Corporate Social Responsibility (CSR) is a broad term used to describe a company's effort to improve society in some way. The funds provided under Corporate Social Responsibility are for social development issues and make a positive impact on the living standards of the economically poor and disadvantaged people of society so they can live a productive and dignified life. The major problems faced in Corporate Social Responsibility (CSR) funds are lack of transparency, leakage of funds or benefits outside the circle of targeted beneficiaries, higher transaction costs due to leakages, insufficient measurement of success indicators.The objective of this project is to develop a proof-of-concept solution that uses block-chain technology for the management of CSR funds (which have to deployed in government-mandated areas of social sector development) that facilitates transparency amongst all stakeholders.
What it does?
The objective of our product was to make the transfer of CSR funds easier, cleaner and in a hassle-free way. Therefore, we built a virtual virtual wallet (VVW) - a web platform. The company would have their own virtual wallet on this platform which would then be connected to their official bank account.
As per the regulations, companies that come under CSR Regulations have to pay a percentage of their profits for the cause of social welfare. In each quarter of the year, the virtual wallet account of the company on our platform will automatically withdraw and store a specific percentage of company’s profits (which is needed to do the CSR activities) from their official bank account. This money would be present in the form of $$ in the wallet.
To make a transaction the company just need to type in the amount and select the NGO whom they want to fund. For every transaction, the amount + a small percentage fee would be deducted from the virtual wallet of the company (which is on our platform) and simultaneously the amount sent would be reflected (once verified by the nodes) in the receivers bank account.
Internally the sender’s money ($$) was first converted into a cryptocurrency, then this cryptocurrency was transferred to the receiver’s account and again converted into $$ which would be then instantly encashed in the receiver’s bank account. The conversion of $$ to Cryptocurrency and vice-versa is being done to use Blockchain technology and induce transparency in the management of CSR funds.
The companies can choose to transact to whichever cause they believe in. In addition, the BlockBit would also provide a dedicated list of audited NGO's across all the industries and sectors on the web platform so that the company has an option to directly choose an NGO given in the list. This solves the dilemma of allocating the CSR funds that almost 32% of companies in the world face. Moreover, by opting this, the companies will also get an end to end auditing of their CSR funds. The auditing problem is faced by over 62% of companies worldwide.
How we built it?
Basically, Cryptocurrency is stored in a virtual wallet that can be kept on a personal device (computer, hard drive or smartphone) or in a virtual bank. In our product, these virtual wallets are linked virtually to the bank accounts of the company, thus virtual virtual wallets(VVW). Every account number along with the bank information would constitute a primary key through associated with one account of VVW.
Blockchain Technology would provide i) A strong security architecture ii) A distributed ledger to bring transparency into the system iii) A framework for creating smart contracts between funders and service providers.
The infrastructure would also be scalable and have minimal transaction costs so that the maximum benefit is passed on to the targeted beneficiaries and other stakeholders.
Challenges we ran into
Our biggest challenge was to get the early adopters on board. It was really challenging to convince the companies to get onboard with us since there was a lot of politics involved regarding the CSR funds at the upper management level. Ultimately, we were able to bypass this by convincing the shareholders and investors of an educational institute (Zeal Education Society, Pune) to pilot test with us. Coupled with this we also faced challenges of reliable commitments from team members.
Accomplishments that we're proud of
A small, core team came together to fulfil the following things - 1) To identify a huge trust gap in the CSR market 2) To come up with an idea using blockchain to bridge the gap 3) To overcoming technical challenges 4) To getting companies onboard for a pilot run.
We are also proud of the fact that we were able to considerable validation from mentors and peer hackathon teams about the prospective merits of our solution.
What we learned
We learned the following:
Building a prototype requires much more technical expertise than anticipated. It is almost impossible to develop software with volunteers or for only future considerations. Blockchain integration into other applications is considerably more complex than making a few standard API calls. Convincing companies to buy our product or to do a pilot run with us is extremely difficult than expected.
What's next for BlockBit
In collaboration with the Zeal Education Society which is an educational institute, we are planning a pilot implementation of BlockBit in the Pune city of India, this fall. We hope to demonstrate its effectiveness for:
1) Transparency amongst all stakeholders 2) Secure and non-repudiable transactions 3) Near real-time authentication of transactions in a closed block-chain 4) Lower cost of transactions due to plugging of leakages 5) Facilitation of direct benefits transfer through virtual currencies and Smart Contract