If someone asks you, “Where do you think the majority of global donations are sent?” your answer is likely to be Africa. And that’s true, as the continent has the highest prevalence of undernourishment, estimated to be 20% of the population. But do you know how much of donations money is sent to Asian countries? I doubt it. There is a huge number of people in Asia suffer from poverty, disease, and natural disasters. So, how much in global donations go to Asia? Is it enough to satisfy all its needs? And how can the blockchain help to cover the gap?
Asia is not a top priority for global financial aid
The absolute majority of global donations is sent to Africa, which has the largest proportion of people living below the poverty line.
- For example, in 2016, the US provided $10.6 billion in disbursements to Sub-Saharan Africa, $12.6 billion to the Middle East and North Africa, and just $7.9 billion in total to South and Central Asia, East Asia, and Oceania. Of those, 42% were distributed for conflict, peace, and security purposes, and about 13% for government and civil society. The rest was left for emergency response, maternal and child health and family planning, agriculture, basic education, energy, social infrastructure and services, transport and storage, and other needs. Basic health was not among the top 10 sectors receiving financial aid from the US during that year.
The numbers for 2017 and 2018 are not fully reported yet, however, we can already see the same pattern here. In 2018, for instance, $9.2 billion of aid was sent to Sub-Saharan Africa, the Middle East, and North Africa, and less than $2.2 billion to Asia and Oceania.
- In 2018, Asia, Afghanistan, and Bangladesh were the main recipients of humanitarian financial aid from Europe, with up to €79 million received. Other Asian countries were significantly behind – €39 million were sent to Myanmar (the third largest amount) and €11 million to Pakistan. At the same time, €223 million were transferred to the Democratic Republic of Congo and €222 million to Nigeria. Although African countries are obviously in high need of donations and global financial aid, the problem with Asian countries remains.
- In Canada, the gap between African and Asian aid is much smaller – in 2017, Africa got 38% of total disbursement, and Asia followed with 33%. The largest recipient in 2017 was Afghanistan (CAD$233 million). However, in total, the disbursements to Asian countries were still less than CAD$1.9 billion.
Local Asian donations are not enough
According to the most recent CAF World Giving Index 2018, Asia is the second highest scoring continent in terms of giving. The problem is that although Asia’s one-year score is unchanged (34%), it is now two percentage points lower than its five-year average score, suggesting a downward trend for donating money in the continent.
Discussing charitable giving in Asia is problematic due to the lack of reliable data across the region as well as the institutional means to collect it, says Mark Sidel, a Doyle-Bascom Professor of Law and Public Affairs at the University of Wisconsin-Madison. There is still, however, a common trend for all Asian countries – “Individual and corporate giving is growing rapidly in some countries, and steadily in most others, even if we can’t always measure it effectively.”
There are, however, a few obstacles in the way of increasing charity donations . In some countries, state regulatory control on civil society becomes very restrictive. “They include restrictions on formation and burdensome registration requirements for organisations, limitations on permissible purposes (such as broad and vague ideas of national security or political activities), restrictive membership criteria, prohibitions and even criminal sanctions on unregistered groups,” Mark explained.
Asian countries from China to Nepal to Vietnam have created a multi-step registration process for non-profit and philanthropic organizations, and approval is required from several government actors. Furthermore, in many countries, including China, India, Pakistan, Bangladesh, and Hong Kong, the role of security agencies is growing when it comes to registration and monitoring and enforcing rules on the non-profit community. Finally, in some countries, including India, tax incentives for giving are discriminatory towards government-favored charitable organizations.
Some Asian countries impose restrictions on foreign donations
Although local charities experience difficulties in collecting donations because of regulation restrictions, the countries still impose limitations on foreign funding. One example is the new Chinese law regarding the management of overseas NGOs and foundations, which came into effect in 2017. The law introduces restrictions on how foreign groups can operate in China and shifts the registration and monitoring of foreign NGOs to the Ministry of Public Security. All organizations registered under the law are required to submit regular “work plans” describing the future activities to Chinese police for approval.
And China is not the only country giving special scrutiny to external philanthropy and nonprofits. Nepal, Pakistan, Bangladesh, and others have done so as well. The oldest set of restrictions is the Indian Foreign Contributions Regulation Act, 2010 (FCRA), which was aimed to regulate the receipt and usage of foreign donations by non-governmental organizations in India. Because of the act, as many as 11,000 organizations have lost their permit to receive foreign contributions.
Mark Sidel said, “Some countries focus on civil society and advocacy groups, seeking to restrict foreign funding to them. Others focus more broadly on foreign funding, seeking gradually to shift giving toward more controllable domestic sources. But throughout the region foreign funders and funding are under increasing pressure.”
At the same time, Asia has the highest population of undernourished and stunted residents
There’s obviously a gap between the amount of donations sent to Asian countries and that required to cover the needs of all those in need. Despite the current donations to the region, a reported 75 million people were living below the poverty line of $3.10 per day in 2017 in Asia, China, Indonesia, and the Philippines.
As of 2017, Asia had the highest number of undernourished people. The situation is especially pressing in some of the Southern Asia countries such as India, Pakistan, and Bangladesh. About half of all stunted children and approximately two-thirds of all wasted children under the age of five live in Asia, and about 38 million babies are born with an iodine deficiency, which is one of the main causes of impaired cognitive development in children. In addition, about two out of every five people in East Asia do not have proper sanitation facilities, which leads to children dying from bacterial infections and diseases.
And it’s not only about disorders and poverty. During the past 30 years, natural disasters have become increasingly common in Asia – hurricane and cyclone seasons lead to powerful storms that cause immense damage to people and households, farming and livestock production, infrastructure, and market prices. Asia Pacific is considered to be the most disaster-prone region in the world.
What’s clearly obvious here is that the current donations to Asia are not enough. So what’s the possible solution?
The blockchain is here to help people in need in Asia
The blockchain could be the answer to the needs of Asian people. The solution could provide maximum transparency in donation tracking – all donors, from both individuals and institutions, would be able to track their money and see exactly where it goes. Paul Lamb, a non-profit consultant, said, “The expansion of specialized crypto funds established by large charity funding institutions like Fidelity Charitable will help popularize and expand cryptocurrency giving. No doubt there will also be more testing of smart contracts and blockchain managed giving and tracking which, if successful, could establish a new norm for transparency in philanthropy.”
With such a high level of transparency, it would be possible to keep the records of all the global donations and understand the full picture, which would, in turn, allow for the redistribution funds to those countries and the people who are currently in need. This way, the whole donation chain would become more effective – for example, charity organizations with excess funds would be able to redirect them to the regions with most distress.
One of the solutions providing such opportunities to the donations market is the International Disability Assistance Chain (IDAC), co-founded by the World Help Disability Welfare Foundation. This platform plans to store the information within the charity process on the blockchain to improve the public welfare ecosystem for disability assistance through decentralization. The data collected will be synchronized with that of the global disability assistance and poverty relief system in real time to create a truly transparent environment.
In October, the company announced its plans to help the less fortunate in Singapore after having a conversation with the head of Development and Strategy at the Community Foundation of Singapore. During the same month, IDAC signed the official agreement with the Digital Currency Exchange of Thailand, and the tokens have been available on the exchange starting from December 1st. Digital asset holders can use IDAC tokens to carry out donation activities peer-to-peer without any third-party organizations or handling fees. The disabled groups can exchange the digital currency rewards obtained for medical services, insurance, and new smart devices, which will reduce costs and serve people all over the world.
There are also other projects that allow to increase transparency in the donations industry by incentivizing charities to run projects with maximum clarity. The performance of each project is publicly available, making it easier for funders, both individual and institutional, to identify the projects that are in the most need and direct, or redirect, money toward them. Other solutions cut out bureaucracy, which significantly decreases the cost of donations, and enable a high level of transparency and accountability. Such projects are Alice, Giventh.io, and Cherr.io.
The global donations market is huge – the US alone is spending almost $50 billion annually to help foreign countries. The major destination for donations is Africa, while Asian countries are mostly left behind – for example, less than 20% of US financial aid goes to the region (including Central, East and South Asia as well as Oceania), which is less than the donations sent to Sub-Saharan Africa. That is despite the fact that 75 million people on the continent live behind poverty line, and the number of undernourished people in Asian countries exceed that one in any other region. In addition, Asia is the epicenter of natural disasters – as already mentioned, it is considered to be the most disaster-prone region in the world.
The blockchain could be used to cover the needs of Asia in financial aid. This technology makes is possible to track all donations, creating a fully transparent system with a perfect understanding of the current demands of countries and their charity organizations. The blockchain would allow for the redirection of funds to those people that truly need them, so no funds would go unused or be stolen.
Although the massive implementation of this technology could be quite complicated for the market players, reaching a new level of transparency on the market will be possible and be better for everyone around the world.
Thanks to the Howtotoken Agency experts for the information and comments provided for this topic.