Hurricane Florence is likely to be disaster for the record books. Then again, so were last year’s hurricanes Harvey and Maria. Mega disasters appear to be the new norm, with damages in 2017 alone reaching $306 billion — the most expensive year on record in the United States. And when disasters strike, people want to help in any way possible.
Humans are fundamentally altruistic, eager to lend a helping hand, send supplies, or open their wallets to help their neighbors down the street or across the country. And yet, although individual donors gave $6.5 billion to humanitarian causes in 2017, enormous funding gaps consistently remain in any disaster response. A significant lack of evidence of organizational transparency and trust that donor funds will be used effectively has notably stifled giving.
Why is Aid So Inefficient?
Aid response is complex and expensive, with billions of dollars spent every year on staffing and logistics. It’s also a sector that’s prone to inefficiency and waste. So many institutions are involved in the transfer and deployment of cash. Subsequently, up to 10 percent of funds go into costly transaction fees every time money crosses borders; 70 cents out of every dollar are spent on logistics. It is estimated that charities spend almost 37 percent of donations on overhead costs during relief efforts, largely because the process of getting money from donors to organizations and then into the field is slow, expensive, and susceptible to fraud.
At NeedsList, we have been streamlining the process of getting supplies and cash into the hands of frontline disaster and aid groups through our platform, which allows donors to purchase supplies directly from local businesses to be sent to the field. Since we launched a year ago, donors have directed hundreds of thousands of dollars in resources–including supplies, donations, and volunteer hours–to hundreds of small aid organizations around the world doing effective, often overlooked humanitarian work. For us, the catastrophic disasters of 2017 were a wake up call. We didn’t only want to do more–we needed to do more. The increase in the number of natural disasters calls for new tech-enabled solutions to get money to where it’s needed more quickly than ever, and with more transparency.
How Cryptocurrency Can Help Streamline Aid
Today, we’re excited to launch a blockchain-enabled Disaster Response Campaign in partnership with Project Bifröst, a cryptocurrency payment system that’s making humanitarian aid response cheaper, faster, and more effective. Project Bifröst is the first venture created by ConsenSys Social Impact, a venture that uses Ethereum to create blockchain-based solutions to tackle urgent humanitarian needs.
For the first time, people can donate the Dai stablecoin (created by MakerDAO), a price-stabilized cryptocurrency pegged to the U.S. dollar, towards disaster relief and preparedness efforts in the U.S. and abroad. This means that for the first time, there is a value associated with crypto donations that is stable and not prone to fluctuation, which is the hallmark of other cryptocurrencies.
Here’s how it works: We’ll be collecting Dai into our Disaster Response Campaign on a rolling basis. Half all donations will be immediately deployed to purchase urgently needed, basic supplies from local businesses in communities around the world where there are active relief or recovery efforts are underway. The other half will be set aside for disaster preparedness for the future. Right now, we can purchase clothing and hygiene products from local vendors in Kerala to help organizations aiding flood victims. We can buy solar or battery-powered lanterns for hurricane-hit communities in Puerto Rico. And we can be fully prepared to help the dozens of organizations that will be first responders to the fallout from Hurricane Florence.
The long-term implications of using the Dai stablecoin in humanitarian response are obvious: getting traceable cash to organizations in need more quickly, without the waste and with few transfer fees, that can be spent locally.
Although blockchain is in its early days, its potential to revolutionize the aid sector is extremely promising. If we can increase trust in donor giving through the transparency and traceability that Dai provides, donors may be willing to give more generously to projects that will have a real impact on the lives of those in need.
We’re excited to be running this experiment in cryptocurrency-powered giving for hurricane relief for Florence. If you have some Dai or ether, you can donate here, and we do of course accept USD as well. We’ll be updating donors with an ongoing list of organizations their funds are being directed to as relief efforts get underway.