Hype or Ripe? Blockchain in Foreign Aid: A Compresenshive Research About the Applicability of Blockchain Technology to Non-governmental Organization´s Financial Processes

Aslak Eek Svensson & Erlend Lier Gjærum

Studenteropgave: Kandidatafhandlinger

Abstrakt

In a digitalizing world, blockchain technology has emerged and been implemented to many use cases in various sectors, showing increased efficiency and streamlined processes. As such, the thesis investigates uncharted territories by researching how blockchain can be implemented to the foreign aid sector. More specifically, the thesis explores how NGOs can exploit blockchain technology to increase trust in their business model and streamline financial processes. Preliminarily, it was discovered that traditional accounting processes consists of multiple manual steps. Moreover, various reports unveiled that donors’ trust in NGOs have decreased in recent years. As such, the research supplemented existing theory with interviews with SOS Children’s Villages. The interviews uncovered obvious potential for improvements in SOS’ current transaction processes, in which multiple steps involves financial institutions. Additionally, SOS currently do not have a shared ERP system.
Hence, the research used these revelations and identified four main criteria for improvement: 1) increased transparency, which is an important factor of trust; 2) increased traceability, 3) lower transaction costs; and 4) streamlined transactions. With these four criteria the researchers used existing theory and interviews with blockchain experts, aiming to develop a strategy in which blockchain technology could help SOS improving their financial processes. The research culminated in a conceptual design.
The public-permissioned blockchain proposed ensures transparency to the transaction timeline, which in turn increases donors’ trust in NGOs. Second, using a cryptographic stable coin, each donation will be fully traceable throughout its journey to the beneficiaries. Third, the design omits several steps on the transaction timeline, which in turn decreases transaction costs and streamlines transactions.
Furthermore, blockchain technology has characteristics which may facilitate streamline traditional accounting processes. More specifically, referring to the eight steps of the accounting cycle, an ERP system on a shared blockchain ledger can affect positively the first three steps: 1) analyzing transactions by examining source documents; 2) journalizing transactions in the journal, and 3) posting journal entries to the accounts in the ledger. However, a shared ERP system could also be obtained by other digitalized platforms. Thus, whether a blockchain infrastructure is most effective, remains debatable.

UddannelserCand.merc.asc Accounting, Strategy and Control, (Kandidatuddannelse) Afsluttende afhandling
SprogEngelsk
Udgivelsesdato2020
Antal sider151
VejledereRaghava Rao Mukkamala