company that essentially says, yes, I've seen proof to say that this is taking place. So for instance, it may be a rental agreement, but what this does is it adds a layer of trust onto charitable giving so that every time you see him, but you know that it's been authenticated by an independent third party. So presumably in, in the, the value of Alice's in not being a charity in your own right, you are, you are effectively in a networking backbone or infrastructure for any charity to be able to use to facilitate that kind of cultural and business shifts. Right, exactly. And I think that actually the, the, the role which we take is, is exactly as you say. I'm also one of facilitating communication between the different accents. We actually just ran a workshop, um, together with Google at which 20 social funders and 20 charities, lots of Amnesty International and, and really quite kind of established charities. She's actually one of the biggest findings was that there just isn't enough communication between funders, between funders and charities and to charities as well. So, um, the impact measurement space is, is littered with kind of cheap plication of frameworks with each funder trying to create their own one for their convenience. And what this means is that an average charity, um, a medium sized charity, you can have something like 20 different format through which to send an impact report in a year, which as you can imagine, just starts taking up more and more of the time away from the frontline work and really impacts the kind of effectiveness of the charity sector. So what we're trying to do, it's really facilitated that communication. Um, so what we're doing is essentially automating the impact reporting for them. We're making sure for the funder that they not only have the information for the screening and due diligence, but also the impact reporting is done on time because that's another issue when it comes to impact reporting that charities sometimes if they're under capacity they just won't have the ability to send it as quickly as the funder needs. So by automating that process, we're kind of allowing them to focus on the front line work and making sure that we'll, that frontline work is taking place and eradicating a different issue there with the kind of proof of impact, um, while also changing the way that donors get. So can we maybe will through the mongers Kesa just in terms of actually the, the nuts and bolts of it, it's, the Mongols came to us and wanted to run a charity to get 15 homeless people off the street. It was our first pilot project. So more than the project itself, we were validating that the system works and they came to us with a guaranteed grant funding. So they wanted a grant funding as well as fundraising from donors. And what our system allowed them to do is to set up a project through us which used outcomes in a similar sense that they would structure them for a grant funded in that project. Th e outcomes and the milestones should look, we should, should we say, well, uh, getting somebody into temporary accommodation, all of the kind of sub outcomes in between. So trying to uh, help them with rental agreements, legal fees, things like this. But they were structured in a sense where it's quite a linear progression from somebody going into temporary accommodation, finding permanent accommodation. And that actually one of the most important parts is checking 12 and 18 months down the line. But they're still there because actually charities when they apply for grant funding often don't have the resources and don't want to put down that they ought to check after the project's complete. The impact is, is is sustained, which means that actually yes you might get homeless people off the streets, but with that funding you don't know if they've stayed in the permanent accommodation 18 months down the line. In terms of the actual mechanics of how this works. So for example, if I set up a project tomorrow and I'm the beneficiary, I said, okay look, my outcome is x. If, if I get why funding is the, is the international centralized through website or is it more deployed on to apps or how does it work from a, from a kind of a workflow perspective. So at the moment, any charity that starts a project to have, this has an appeal page on our website with a page basically giving the information as to the project details. We are currently building an API which allows charities to actually integrate our system onto their own websites, but all of the backend. So all of the smart contracts and all of the kinds of facilitation of how the money moves, how the impact's done is done on the blockchain. So although validators have to log into our system to validate a certain outcome, all of the data is kept on blockchain and all of the flow of funds is done through smart contracts on the blockchain as well.
Speaker 1:Okay.
Speaker 3:This kind of leads us into exactly why we use blockchain and a public block chain. So it's the theory I'm number. Uh, and for us it is the fact that that information is one of the most valuable assets from, uh, from the project work being done. So the impact data is available for policymakers to see exactly what works and how effectively and at what price it's available to charities to actually see what's worked in the past and what hasn't, so that the charity sector doesn't have this tablet of a failure, which leads to it making the same mistakes over and over again. And for funders, it's actually, um, it, it removes the issue of these siloed impact data proves that they have themselves, which they used for screening and due diligence, but actually might be outdated, might actually be wrong. And it allows them to, to, to make these decisions, funding decisions from the same timely valuable information. Presumably there are other parts of blockchain that also play to the objectives of Alice. Here. Transparency is a key one. So anybody being able to go and audit the data, see what works, what doesn't and but also trust is a, is a massive factor and that's mainly kind of practically shown through our use of smart contracts. So what we use smart contracts for is to automate the process of impact reporting resulting with donations being drawn down from escrow. So as soon as somebody has said yes, I've seen proof of impact, uh, automatically the corresponding amount of funds are drawn down from escrow, incense, the charity. So there's no kind of paper trail, uh, or kind of paper process drawn out between them where they have to send the proof and all of this kinds of stuff. Even on that note, as well as the security and the private aspect of inflammation is also catered for. So we've actually developed a solution for so selective disclosure, which allows only certain amounts of personal information to be shown to the valid data at any given point. So for instance, if I'm looking at somebody rental agreement, I don't need to see their medical data as well. And so what we're able to do is actually define exactly what a validated needs to see to say yes, that's actually happened. Uh, the, the blockchain sector is, is really, uh, making strides with governance as well. And one of the crucial elements of governance is that traditionally in the model of charitable giving, the beneficiaries don't have much of a voice when you are allowing. And what we're hoping to build on top of all of this kind of ecosystem is a number of different means for, for instance, um, and fisheries to be able to whistle blow on a project. It's not actually achieving what it says it is. So even if there are instances of collusion between a validator, a charity, we were hoping to kind of negate any potential impact of that by allowing the beneficiaries of voice in a model that they've traditionally never really had a voice in. Presumably. Actually, I mean the putting the beneficiaries at the center of this is it runs actually deeper than just being able to whistle blow. I mean historically in a, in a Red Cross and height, she contacts, you've got the donor organization or the NGO deciding ultimately on how best the money is spent. Whereas using an Alice kind of facilitated project, you're really talking about the beneficiaries deciding how the money's going to be best spent to get the right outcome. Exactly, exactly. Where even threes, the things such as design, we're trying to show that the, the journey that matters is that to the beneficiary. Are you seeing any evidence of people actually because of what you're achieving in terms of transparency, being willing to donate more through the atlas platform? Anecdotally, we can definitely say that. For instance, when it comes to a repeat donation, it's a lot easier for some to convert someone who's a one time donor into a two or more time donor based on the fact that you have information to reengage the width. And if we can prove to them, look like this is exactly what your money's done and only a little bit more kids do the same for another person or actually it could further this person's progression, that will be a kind of motivating factor for people to donate more. Essentially by becoming a kind of data engine. On the one hand you rip out the costs of providing the reporting back into the kind of more institutionalized side of donors. And then on the other hand you can use the same data to be able to actually run far more targeted, uh, essentially advertising or fundraising on the BTC side as well. Exactly. We're hoping that actually people's motivations with this increased transparency become a lot more honest and a lot more human and they actually kind of, uh, engage with the beneficiary or, and so what about, I mean, issues that you've, you've come across on the way. I mean, what are the things that has surprised you on the, on the journey so far? It's very difficult to kind of nail down the design and an easy sentence because although a traditional starts up might have one particular audience which they targeting with all of their cloud, we're in a situation by which we have to target impact investors, grant funders, governments, uh, individual donors, charities. And so as you can imagine, it starts to become quite complicated as to how to structure our website, how to structure an appeal, even how to structure the signup flows for these different audiences so that they get the information that they need as soon as possible. But we're trying to test everything and it's everything. So when it comes to actually validating our kind of assumptions as to why your sets an audience responds well or not, um, we're really trying to test them so that everything go even in the design sense, everything goes from kind of gut feeling too. Well look, we've got the stats to say that's the way it is.
Speaker 2:I'm Bonnie Nelson. I hope you're enjoying this could stop podcast. So far we've heard about the big picture and the reasons why block chain was a necessary part of the solution. We're going to go on now to hear about the practicalities of using blockchain and using the solution in the real world. Before we do though, one of the reasons why I'm doing this podcast is to make sure that you have a chance to get involved. So please do reach out if you'd like to get in touch or involved in any way. Look us up on the value.co/good
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Speaker 4:And back to the[inaudible] podcast,
Speaker 3:cinnamon Mungo's down, um, cancer research UK also coming soon and presumably the API opens up many new avenues in terms of potential cooperation. What does the next 12 months look like that, so we at the moment have a two lane projects as well. One is run by a OKC, which has specifically to do with helping people who've lost limbs in Nepal, in remote villages of Nepal. Um, have the prosthetics provided to them. And a second project is run by forgotten animals, which is a charity that is opening the, I think the country's first wild animal sanctuary and Russia. So, um, two, two great projects that we're working with at the moment and very different audiences. So it's been quite interesting to actually kind of work with them on, on making sure their appeals are targeted at the right audiences the next few months at least they're going to be onboarding. Other charities are currently speaking to a few social funders. So hopefully we'll have pilot projects opening up with them as well. And actually when it comes to exactly as you mentioned, the API, we're able then to start looking at much more established charities that might already have quite a simple flow through their own website, might want to experiment with a satin audience segment for instance. So if certain charities come to us and say, look, we're very happy with how our donors are of behaving from the age of 35 upwards, but we found that actually we really don't perform well when it comes to younger people. We can test whether something like the transparency that we offer might be a motivating factor for them. So it really provides a, an opportunity for charities to test with different audiences and to kind of fit us into their digital strategy. I mean that example is a very pertinent one, presumably is the WHO this appeals to you most younger generations I would have thought. But I think the benefits that you mentioned in terms of not just the transparency around the donations and putting the beneficiaries in control, but I think you know, the, the ripping out the reporting costs to the industry, being able to provide a strong degree of best practice around outcomes. Um, whistleblowing and then the whole question of Iot for automated kind of validation. I mean you're talking about really transformational change. You started with the Red Cross example, building five houses, you know, for half a billion dollars to a an industry run with all of the benefits we just mentioned. I mean that would go a long way. I would have thought to restoring the single biggest thing that's missing, which is trust in the industry. Obviously there are kind of difficulties and obstacles as well within the industry itself because some charities that performed very well might not necessarily want to structure that project through an outcome based kinds of systems. That donuts and obviously there a very kind of understandable concerns about cannibalizing on donors that actually have formed, does that in behavior. But what we're trying to show is that it might not be necessarily for those donors, but it might be that actually initially at least we're able to convert people who otherwise wouldn't donate. So it's, it hasn't made a bigger pie rather than a different portion of the pie when it comes to to, especially as you kind of mentioned that the younger people who might be more cynical, more, more use to kind of convenience and information on demand. Well actually the proof of impact might be the thing that gets them to say, well, okay, this clearly works. This project really means business. And why would they kind of be open to transparency if they're not being honest. So it's interest as she, can you expand on that briefly? The point about cannibalization because that's really interesting. One. So who, who wouldn't be interested in having this kind of outcomes based, uh, transparency? One of the obstacles that we've come across is that, um, a lot of charities might be interested in having a new project run through Alice, but when it comes to existing ones that performing well, obviously because we're still young and we're so experimental and we're still kind of very much, um, testing everything and they're slightly concerned about whether they want to, uh, for instance, feed their warm donors through us because for instance, if anything were to go wrong or if, if it were to kind of change the expectation for the charity, they'd have to change a lot more than they would in the first instance if they just funnel their cold donors who aren't likely to donate anyway. So it's a challenge that we've had where it's difficult for us to improve conversion rates and things like this, uh, against committed donors that they already have because of the fact that often a charity might say, well, if this audience is one that we've got no use for anyway, let's try them with that list. And it's not very comparable segment with the ones that really do donate regularly. If I understand right, Alice essentially just represents a certain amount of counterparty risk as a, as a startup still. And there's not really associated with the actual concept of outcome based giving. It's more associated probably with your, the new, just how young Alyse is. Does that fund? Uh, yes. So that's, that's probably half of the equation. The other half is that never obviously inefficiencies in the charity sector at the moment and so benefiting from the lack of transparency. And that's not to say that all charities are, are kind of corrupt or anything like that, but there are probably pockets of, of money being misspent and therefore those vested interests make it very difficult for a charity to say a massive charity. Let's say. Yes, we will put everything through Alice. But the more we change the donor's expectations of what giving is and the more the donor's start saying, well actually, look, if you're not showing me proof that my money's done anything, I'm not going to give you the money. Well. Then slowly that will kind of hopefully, um, fossil charities say look transparencies clearly the answer donors give to us unless we show them impact. Yeah, absolutely. It's going to be fascinating just to watch ultimately if, if it was possible to track that billion dollars that's out there that people are holding back on at the moment to watch how that, how that kind of hopefully dissipates downwards as people see the transparency in and and buy back into the charity sector. I think even a billion is a very conservative estimation because for instance, we've been talking with certain funds that have hundreds of millions that they might want to, for instance, track the impact of, and if it's, if it's a matter of funds saying wait, if as an easiest solution to what we already do, which is pay for a hell of a lot of accounting and legal support just to be able to do the same work, well then why don't we kind of put the same money through something like Alice? So we are, we are working with a massive markets. It turns the potential. But it is. I think the crucial element for us is about exactly what you said at the kind of changing behaviors and cultures. That's going to be the key aspect. We were really quite hopeful is that we can get it to a point at which where donors are happy, charities aren't making any wasteful decisions based on the fact that this has to be a failure and funders are happy and actually kind of making decent returns on their money as well as attracting more impact investing to the space.
Speaker 2:Fantastic. Well thank you so much. Done in, really appreciate you making the time to do this and the, yeah, thank you for running through that as clearly as you have.
Speaker 3:Yeah, perfect. Thank you very, very much.
Speaker 2:I'm Bonnie Nelson and thanks for listening to this week's good start episode. Next week there'll be another amazing story about how blockchain is being used for good, and so make sure to join us. Then in the meantime, if you'd like to get involved, look us up on the value exchange.co/good start or on linkedin or Facebook. Thanks and see you next week.