In this interview, Met Ciftci of Freewill and Taras Tovstyak of ELEKS speak about the origins, development, and evolution of a crowdfunding platform, SPIN, that verifies the feasibility of using blockchain for social impact projects. They reveal the profound motives behind this platform and explain its limitless potential in terms of tamper-proofing and speeding up charity funding projects for both local and global communities.
Met Ciftci is a Chief Design Officer at Freewill, the company that owns the SPIN platform.
Taras Tovstyak is a Director of Customer Success at ELEKS. He was supervising the development of SPIN and continues to work with Freewill account on other initiatives.
What is the SPIN project about? How did you come up with the idea uf using blockchain for social impact, and why did you start this social innovation?
Met: SPIN is a blockchain-powered crowdfunding platform where anyone can become a supporter of a Talent – anything and everything that we want to leave for future generations – be it people, an environment that is safe and nurturing for young children, animals, or mother nature.
SPIN is owned and supported by Freewill, a Japanese IT consultancy firm. The concept was born out of our wish to make our world a place where everyone can invest in local Talents and create a cycle of positive outcomes. Based on this concept, we named the application SPIN, and these letters stand for Social Parents, Investment, and Nurture.
Toshi Asaba, Freewill’s founder, and CEO, has been thinking over this concept for years. His idea was to create a system where we can track how the donations are being used and what kind of impact each user is making. The motivation behind this is straightforward: we want to support those Talents in need, and we want to make sure that our support is reaching them.
What were the beginnings of this social innovation and how did you build the initiative?
Met: SPIN is all about bringing transparency and traceability to the world of charity. As a comparatively small company behind this concept, the issue of trust was crucial for us. So, in order to gain the users’ trust, we came to the conclusion that the best solution would be to build a system that is run by automated protocols rather than controlled by a single entity. The technology of blockchain was truly cut out for this solution. People can trust the blockchain system itself, knowing that their money is controlled and protected by the system, all of their transactions are recorded well and cannot be changed. To develop SPIN, Freewill contracted ELEKS, a vendor with solid blockchain expertise. That is how things started to spin.
Taras: The ELEKS team joined the SPIN project as a development partner. We were fascinated by the challenge of combining the seemingly incompatible: Eastern traditionalism and Western entrepreneurship, charity and technology. Previously, the company’s experts had successfully implemented blockchain solutions for various industries, such as fintech, logistics, retail and others. CSR, or charity as a broader domain, was a new ground for us, so we wanted to see how the principles and ideas behind the technology would empower the charity initiatives.
We used Ethereum blockchain to secure transactions within SPIN. Ethereum guaranteed full transparency of donations, and the ability to track the donated funds all the way to the beneficiary. Besides transparency and trust, the blockchain core allowed us to minimise the time needed to perform the transaction so that the beneficiaries could receive the often urgent help from SPIN within days rather than weeks or even months. We also integrated the solution with a Stripe payment gateway to allow worldwide online transactions and remove any geographical boundaries for SPINs Social Parents.
Met: However, money is not the only visibility issue. In most crowdfunding platforms, it is not possible to see why the project is really necessary, what the story is behind the idea, who the people involved in the project are, whether those people are reliable, and so on. Apart from the whereabouts of the donations, these points also raise the issue of trust, making it almost impossible for small organisations to reach out to more people and gain their trust. In order to solve this issue, we built our concept as a storyfunding platform, where people can access the detailed story of the Talent, the personal background and public profile of the project owner, and the profiles of everyone involved in the creation of the project. This enables a fully transparent process of project management and thus, a better interaction between project owners and donors.
How did you attract public attention to the issue you wanted to tackle and make others believe in your purpose and potential?
Met: The concept of SPIN was not new to us when we started working on the application. We already had deep connections with a number of nonprofit organisations from various countries as well as social investors, etc., and we were aware of the transparency issue.
For a local NPO, for instance, the only way to collect funds for their activities was organic connections such as personal/organisational networks, sponsors, etc., because it is not easy to compete with organisations that are known worldwide. However, apart from the scope of their activities, some local nonprofits are more committed to the problems than those big organisations, because they are doing those activities for their own communities and they understand the needs better.
Even though crowdfunding platforms helped these smaller organisations reach out to more people, most of them were still struggling with collecting the necessary funds. Here, we thought that the main problem was transparency, and we decided to start SPIN for these organisations. Thus, SPIN is tailored to those local organisations in order to provide more transparent and trustworthy connections between them and their supporters.
In addition to that, as I mentioned before, SPIN is a storyfunding platform, which means that we focus on the mentors’ and talents’ stories, and help them bring the source of their motivation out into the open, and this reaches deep into the audience’s soul. Also, in order to create a good narrative, we dive deep into the mentors’ stories and try to understand them better. This enables us to create a strong relationship with them and make them believe in our purpose. Because, apart from all of the technical aspects, we move with pure emotions. We believe that this emotional bond between us and the mentors, as well as the supporters, is also the key to successful projects.
Speaking of projects, we currently have five active projects on SPIN. Due to the outbreak of COVID-19, we decided to start our platform earlier than initially planned, and we published our pilot project in Nepal in June. Toshi-san had personal connections with the mentor, and after he contacted him about the project, we realised that there was a huge demand for international aid in the region. Because of the long–lasting lockdown, the measures resulted in layoffs and reduced income, making it more of a struggle for families to put food on the table. So we started the project immediately, and in just three days, the target amount was reached. Right after that, we managed to send the money to the region in a few days in total. The mentor provided receipts for all spending and submitted a couple of reports confirming that the local people received their food supply. Usually, on most crowdfunding platforms, it takes weeks or months for those in need to receive the money after the project has been completed. However, the mechanisms in SPIN, such as phase management and voting, enabled us to deliver the help faster and to provide visibility for the activities. We also invited the mentor to an online talk session and discussed the features and benefits of the system, and thankfully, he seemed pretty satisfied.
Taras: I strongly believe that the blockchain technology at the heart of SPIN adds a lot of value to the project and makes it stand out among similar solutions. In addition to providing a much–needed layer of trust to charity transactions, our application of blockchain also shows how disruptive technologies can be leveraged for the greater good. We at ELEKS, as blockchain experts, are fascinated to see how this technology is penetrating various spheres of life and becoming a unique feature that attracts public attention to projects such as SPIN. If you ever wanted to test how blockchain works, becoming a Social Parent at SPIN would be a great start.
From the very start of the development, we have appreciated the idea of SPIN and its storyfunding nature. Freewill’s dedication to the idea and the potential of the platform shifted our perception a lot. The project team became true advocates of SPIN, promoting it first inside the company and then among the Ukrainian IT community.
How does the SPIN platform raise money?
Met: SPIN is a public platform where anyone can start and support a project. The main mechanism that enables us to raise money is similar to crowdfunding and thus, project owners need to promote their projects by using their own networks in order to collect the necessary funds.
In addition to that, SPIN is designed to give the project owners the ability to build stronger bonds with their donors in order to provide continuous support for their projects. We offer a couple of unique features, such as phase management, reporting, and voting, that make the application stand apart from other crowdfunding platforms.
We ask the project owners to divide their projects into manageable phases, each with measurable milestones and a required budget. The donors can then access the detailed budget breakdown, including a list of items and their value/price, in addition to a detailed explanation of the phase goal. This information, by the way, cannot be edited or altered by the project owner once it is published.
Also, donors are the decision makers in SPIN. We give them the right to decide whether the project should advance to the next phase by asking them to vote on the project at the end of each phase. This procedure minimises the risk of fraud, and it enables the donors to get their donations refunded by voting against the project if the project owner is not fulfilling their commitment.
Having full control over the project and overall visibility of the project owner’s activities encourages supporters to donate and allows them to focus on the main purpose of the project, which is the Talent. We believe that if we can focus on the story and create an emotional bond without any obstacles, raising the money is not an issue at all.
How did you scale your social innovation and what tips for scaling could you share?
Met: I think we can talk about scaling social innovation from two different perspectives: the scope of the social projects and measuring their impact on society and the environment.
Regarding the scope of the social projects, we focus on talents, which can be anything and everything that we want to leave for future generations. Our starting point was talented children, who are in desperate need of support in order to pursue their dreams. When Toshi-san talked about his idea of starting SPIN, he mentioned his past experiences, seeing young people vanishing in front of his eyes, having no opportunity to get a proper education and just doing their best to survive. He said that he wants to save these people and make heroes out of them, who will guide their local society. However, when we started planning our activities, we realised that these talents cannot be restricted to humans. Everything around us, animals, nature or the culture itself can be a talent, because without these, society would not exist. And currently, we have active projects in SPIN in each of these categories: human, animals, nature, culture and more.
The second perspective is how to measure the impact of those projects on society and the environment. Freewill utilises Sustainable Development Goals (SDGs), which are set by the United Nations General Assembly, as the basis of scaling the social impact of the projects. Each project on SPIN is tagged with the corresponding development goals and reviewed by the audience accordingly.
Apart from the indicators described in the official guidelines, SPIN enables visibility by applying a direct line of report between the project owner and the supporters. Thus, the supporters can track their impact on these development goals and review the activity reports in order to decide the project’s Social Impact Score.
Taras: For us, SPIN is much more than a project that we are building for the client. We felt that together we can do more to benefit the people and communities around us. Naturally, we started asking ourselves a question: does charity have limits? Help is needed everywhere; geographical location should not be an obstacle or limitation. As Met mentioned, many urgent needs covered by local communities remain unnoticed to the world. We realised that SPIN is a powerful tool to reach out to people worldwide, touch their hearts with a story and change people’s lives for the better.
So, when we offered to create the first Ukrainian project on the platform and go beyond a specific region, we were pursuing a triple goal: to provide help for those in need, to promote the platform internationally and to scale in terms of geography and project type. We considered several options and chose to help an orphanage in Lviv, Ukraine, which specialises in medical and physical rehabilitation of children with diseases of the nervous system, congenital anomalies and chromosomal disorders.
How do you change the whole system?
Met: Actually, this is a question we constantly ask ourselves. How can we change the system and what can we achieve with that? Do we need to get rid of the old system or just provide new approaches in order to evolve it or just to coexist with it?
Our world is going through tough times. Climate change feels closer than ever, and we have seen devastating climate disasters all around the world. Also, we are in the midst of a global pandemic, which has revealed, among other things, the lack of social cohesion and equal opportunities in today’s world. COVID-19 has shown us that we need to reconstruct our system and evolve it by putting the people and the planet at the heart of global value creation. We have to make sure that the new system is human-centred and serves society as a whole instead of being capital-oriented and serving only the shareholders.
The World Economic Forum has stated that “The Great Reset” will be the theme of the summit in January 2021. Klaus Schwab, founder and executive chairman of the World Economic Forum, stated that “…The Great Reset will require us to integrate all stakeholders of global society into a community of common interest, purpose and action.” He continued, “We need a change of mindset, moving from short-term to long-term thinking, moving from shareholder capitalism to stakeholder responsibility. Environmental, social and good governance have to be a measured part of corporate and governmental accountability.”
So, what can be done in order to prevent shareholder capitalism and switch to a system which is environment and society oriented? What would change if we focused on stakeholders’ social and environmental responsibility in order to sustain our planet?
Sustainability is and has been a core concept of Freewill’s business model from the beginning. In addition to the traditional definition of sustainability, which can be stated as avoiding the diminution of natural resources in order to maintain the ecological balance, we define “sustainability” as the ability to contribute to the environment without changing our daily habits. Here, we can talk about two separate approaches for our sustainability model that complete each other.
The first one is the main business model. Both climate change and COVID-19 showed us that problems can easily spread to the global level if they are not taken seriously, and sustaining our planet must be our first priority. However, traditional investments are still common for most companies, and to be honest, the only thing that most investors care about is the financial return rather than our environment. This leads us to use more resources to produce more products in order to fulfill the investors’ expectations. Eventually, we face such problems as overconsumption, overexploitation, pollution, and deforestation that are causing damage, either directly or indirectly, to our environment on a global scale.
On the other hand, the term “socially responsible investment” or “’green’ ethical investment”, is becoming the key criterion for environmentally conscious investors. Yet, even in socially responsible investment, financial expectations still outweigh social and environmental outcomes. We believe that such constraints as paying dividends and interest earnings to the shareholders are the biggest obstacles to purely ethical investment.
Here, Freewill’s approach can be described as putting the focus on a non-financial business perspective, where the main focus of the investment is on social and environmental factors. In order to achieve this sustainability model, we use our main business, which can be described as system engineering, as the source of our revenue. Then, instead of paying dividends to shareholders, the revenue is utilised to finance in-house projects like SPIN, which enables us to provide ethical solutions for social and environmental issues. Being free from the pressure of making profit at all cost, we are able to focus on the main issues and provide even more flexible and faster solutions for our users.
The second approach is our model of Sustainable Eco Society. We created CSR initiatives, including SPIN, with the simple and pure aim of preserving nature’s blue oceans and beautiful mountains, as well as the talents of people from all societies, to pass on to future generations. We believe that preserving our environment in the best possible way and passing it on to future generations is the duty and mission of all of us who currently exist on Earth.
Conscious people are constantly looking for new ways to protect the planet or harm it less by changing their habits. However, for those among us who are accustomed to living in capitalist societies, it is not easy to alter our lifestyles. So, we thought that there needs to be a system where people can easily and unconsciously take part in environmental protection. We call this system Sustainable Eco Society.
For example, supermarkets often have a system that allows you to accumulate points with every purchase. However, these points usually have an expiration date. On the other hand, any accumulated points on the Freewill ecosystem that have expired do not return to us. Instead, these points automatically go towards NPOs and NGOs that are dedicated to environmental protection. These expired points, that are implemented as internal coins in the Freewill network, will also be traceable and fully transparent, and consumers will be able to see and track their impact by checking activity reports.
By applying the approaches described above and offering people new, trustworthy instruments like SPIN, we aim to increase the number of choices for consumers and users instead of forcing them to change their habits. We believe that this will be the basis for multiple-choice capitalism. Capitalism itself is still required in order to maintain the economic strength of companies and countries. However, the world is changing now, and consumers are more conscious of what they consume and who they are buying from. many people have started to realise the importance of their local communities, their local producers, and supporting each other locally. Again, a lot of people are more conscious about plastic-free products, etc. However, we cannot rely on conscious consumers only if we want to change our society and protect our environment, so, we should provide new ways for either conscious or unconscious environmental contribution. Along with proper education, we believe that this is one of the quickest ways to build a more sustainable world.
Dr. Lyubomyr Matsekh is a business development manager for the DACH and Nordics business unit at ELEKS. In this role, he brings people together and finds new opportunities for the company worldwide. After living and working for several years in Asia, he is back in Europe, where besides working for ELEKS, Dr. Lyubomyr teaches leadership, sustainability and social entrepreneurship at several universities in Baden-Württemberg. He also supports the Centre for Entrepreneurship (Reutlingen/ Germany) in innovation management, teaches entrepreneurship and expands the network of international partners. In his free time, you can find him swimming and contemplating ways of creating a space, where change is possible and fun.
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