Abstract
Grant management is a vital process that enables organisations to successfully deliver programmes that address social, economic, environmental, and other challenges. Globally, grant transfers represent significant sums, and their management is fraught with deficiencies that undermine the impact of the donated funds. Among the most urgent challenges in grant management are to improve transparency and reduce high administration costs. Digital transformation has done much to enhance efficiency, transparency, and accountability in grant administration; however, numerous shortcomings still exist. Blockchain, smart contracts, and tokenisation can be combined to achieve greater levels of efficiency and control in grant management than is currently possible. Through the study of fundamental blockchain concepts, the authors propose a grant-management solution that tokenises every expenditure item and uses smart contracts to automate payments, reporting, and budgetary compliance.
TopIntroduction
Populations living in poverty across the world suffer from social ills ranging from a lack of basic social infrastructure (water, sanitation, electricity, healthcare access, etc.) to discrimination and hunger. These challenges severely jeopardise the futures of people in countless communities who are desperate to escape the cycles of hopelessness that these social ills create. Governments, multilateral organisations, foundations, and philanthropists attempt to address these issues by developing and funding programs to the tune of trillions of US dollars annually.
Unfortunately, shortcomings in the management of grant programs, such as the misappropriation of funds and poor oversight of administration, prevent many people from benefiting from the assistance they desperately need. To address these deficiencies, a number of different grant management systems have been developed over time. These systems have sought to incorporate new tools to update their capabilities in accordance with the latest technological advances. Still, much inefficiency in grant management persists.
Since 2008, blockchain technology has shaken up the financial world and the Internet at large. With unprecedented automation capabilities, enhanced security, and real-time auditability, it holds great promise to significantly address current inefficiencies in grant management.
This chapter explores the use of blockchain in grant management by paying particular attention to the core features of blockchain and blockchain tokenisation that are relevant to the administration of grants. Through an exploration of a case study, significant challenges in current grant management systems are highlighted and a blockchain-based solution is proposed while further expounding on the lesser-known features of blockchain tokenisation.
Key Terms in this Chapter
Cryptocurrency: A digital currency programmed on a blockchain using cryptography and a consensus algorithm to secure and validate transactions. Cryptocurrencies can be used to buy goods and services.
Wallet: Software applications that are used as user interfaces with a blockchain. They are applications used to store, track, and manage a user’s keys to transact with cryptocurrencies.
Blockchain: A decentralised ledger that enables peer-to-peer transactions with time-stamped and tamper-proof registries that utilises cryptography and consensus algorithms to validate transactions and solve the double-spending problem.
Double-Spending Problem: When the same digital token is spent more than once.
Consensus Mechanism: A method by which parties in a network reach an agreement about the correctness of transactions in a shared ledger.
Smart Contract: An encoded set of rules typically programmed in high-level computer languages. A smart contract executes upon the fulfilment of certain conditions with clauses that are binding, unstoppable, and automatic, without the involvement of third parties.
Token Standard: Minimum specifications that encourage interoperability between smart contracts and other infrastructure components such as wallets, exchanges, and user interfaces with predictability. Standards allow token trading without the need to upgrade or additional programming efforts.
Turing Complete Computer Language: A programming language that is capable of running any possible algorithm.