From a China’s Online Donation Crisis to Blockchain Application
A Chinese father in the southern Chinese city of Shenzhen has recently raised nearly 2.7 million RMB (390 thousand USD) through a heart-wrenching appeal on Wechat, the most popular messaging app in China, for curing his daughter’s leukemia.
Luo Yixiao: the girl is now hospitalized and in serious condition
On 25 Nov, writer Luo Er published an article on Wechat about the sickness of his five-year-old daughter, Luo Yixiao. Wechat allows users to give money to authors through their online wallet instantaneously with an intention to encourage more people write original articles of quality. Some people together donated about 32,000 RMB to Mr. Luo. On 27 November, a financial marketing company named “Xiaotongren”, which is owned by Luo’s friend, announced it will donate 1 yuan for each repost of Luo’s article on Wechat. Then the article went viral as the whole WeChat community took action by reposting the article and tipping the author. The enthusiasm from users even led to a breakdown of Wechat’s tipping system that will restrict any donation if the 50,000 RMB per day limit is reached. It turned that Luo’ has received more than 2.7 million RMB comprising 2million RMB from Wechat users’ tipping and 700,000 RMB from Xiaotongren’s donation.
But the public became outrageous when some whistle-blowers alleged that Luo’s family in fact owns three apartments in Shenzhen and the Chinese Medical Insurance System has already covered 80% of girl’s medical expenses, which has been admitted by Mr. Luo and vindicated by the staff of the hospital caring the girl. Luo quickly apologized and made it clear the huge amount of money was out his expectation and money will be returned to users. But the public are still challenging the donation as a blood-oozing campaign schemed by the marketing company and acquiesced by the father. More people are questioning who will guarantee accuracy of the sum of donation and the flow of money in the returning process.
This is the biggest trust crisis related to donation since the crisis of China’s Red Cross Society in 2011 when donations decreased to even zero in some cities, which was triggered by Guo meimei, a girl claiming herself related to red cross and showing off her Maserati online. From donations organized by government to donations called for by individuals, Chinese gradually become more puzzled, skeptical and nonchalant. The fact that there were discrepancies between the sum of donation claimed by several Chinese world-known movie stars and actual sum received during and since 2008 Wenchuan earthquake only precipitated the collapse the public confidence on charity.
All the problems of philanthropy boil down to a lack of trust. To build trust, charities and individuals need a third party to be the judges. This not only increases the management costs but also becomes the Achilles’ heel when the third parity itself corrupts. Blockchain technology is the most possible vehicle that can totally transform the governance of charities in terms of trust building and costs lowering. According to a paper published by Charities Aid Foundation(CAF), a UK-based organization, Blockchian technology can increase transparency and thus build trust even when is set up. The set-up of a charity often involves cross-checking against trustee’s eligibility; and one of the proposed uses of blockchain is to provide more effective means of enabling online identity. Then all a company need is to have their name for the charity, address, governing document (including purposes of founding of the charity recorded on the blockchain without the reliance on government body. This not only reduce the public expenditure but also make charities more transparent. Next, the donation receiving and giving process will all be recorded on blockchain, reducing the need for accounting as these data are immutable and traceable. The whole process requires minimal labor costs. Finally, this 100% transparency and real-time updating will give much more impetus to the donors and thus a virtuous circle. China now can see some efforts of applying blockchain technology in charity. Guo Yue, the manager of the charity platform on Chinese Tencent has said what Tencent is now seeking for is to explore the possibility to apply blockchain into crowdsourcing charity by making each record of donation transparent, immutable and traceable.
Now in China the lion’s share of donating group, at least on Wechat platform, are the young people between 18-35 years old. They are going to form the core of China in the coming years. To convince them that their philanthropic acts all will help those in need, which is in the interest of the whole society, the blockchain community must fasten its pace to transform technology into social benefits.