BitGive recently announced a new tool that allows everyone to see exactly where charitable funds go, and the impact they have. Called GiveTrack, the new service will use blockchain technology to allow donors and the public to trace transactions on a public platform in real time.
The Founder of BitGive, Connie Gallippi, said that an initial minimum viable product is currently available in private beta while the project is still under development. The platform is built on Bitcoin, which can not only transfer funds directly, securely, and at significantly lower cost; but can also broadcast every transaction on a public ledger, allowing everyone to see exactly where the funds go and the impact they have.
“If there’s real-time transparency and accountability, donors will be excited about supporting organizations that are willing to share this information.”
- Connie Gallippi
A study published in 2015, by The Chronicle of Philanthropy, found almost two-thirds of Americans have a great deal or a fair amount of confidence in charities, but a significant number expressed concern about finances. A third said charities do a "not too good" or "not at all good" job spending money wisely, while 41 percent said their leaders are paid too much.
The largest and most-utilized evaluator of charities in the US, Charity Navigator, recently released their tenth CEO Compensation Study. Not surprisingly, there is a predictable relationship between the total annual expenses of a charity and the CEO's compensation the bigger the charity’s budget the higher the compensation.
Of the 4,587 charities included in the study, 10 awarded their top executive with $1million or more in compensation. 66 charities paid their CEOs between $500,000 and $1 million. “The charities in our study reported a median total CEO compensation of $123,462 in 2014,” states the report.
“These same charities reported a median 3% increase in CEO compensation from 2013 to 2014 indicating that charities are still being conservative with compensation increases.”
- Charity Navigator
The nonprofit charity watchdog organization, Chairtywatch, offers similar information. The data they collect is turned into a Top Compensation Packages list, with 15 charity employees topping $1 million in earnings. The site also provides a Top Rated Charities list.
However, the publically available data that these figures are based on are from Internal Revenue Service (IRS) filings. The salary information was calculated by adding the IRS Form 990. “The IRS expanded the Form 990 in 2008 to collect additional information from charities that can accept tax-deductible donations,” states Charity Navigator. “Several changes were designed to inform the public about potential conflicts of interest, board oversight, executive compensation, and record keeping.”
According to the IRS, some tax-exempt organizations are directly involved in abusive tax avoidance transactions, which the agency calls ATATs. “Because they are tax-indifferent, tax-exempt organizations are, at times, used by for-profit entities as accommodation parties in these transactions.”
Identifying and responding to ATATs involving tax-exempt organizations is critical to the IRS objective of discouraging and deterring non-compliance within tax-exempt and government entities. Former Commissioner Everson emphasized this in a hearing conducted by the Committee on Finance, U.S. Senate on Charitable Giving Problems and Best Practices.
"By making full and accurate information about its mission, activities, finance, and governance publicly available, a charity encourages transparency and accountability to its constituents."
- Internal Revenue Service
By using Bitcoin, GiveTrack allows both Charities and donors to see the entire transaction chain for a donation, and watch the funds as they’re spent. The customized platform for nonprofits is data centered and provides a comprehensive user interface.
The platform also gives donors project status updates, and helps them visualize their contributions in action. According to the GiveTrack website, future phases will build out a broadly-applicable platform, data analysis layers, feedback loops, reporting mechanisms, and more.
However, the platform’s transparency is dependant on bitcoin adoption. Unless the donor already has bitcoins to donate, charities may be stuck with conversion fees, and the opacity of in house accounting.
Referring to the current beta release, Gallippi admits that GiveTrack is a work in progress, and isn’t launching with a robust system for preventing every fraud. However, BitGive will initially limit members on GiveTrack to US-based, tax exempt organizations that have a track record of success and accountability.
“By empowering donors to track their charitable dollars, and allowing donors to own and manage their own trust in nonprofit organizations through direct and instant access to dollar flows, BitGive can catalyze an increase in total charitable dollars given each year.”
- Alyse Killeen, a Director on BitGive’s Board of Directors and Partner at StillMark Investment Fund
BitGive has worked with several major charities already, including Save the Children, The Water Project, Medic Mobile, TECHO, Fundación Parlas, and Team Rubicon. The Water Project and Medic Mobile will be on the new platform from the start. “Many donors may want to try it first with small amounts of money for their donations,” Gallippi explained at the launch party on Wednesday in San Francisco.
The Water Project is BitGive’s biggest success story. The charity invests in local people and solutions to solve water issues in sub-Saharan African countries, like Kenya, Uganda, and Sierra Leone. These local projects develop clean water programs, building wells, constructing small dams, protecting springs, and otherwise securing clean water sources. BitGive and the bitcoin community raised over $11,000 in bitcoin last march for the charity, funding a new well in western Kenya.
“We recognized early on, alongside BitGive, that the blockchain provides a whole new way to allow confidence-inspiring real-time auditing of how organizations like ours spend the public’s donations,” said Peter Chasse, President and Founder of The Water Project. “GiveTrack will allow charities to prove, in an approachable way, what they’ve been doing all along, namely providing sustainable, cost-effective solutions to people who need them most.” -
Medic Mobile is a non-profit seeking to use mobile-phone-based data to solve issues related to medicine and distributing it properly. The highly tech-centric charity revolves around a software toolkit that brings together, “smart messaging, decision support, easy data gathering and management, and health system analytics.”
“Our tools are free, open-source, and designed alongside people delivering care in the hardest-to-reach communities,” states the organization. Their mobile app and other software tools help ensure safe deliveries, track outbreaks faster, treat illnesses, keep stock of essential medicines, communicate about emergencies, and more.
After a devastating earthquake shook the Dhading District of Nepal, BitGive supported Medic Mobile’s Nepal-based team in rebuilding efforts by raising almost 15 bitcoins, which supplied about 650 mobile phones to health workers.