Treasury Department and NSF explore using blockchain to boost grant management process

“The Treasury Department’s Office of Financial Innovation and Transformation (FIT) and the National Science Foundation have teamed up to explore how using blockchain could add value to NSF and its hundreds of grant recipients.”

“The build, which uses a permissioned version of Ethereum’s distributed ledger technology, will be complete by year’s end.  The idea is to tokenize the details and payments found in letters of credit sent to grantees to improve transparency and reduce labor costs.”

“Currently, the process between NSF and universities that frequently receive grants is convoluted: A university receives a letter of credit, which notifies grantees that they have been awarded funds for research, and then passes it on to the department or team actually conducting the study. That multitiered process makes it tough for an awarding agency, such as NSF, to ensure the money is being spent according to the terms of the grant. NSF must rely on regular reporting from the recipients and sub-recipients, which takes a significant amount of time, said Craig Fischer, supervisory program manager at FIT. Adding to the complexity is the fact that NSF has five letters-of-credit systems, NSF Deputy CFO Mike Wetklow said…”

“The idea is to pay the first-tier grantee with a token that represents the money and has all the grant information baked in, rather than send actual money. When the token makes its way to the end recipient, that person can redeem the token for money…”

A lot of the grant disbursement mechanics would remain the same. NSF would upload the award information into a system like it does now, but all the information would be tokenized. Read the full article here.

Source: Can blockchain smooth grant management? – By Stephanie Kanowitz, December 6, 2019. GCN.


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