Start Network is partnering with Disberse in a social enterprise start up. Their aims are to:
- test blockchain in the delivery of humanitarian finance
- harness the potentially revolutionary potential of the technology that enabled the Bitcoin..
Ben Joakim, CEO and co-founder of Disberse said: “Disberse was born from an ambition to preserve and improve the impact of aid finance, for the communities and individuals it serves. We believe in the purpose of aid, but recognise it is constrained by inefficiencies. Using blockchain technology, we digitise and distribute donor funds through the chain to recipient beneficiaries. These transactions are transparent, and can be viewed online, ensuring funds are distributed and delivered as intended.”
The project and humanitarian aid
Ensuring the effectiveness of donor funds remains a challenge for governments and international charities. Funds can take weeks to arrive. 10% losses can occur if banking fees, poor exchange rates and currency fluctuations are adverse.
These inefficiencies come with a lack of transparency within the sector which:
- raises the risk of misuse of funds
- makes it more difficult for communities affected by crisis to hold the aid system to account.
The project seeks to speed up the distribution of aid funding and trace its spending. The objective is to trace every pound, from original donor to each individual assisted. The effect should be to enable more money within the international aid system to reach the people it is intended to help. By monitoring the flow of funding monitored, there should be less lost through the process of currency exchange.
The Start Network will work with the Disberse platform to assess whether their first experiment can scale. The partnership will test the system on a series of small disbursements over the next six months. This will occur within Start Network’s existing programmes. The network says is has deployed more than £100 million of funds across the globe over the past four years. This has occurred in response to crises and in its effort to develop innovative humanitarian solutions.
The Start Network comprises 42 national and international aid agencies from five continents. Its avowed aim is to deliver effective aid, harnessing the power and knowledge of the network to make faster and better decisions to help people affected by crises. We are developing more effective ways to work together, and new approaches that will reduce the scale of human suffering. The government of Estonia, so often technologically at the forefront, assisted Start Network’s preliminary work with a €50,000 donation.
Sean Lowrie, Director of the Start Network said: “This exciting partnership could lead to the transformation needed in the way money flows through the humanitarian system. The Start Network is testing innovative solutions to many humanitarian challenges to enable aid agencies to be more efficient and effective. This new project could catalyse a new way of working, one that is transparent, fast and which drives accountability to taxpayers and those affected by crises.”
Disberse, a for-profit social enterprise, was founded in September 2016 as a fund-management and distribution platform. Its purpose is to drive the transparent, efficient and effective flow and delivery of development and humanitarian aid. Donors, governments, and NGOs can transfer and trace funds through the entire donation chain from donor to beneficiary, via intermediaries. It wants to ensure vital resources reach the intended recipients.
Commenting on the initial Disberse pilot, Sarah Llewellyn, Director of Positive Women, said: “We normally use our bank to transfer funds, but transfers have become increasingly expensive and slow. Using Disberse, we saved 2.5 per cent [on forex fees], which covered the costs of a year’s education for an additional three girls. We could also see our funds being distributed to partners and schools, enabling us to spend less time monitoring, and more time demonstrating impact to our donors.”
What does it mean?
For most enterprises, blockchain is foremost a financial industry initiative trying to solve finance sector-specific problems. Some way behind come more general applications, for example trade finance. This is general because it covers everything from shippers to ports to insurance to buyers and sellers, in addition to the finance house(s).
The combination of the Smart Network and Disberse is refreshing. The problems the trial seeks to address are not new – donation efficiency, traceability, auditability, accountability and monitoring. Testing out the applicability of blockchain technology could prove a neat part of the solution needed to reassure. Donors and recipients hate ‘donation leakage’. Real damage happens if this puts off donors from giving. In the complex operating environment of aid disbursement all improvements are welcome.