Transparency in the nonprofit and impact investment community has been a major talking point for a number of years. Recent high profile scandals highlighting the misuse of donations, and advances in technology have seen a set of healthy higher expectations emerge, when it comes to understanding where and how funds are being used. And with around 900 billion being donated to charities each year, roughly the same size in value as Microsoft, it has to be a step in the right direction.
Accountability is key
“Earn trust, earn trust, earn trust. Then you can worry about the rest.” — SETH GODIN
There are some big positives about implementing open businesses practices. For one being transparent is the fastest route to developing trusted relationships with stakeholders and by doing that you also increase your chances at securing more funding. That was one the the key findings of a 2018 study published in Journal of Accounting, Auditing & Finance. Researchers from Villanova University and University of Wisconsin discovered that organisations earning a rating of transparency from the nonprofit GuideStar gained on average, 53% more contributions when assessed a year later. GuideStar give different rating levels depending on the thoroughness of public disclosure and the more transparent organisations are, the bigger the funding gain. For example, silver-level awardees earned roughly 26% more contributions than bronze.
And the popularity of Charity Navigator, a US based non-profit that rates charities by evaluating areas of performance around financial health and accountability & transparency, now has 11 million annual visitors to it’s website and as of the date of this article has rated 9,158 charities, provides further evidence of the hunger for greater insight into how charities are operating — With more data and information at hand, funders are provided with the confidence required to continue supporting the projects they are passionate about.
The role of technology in creating transparency
There’s been a lot of talk about blockchain recently and this decentralised ledger methodology is one piece of technology that could help to streamline project fundraising strategies. By reducing administrative costs via automation, providing more accountability with provable project milestones, and allowing investors greater transparency and reporting into their investments, blockchain can help to improve the operational efficiency of the organisations creating impact and ensure they can get more done with less — And in a sector where trust and transparency are among the key factors that determine the continued flow of investment dollars, blockchain could end up being the technology to ensure projects continue to secure that much needed funding.
How is Task creating opportunities for funders?
Organisations using Task get access to custom Stellar Tokens to track funds. Stellar is fast, low-cost — and it provides a publicly accessible blockchain ledger system so that the activities that have been funded can be reported on at anytime. Each Funder is provided with a “funding wallet” which is used to channel payments to the funded activities. Task uses a special technique to encode the tracked activity data, so that this data can be checked for authenticity at any point in the future.
Whether you are a large investment fund or an individual supporter, using this wallet system provides per transaction tracking as the funds get utilised and all activities are reported in real time on Task dashboards.
Enter the health rings —on the Task dash boards we’re presenting data via a well recognised reporting format as used by Apple, Fitbit and others for activity tracking. It’s an excellent visual and the perfect way for Task to give insight to project performance and reputation.
The outer ring shows the fundraising target against actual funds received, so you can see how much a project has raised. The middle ring shows the value of funding that has been used for a particular activity — so real transparency of investment spend. And the inner ring, which is optional, is used in projects where team members are rewarded for the work being done. For example, an education project may involve teachers receiving tokenised rewards for teaching a certain number of classes.
When funding has been used up, you get to see who got paid, and why they got paid. It’s a very different approach to so many investment and funding experiences in which donors have little to no idea what happened to their support. Task is a window into investor spend helping to create far better transparency, which ultimately leads to stronger relationships between funders and impact creators, so the work that needs to be done continues to receive the funding that’s required.