My Donation Went Towards What!?

As rain continues to hammer Houston Texas, people and nations everywhere are opening their hearts and their wallets to provide aide to those affected by the hurricane. I love to see people come together and give freely to help one another. However, there is a dark undercurrent rising. If you look close enough on social media or listen to conversations about relief efforts sooner or later you will catch wind of it. People generally ask the same questions.

• "What is the best way to donate money?"
• "How do I know my money is being used to help those in need?"

These questions rise from a deep distrust that has defiled some of our most giving moments.

This isn't anything new. In the aftermath of 911 the world was shocked to learn that their donations were grossly misallocated by some of the world’s largest non-profit relief organizations. The Red Cross came under intense fire after raising over $564M in relief under its Liberty Fund yet it only distributed a mere $154M to victims of the attacks. While this is an extreme example one can’t help but wonder if the promises will subsequently fall short yet again resulting in our well-intentioned donations disappearing into the ether.

The fact is that Chaos has long been the harbinger of opportunity. On the battle field, we say when the dust settles you can see where the devil has been. In a natural disaster, the he comes in 3 forms.

1. Relief Fund Allocation. Issues and questions regarding the usage of initial relief fund has been a topic of debate for as long as we've had natural disasters. Today there is no way to know for sure how much, if any, of your donation makes a difference to someone effected by this storm.
2. Insurance Fraud. I promise you right now there are dozens, if not more, people trying to figure out how to make a claim against damage they did not incur. The resulting audits will continue for years and costs hundreds of millions of dollars in productivity and false claims. Those costs are passed on to you!
3. The Tricksters. Once the waters recede and the people begin to rebuild they will come rolling in. They come with promises and stories of quick easy repairs and brighter days. They pray on the young and old, on those most vulnerable and they will take their money and disappear into the night.

Now I hate to paint a picture of despair and to pile onto the already devastated people of Houston but until we as a people take action we will continue to see this kind of activity. To give you an idea of scale fraud estimates in the wake of hurricane Katrina have placed the costs to taxpayers at a staggering $2B.

That’s TWO-BILLION DOLLARS! That's crazy! The good news is a technology is now being developed that can prevent these very things from ever happening again.

By now we have all heard of the widely popular Bitcoin but how many of you understand the underlying technology that powers it? That is the real gift to the world and the way we prevent the staggering losses that are still to be seen in Houston. Blockchain provides a single, immutable point of truth in a given transaction. You cannot alter it, you cannot fake it, and you cannot deceive it. In the spirit of brevity, I won’t go deep into "what" Blockchain is but instead will focus on "how" it could be used in this scenario. For a more detailed look at Blockchain as a whole check out this article by Mervyn George.

Let’s look at how Blockchain it could be used to prevent each of the scenarios listed above.

1. Relief Fund Allocation. We need a mechanism that is based on accountability and transparency. We need a way to track every dollar's path from the donor to the recipient who benefits from it and then on to its final consumption. Blockchain does exactly that. A house wife in Nebraska could make a donation to a national relief fund Blockchain and then track that donation's usage down to the most minuscule detail. Did it get used for food? Was it used to provide blankets, perhaps medicine? It would all be there, locked in history for all to see and audit.
2. Insurance Fraud. Insurance is simply a contract between the insured and the insurance company to replace certain things of intrinsic value at a set value. Blockchain's concept of smart contracts are able to capture the nature of these items and agreements in perpetuity along with any claims and payments made against them. There is never a question if someone owned something or if it was insured at the time of the incident and the payouts are recorded and fully auditable. They are tamper proof because they are not owned or managed by the insurance agency nor the property owner.
3. The Tricksters. Blockchain has a concept of reputation and identity. Tricksters and frauds thrive on anonymity. If you don’t know who they are you can't find them. Consumer education combined with well-defined business identity and reputation systems on the Blockchain would provide a concrete vetting system that would be impossible to fake. The contract and money exchanged on the Blockchain stays in plain sight making it easy to reverse a transaction and track the would-be thief should they not hold true to their promise.  

Now I wish all of this was in place and ready to be deployed today but the fact of the matter is that these solutions are still being developed. Startups and major corporations alike are dedicating significant resources to bringing these to life but it is a fundamentally new way of conducting business not only at the corporate and economic level but in our personal lives as well. That being said we must continue to develop these solutions and put a stop to the abuse of people in their time of need.

This is where you come in.

1. Educate yourself about Blockchain and what it can do. Many have called it the most significant technological advancement since the internet and I for one believe that to be true.
2. Share your knowledge with anyone and everyone you come into contact with. The more the average person understands this technology the faster it will grow. There are forces who would love to keep this from ever seeing the light of day because it means they would lose the ability to act in less than honorable ways.

Lastly Share this article widely and broadly so people know there is another way. Thank you and God Bless Texas!