How blockchain could fix charity’s data problem

David Reed, director of research and editor-in-chief, DataIQ

Suppose a group of organisations all make use of a common asset. A regulator needs visibility of when that asset has been used. But the details of that use are commercially confidential and can not be exposed to either the regulator or the others in the group. How do you create a common asset base that simultaneously supports commercial exploitation and regulatory oversight?

The answer could be the use of blockchain with layered permissions and zero-knowledge proofs. That challenging concept was discussed at CityChain 2017, a highly-informative event on the subject of blockchain organised by MBN Solutions and held at the IBM Client Centre on South Bank this week.

Here’s how it could work within the charity sector. Suppose a new service is created by HMRC that allows charity donors and supporters to create a digital token which identifies them and proves that their donations qualify for Gift Aid. That token is created within a blockchain which is participated in by all fundraisers. When an individual decides to support a cause, they share the token with the charity together with their personal details. The charity then uses the token to show HMRC and get the 25 per cent uplift on the donations it receives. 

So much for the business case - more efficient giving and better uptake of the tax break on offer. Now for the governance and regulation part. If all charities participate in the same blockchain where the digital token has been created, then each of them will know when that unique number has been made use of. Not how much has been given, only that a donation has taken place. The Fundraising Regulator can also track usage across the entire ecosystem to follow levels of exploitation of individual tokens, again only seeing the event, not the specifics of what was involved. Hence, zero-knowledge proof.

Here are the upsides. Consumers gain ownership of their participation with charities and can choose who to share that digital token with, making their support a much more active engagement. Charities can automate business rules within the blockchain to stop themselves from chasing a donation from a consumer if they have given to a similar charity within a defined period, for example. The regulator is able to develop reports on exactly what levels of solicitation are taking place. And no more monstering on the front page of the Daily Mail. 

The technology to do this already exists. At CityChain 2017, the actual use case was a drone registry - a critical emerging area where individual users and the manufacturers of a technology need to come under scrutiny, not least because of their potential impact on a much bigger, more mature technology. Blockchain and layered permissions have been deployed in that sector. So why not in charity, too?

The answer is that very few fundraisers are mature enough in their outlook and understanding of data to make such a step change. Short-term interest and political infighting are barriers to innovation and long-term benefit. Once consumers start to understand GDPR and demand their rights, this could change in a hurry, of course. Either that or the regulator will act. So don’t be the ones left behind with zero knowledge.

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Knowledge and strategy director, DataIQ
David is developing the framework for soft skills and career development among data and analytics practitioners. He continues to be editor-in-chief and research director for DataIQ.