Tokenization For The Social Sector

The idea of tokenization is deeply linked to its use and exploitation in the economic sector. The explosive speed with which tokenization has reached every corner of the world, hand in hand with the Blockchain and in the form of financial solutions, has given entrepreneurial spirits the enormous motivation to expand its benefits to other sectors. Non-profit organizations (NGOs), within the social sector, have timidly raised their hands to participate through tokenization and Blockchain solutions. However, among the various implementations, the noblest and most impactful in the world is the one between non-profit organizations, tokenization and blockchain with initiatives that seek to bring scalable good to humanity and its environment.

The largest number of social benefit initiatives linked to blockchain took their first steps in 2012, with the best figures coming in 2014 with the rise of social sector initiatives experimenting in pilot tests with blockchain1. However, its participation has been intermittent and minimal, with a sudden halt in 2017, with a development far below the rest of the sectors that have linked their evolution and scalable benefit to Blockchain.

Democracy and governance, land rights, environment, energy, health, agriculture and financial inclusion are some twists of the social sector impacted by Blockchain, which has given visibility and notoriety to people not considered in the flow of the global economy, as they are vulnerable and lacking an identity that allows them to exist in the thousands of daily transactions that make human life rotate.

Why is the Blockchain Tokenization solution a breath of fresh air for social sector initiatives? On the one hand, we have the interactions that are generated every minute between NGOs with their donors and beneficiaries, fundraising, the destination of each donation and the legal and fiscal obligations that have a direct impact on the investment of time, material and economic resources by the social sector in addition to stigmatizing NGOs in a confusing cloud of activity vulnerable to illicitly sourced funds, despite the extensive compliance and transparency mechanisms that regulate these organizations. Imagine the enormous potential that a tokenized donation could have, tracing a secure, immutable, perennial and automated path. This is the answer to how to measure the real benefit and impact that donors are looking for in the contributions they make and, at the same time, it is the transparency mechanism that would reduce costs in all the processes in which an NGO is involved in the economic reporting of the use of resources. Tokenization would make the process of filing tax returns and reports a secure, efficient and accessible process for organizations.

The use of tokens has enabled for-profit companies to access monetary capital that until a few years ago was almost impossible. In the same way, NGOs have the same possibility of accessing donations and project funding with the use of tokens, with the characteristics specific to the needs of each project and with a greater openness to potential donors from all over the world who listen and pay attention to the expectation of testing effective ways to enforce their philanthropic actions.

Rewarding collective collaboration in a social benefit project is an incentive that NGOs can utilize with the use of tokenization, using specific tokens created for access to benefits established by the project in question and which results in a permanent digital reward over time that constantly reminds of social awareness and rewards willingness in a good deed, something important for the donor as he/she will always want to feel part of the project he/she supports.

Blockchain for Social Impact – Moving Beyond the Hype. Stanford Graduate School of Business – Center for Social Innovation, RippleWorks (2018)

In the same way, the implementation of new business models for social projects through the use of tokenization allows for transparent access to funding rounds where the percentage of dependence of non-profit organizations on labelled government funds is reduced, which is currently scarce for those micro projects that represent a short-term local impact but which in the future are profiled as macro social developments in the most vulnerable communities.

There is a new opportunity for NGOs to evolve and find, with the support of tokenization of their projects, a way to optimize benefits, obtain resources for their sustainability and permanence, and build a solid economic support network among the NGOs themselves in order to revive the principles of hope, solidarity and positivity.

Published On: September 24, 2021Categories: Legal1 Comment

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One Comment

  1. Cleopas Michael September 25, 2021 at 5:00 am - Reply

    Interesting

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