Why Academic Endowments Need Blockchain

Americans donated over $52 billion dollars to academic institutions in 2021, but where is that money really going? Today, US academic endowments control over $691 billion, however, the majority have limited transparency around fund management and spending. While donors may feel they are contributing to sponsoring students directly, often times their donation is tarnished by high overhead fees and the misuse of funds. Transparency and efficiency are vital for building trust in our institutions. Blockchain bridges these gaps in visibility and demands accountability from endowments.

Today, most donations are tracked individually by private endowments with minimal public reporting. The processes around management and spending are opaque, leaving many donors uncertain about where their money is actually going. Blockchain changes this notion entirely. Blockchain, also referred to as a common ledger, is the backbone of cryptocurrency and web3.0. It is what allows for transparency and security in making donations. When donations are made using blockchain, transparency for the donor and institution becomes accessible through the secured transactional records kept in that digital ledger.

Now, let’s investigate the intersection of academic endowments and blockchain. Academic endowments are collections of assets donated by private donors and partners of academic institutions that are used to fund academic operations including salary, facilities maintenance, and finance management. Blockchain is the core technology that tracks financial transactions, such as the transactions made between donors and institutions, and stores records of that data on-chain. This chain of data is immutable, which in turn allows for total transparency and enhances the level of security for the transactions made.

The blockchain, or digital common ledger as some call it, keeps all the records safe from fraudulent activity as it requires authorization and recording transactions. Each transaction is validated and confirmed by a network of computers. This chain of data becomes a single source of truth and validates each transaction made. One needs to have the approval and consent of all parties involved to change the transactional records. Blockchain ensures transparency for the donors by tracking funds on-chain, from donation to disbursement. This allows the users to see the transactions, including money management and spending, that have been made and how the money donated has been spent. Having blockchain as a part of the process for academic endowments allows for trust to be built between donor and institution. Donors want to see where their money is going, and blockchain holds all parties accountable through the stored transactional record data.

Academic endowments are often overlooked in our financial space, but one company has its eyes set on radically innovating academic charitable giving and scholarships. Sch0lar is a community-driven, end-to-end solution for assuring transparency in the allocation and expenditure of donations. Through the use of blockchain, donors, institutions, and enterprise partners will be able to view the record data for donations and money management. One of Sch0lar’s core principles is user-centricity, so the transparency blockchain delivers is key to building trust with its users. The team seeks to instill transparency, performance, and equity into its platform while helping alleviate the growing student debt crisis and serving those that need it most.

Sch0lar offers donors to choose a purpose and mission they are most passionate about, the ability to choose how their donation is scaled, and most importantly, direct control over which students will receive their scholarships. Sch0lar provides complete visibility and control to the donors, whereas with traditional endowments, none of this is possible.

Vested Interest Disclosure: The author is an independent contributor and is a part of the Sch0lar team. Thus, the author has a vested interest in the company mentioned in this story. HackerNoon has reviewed the story for quality, but the claims above belong to the author. #DYOR

Article written by 

Cienna Lamoreaux, edited by Theodore Zipoy.