Transforming Charity Into a Business (for the Beneficiaries)

coinshareBy Enrico Camerinelli, Co-Founder, CoinShare

“Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime”.

This proverb is very true, but to be realistically applied a sentence should be added: “Keep on giving a fish until the man has learned”. This should be the essence of charity: to sustain a person until that person becomes self-sufficient and capable to decide for its own future.

There are numerous charity programs thanks to the good will of international organizations, and CoinShare’s charity initiative would not be different had it not the peculiar characteristic of its digital tokens that allow to envision charity donations as a means to encourage beneficiaries to become self-entrepreneurs.

Coinshare, a blockchain-based social shopping project that runs on digital tokens (a.k.a. cryptocurrencies), is supporting Charity, an African project focused on collecting and recycling plastic through blockchain technology. People collect plastic waste and take it to a collection point, receiving in return a ticket voucher in cryptocurrency that they can spend to buy food and clothing in authorized stores.

Going back to the proverb, this is the equivalent of “giving the fish for a day”.

It is the cryptocurrency voucher that runs on blockchain-based tokens to implement the “give a fish until the man has learned” part.

This vision has solid foundations in current projects for sustainable supply chains in which buyers are investing significant amounts of money and time to ensure that Corporate Social Responsibility (CSR) credentials of their suppliers are of a good standard. Financial incentives based on supply chain finance schemes reward suppliers that comply with CSR protocols: These supply chain sustainability programs use sliding rates for invoice discounts based not only on the buyer’s credit standing but also on the supplier’s adherence to the company’s CSR standards. The supplier leverages the buyer’s credit rating and accesses an agreed percentage of its due payment up front from the corporate buyer’s bank. Suppliers get cash faster and cheaper, and corporate buyers benefit from removing the risk of having financially distressed suppliers. Suppliers who score higher in the CSR auditing process are rewarded with better rates.

Organizations of the likes of the World Bank are behind these supply chain sustainability programs.

The presented model can be used to transform the charity scenario: beneficiaries could do more than using the voucher to “buy the fish”. They could create a cooperative of “plastic pickers” who recycle the plastic and sell it to industrial textile clients who produce fabrics using recycled plastic. The digital tokens would be the exchanged currency, investors could finance the cooperatives and receive back digital tokens that certify their participation in the project and allow them to monetize the investment by virtue of the token value. Furthermore, the token-based economy of the cooperative would allow financiers to have complete visibility of the operations totally CSR-compliant, paving the way to supply chain finance schemes already operating in the above-mentioned supply chain sustainability programs.

Conclusion

Token-based economies have disrupting effects in enabling previously almost-impossible business models due to the costs involved or to technical limitations. Blockchain opens the way to socially sustainable economies that enable- for the first time- the poor to take action and decide for their own future, while the fortunate in richer countries can benefit by investing and having fair returns from their investments.

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