Using Blockchain to Ensure Trust between Donor Agencies and NGOs in Under-Developed Countries

Abstract

Non-governmental organizations (NGOs) in under-developed countries are receiving funds from donor agencies for various purposes, including relief from natural disasters and other emergencies, promoting education, women empowerment, economic development, and many more. Some donor agencies have lost their trust in NGOs in under-developed countries, as some NGOs have been involved in the misuse of funds. This is evident from irregularities in the records. For instance, in education funds, on some occasions, the same student has appeared in the records of multiple NGOs as a beneficiary, when in fact, a maximum of one NGO could be paying for a particular beneficiary. Therefore, the number of actual beneficiaries would be smaller than the number of claimed beneficiaries. This research proposes a blockchain-based solution to ensure trust between donor agencies from all over the world, and NGOs in under-developed countries. The list of National IDs along with other keys would be available publicly on a blockchain. The distributed software would ensure that the same set of keys are not entered twice in this blockchain, preventing the problem highlighted above. The details of the fund provided to the student would also be available on the blockchain and would be encrypted and digitally signed by the NGOs. In the case that a record inserted into this blockchain is discovered to be fake, this research provides a way to cancel that record. A cancellation record is inserted, only if it is digitally signed by the relevant donor agency.

Blockchain and Recordkeeping: Editorial

“…It does, however, create a challenge relating to privacy and tracking that must be addressed in many use cases involving recordkeeping. In their paper on the application of DLT to track the distribution of donor funds, Rehman et al [13] acknowledge the tension between transparency and privacy, noting that transparency might not be desirable in the context of transmission of donor funds but also that too much privacy can undermine the integrity of a DLT. In the context of their solution, they propose several approaches to achieving the necessary balance between transparency and privacy.…”

“…On the other hand, the relative immutability of DLTs, while providing better protection for records against tampering or manipulation, means that it can be challenging to delete, cancel, correct and update records when necessary for legitimate purposes. In the context of donor payments to educational NGOs, for example, Rehman et al [13] cite the need for cancellation of transactions, such as when a student no longer requires donor funds. To provide the capacity to cancel transactions whilst still attending to the need for security and immutability of the ledger, the authors describe a process for recording cancellation messages on chain and an ordered approach to broadcasting the cancellation to other nodes.…”

“…Metadata for records also must be described and documented in authoritative metadata schemas. The paper by Rehman et al [13] discusses the challenge of creating, updating and ensuring the authenticity of such schemas. In their solution design for donor funds tracking, they describe a novel process for defining an authoritative donor/NGO list.…”

“…This arrangement, argue Henninger and Mashatan [15], is typical of existing supply chain management DLT solutions, which tend to have a certain degree of centralization in which solution providers maintain control over the blockchain. In a similar vein, Rehman et al [13] suggest a private, permissioned solution for their donor funds tracking solution, but seek to mitigate the risks to security and integrity of the ledger that more centralized solution architectures can introduce using a novel consensus-based approach to ensuring only trusted NGO or donors can be added to the network. Specifically, the solution envisions a distributed list of valid donor agencies maintained by each node.…”

“…When a node receives a request to add a new NGO or donor to its list, if the majority of nodes have the requesting donor agency in their lists, the NGO or donor agency is allowed to join. Rehman et al [13] note that the list is maintained outside of the ledger, so human intervention is required. The paper further contributes a novel approach to encouraging ongoing node participation for networks that rely upon persistent node participation to maintain the security properties of the network.…”