Hi Rhodri – In your capacity as Head of CAF’s in-house think tank Giving Thought, you have written a number of papers and blogs about Blockchain and charitable giving. How did your interest in the topic come about and why should charities care about something like blockchain technology?
My interest in Blockchain came about slightly by accident. The initial motivation for creating Giving Thought, as a kind of think tank within CAF, was to look at long-term trends in philanthropy and to pick up the strands in the future of doing good, including what might come along to challenge traditional ways of doing charitable work. In 2013, I came across bitcoin and cryptocurrencies with the fairly naïve view that this might be a new way of bringing money into the charitable sector. I wrote a blog along these lines and kept on returning to the subject. As I carried on learning about bitcoin, the following year I started to realise that this technology was about more than just money and payments. I began to understand the implications of Blockchain – the underlying ledger of transactions which allows for money to change hands without the need for trusted intermediaries. That’s when I really started exploring the implications not just for how people give to charity but also how the internal workings of charitable funding, charity governance and other aspects of philanthropy would be profoundly affected.
Since Blockchain, and associated technologies like smart contracts, are still so new and relatively un-regulated, what are the risks that charity boards should be aware of?
The number of live Blockchain projects in the charitable world is still pretty small. Charities and their trustees don’t tend to take risks especially in regards to technology. Awareness of Blockchain in the third sector is also still relatively low and initially its association with bitcoin would certainly have been offputting to charities not wanting to be seen to be involved with anything untoward such as the dark web or the Silk Road. Now that blue chip companies like PwC and JP Morgan are exploring the technology, the idea has probably become more acceptable while still viewed as being relatively ‘out there’. Any trustees getting involved are likely to be doing so in discrete partnerships bringing in technical expertise, which most charities are unlikely to have in-house. There are a number of people or groups thinking of using Blockchain-based technologies for social good but they are not all driven by a clear charitable need which is a concern as it could lead to projects fizzling out, which would damage confidence in the idea of using Blockchain for philanthropic goals. There is a need for meaningful use cases which can push the technology forward. Most charities won’t care what Blockchain is or the ins and out of how it works and they probably shouldn’t, as long as it can deliver on their goals.
How might Blockchain help charities deal with the issue of managing data – could this be a solution to the upcoming implementation of General Data Protection Regulations, for example?
Blockchain could potentially help with this problem in that Blockchain allows for self-sovereign personal IDs. Charities would need that shift in how the public manage their online identity to happen more widely as they are not going to be the ones to push it themselves. That said, personal ID wallets based on zero-knowledge proofs would solve identity problems in a variety of industries including the charity sector. Gift Aid, for example, could become a completely frictionless process, removing the need for multiple form fillings and associated bureaucracy. Perhaps even more so, the information and financial data that charities themselves have to provide could be simplified. If Blockchain-based structures were implemented within or alongside charities themselves you could have a system of real-time financial reporting, which would do away with the need for annual reports and audits for the Charity Commission. It’s not without its implementation challenges but such a system could eventually become more robust, more transparent and operate at a much lower cost.
Your recent paper about the decentralisation of charity looks into the role Blockchain could play in creating new types of so-called Distributed Autonomous Organisations (DAOs) and how the charity sector will be affected. The idea of a charity run by computers sounds like quite a revolutionary, maybe even a scary concept – should donors and the general public be afraid?
The point of writing papers like the one you mention is to some extent to be contentious and deliberately push this idea to its limits in order to provoke a reaction and get people open up their minds to a vision of a possible future. However, that being said, such ideas are closer than many people think and there are actually live projects right now to create charity DAOs. You tend to get push back with this kind of paper because people can’t get their heads around these new ideas. Understanding Blockchain, then understanding how Blockchain converges with other technologies requires a conceptual shift. But this also makes it exciting once you get to a point of deeper understanding of how the future may look. Naturally people are less sceptical about a simple shift in how charities organise their finances but more sceptical of the idea of large-scale humanitarian projects being automated with artificial intelligence operating fleets of self-driving vehicles or distributed aid from smart warehouses but it is is possible to see those types of things happening in the not too distant future. It is hard to say how far down the line that might be but the United Nations, for example, is putting a lot of resources into investigating Blockchain and it would be surprising if they weren’t looking at it from that type of perspective.
You have looked perhaps even further ahead than many people in the third sector, not just into the use of digital currencies like bitcoin or into the use of Blockchain technology but into even more, some might say, ‘futuristic’ technologies like Artificial Intelligence and the role of charities as Decentralised Autonomous Organisations. Is this all just ‘blue sky’ theoretical thinking or are there already applications that you can see charities using in the relatively near future?
There are lots of ideas and white papers out there on this topic but only a small number of live charitable Blockchain projects, largely in the UK and USA. Mostly these projects are still about streamlining processes, reducing costs and increasing transparency by making use of the public ledger aspects of Blockchain. The full potential of these projects may only be realised when wider-scale adoption of Blockchain and cryptocurrencies takes off. Nowadays these organisations have to put a huge amount of legwork into pilot projects to demonstrate concepts and build trust. The BitGive Foundation’s GiveTrack project, for example, is working very closely with a small number of partners to demonstrate it has a concept that works, but there is still a reasonably long way to go before it could become a mainstream platform for giving. The same is true of most other pilots I have seen. However, over the last year, the charitable sector’s interest in Blockchain has gone up exponentially and I expect that in the next 1-2 years we will see projects being built and piloted to do things like impact measurement for charities.
You recently launched a new podcast to explore these topics in more detail. Can you tell us a bit about that and what you have coming up?
Our podcast is part of experimenting with new ways of getting our ideas and content out. Coming from a think tank background, I have been used to the traditional method of spending 6 months writing a research paper, launching it and then letting it sit on a shelf. The topics I am working on now lend themselves to different communication methods which could be blogs or short white papers but also podcasts which may encourage a broader audience interested in charity who can then begin to understand the technology or future trends in giving as part of a broader discussion. We are creating 15-25 mins shows, once a fortnight based around a key theme and divided into 3 sections, linked either to external news or new content we have produced internally. We launched our first podcast on philanthropy and politics recently and we have 2 more shows already in the pipeline which are coming out soon. You can find a link to the first show on our website or subscribe to Giving Thought podcast on the usual channels.
And, last but not least, what do washing machines have to do with the future of philanthropy?
This idea was published in a paper I wrote some time ago and has attracted a lot of attention! It comes from the idea of convergence between Blockchain and the Internet of Things (IoT) – in other words a network of smart objects which can react to their environment. What will make this take off is the ability to connect smart objects with Blockchains that can provide a secure ledger for transactions – think of a kind of Uber model without the drivers, where a fleet of autonomous cars are able to take payment without necessarily being owned or operated by a driver. As far as washing machines go, a smart machine would do the laundry but in its downtime it could also sell its spare processing capacity which will be in high demand. The machine will earn money which it can use to automatically buy washing powder, get itself serviced and repaired but it may also have leftover cash which could potentially be donated to charity. If you think of schemes like ‘round up your pound’, these micro-payments could add up to a vast pool of money that could be going to charity – but how would it be allocated? Would humans have the capacity or willingness to manage and make decisions about all these micro-payments or could it be better done by artificial intelligence? Couldn’t AI match the most pressing social needs of the time to the donations coming from these appliances? It sounds fanciful in some ways but its hard to see how machine-to-machine (M2M) transactions could work without some kind of process like this being in place – even if it were not used for charitable giving. Forcing ourselves to question this concept at the least gets a very interesting debate going. The worst case scenario would be if charities were to dismiss, fail to engage or underestimated the pace of technological change that is now happening. If so, I believe society will miss out on a lot of new opportunities to do good.