Coala Pay is speeding aid to those in need, one NFT at a time

Growing up in rural Utah, Melyn McKay knew from a young age that she wanted to help build a better world. So as soon as she could, she threw herself into aid work: helping to run a rural health center in Burundi, studying the impact of Syria’s civil war, and researching the lives of women in strife-prone Myanmar.

Along the way she noticed a glaring problem with how money gets from donors to projects on the ground. Part of the challenge is that donors and recipients of aid define risk differently.

Donors, whether governments or NGOs, want to make sure their money is going to a good cause and not getting sidetracked by government corruption or embezzlement. Humanitarian workers worry about getting arrested and keeping their organizations functioning in often dire circumstances, in addition to their day-to-day work in getting aid to those who need it. Local humanitarians in particular may not have the time or resources to deal with the onerous compliance and audit requirements that some donors require. These conflicting priorities can result in aid dollars taking much longer to arrive.

“These kinds of problems are an annoyance when you’re running a business,” McKay says. “It is life-or-death when you’re doing a humanitarian aid response.”

To help solve this problem, McKay has created Coala Pay, a startup that aims to take much of this friction out of the aid funding process using blockchain technology and cryptocurrency. Last week, Coala Pay joined Start Path Digital Assets, Mastercard’s award-winning startup engagement program that provides startups with opportunities to scale their business through access to resources and expertise.

Coala Pay works like this: A local organization, say a rural health clinic in Kenya, wants to raise $50,000 to help vaccinate children in surrounding towns. The clinic goes through Coala Pay’s due diligence and vetting process, which ensures the organization is legitimate and has a track record of helping people. If approved, the clinic can use Coala Pay’s aid funding marketplace to submit grant proposals. The information provided is more streamlined than a traditional request for funding, and includes the type of project (food distribution, health, etc.), how much money the organization needs and how many people they expect the intervention to help.

These grant proposals are then turned into a smart contract, essentially a software program on the blockchain — a distributed system of record that tracks transactions — which activates when a donor chooses to fund the activity. Each grant proposal is also paired with a non-fungible token, which displays as a digital artwork generated by an algorithm that takes into account the type of aid being requested, where it will be distributed and how many people it will help. Putting these details on the chain helps improve transparency, McKay says.

“We also wanted to encourage people to have a conversation about the way that we portray aid recipients,” says McKay regarding the decision to depict the grant proposals through an algorithm instead of, say, a photograph of those receiving aid. “We wanted to make a clear case for how you could do it in a different way that’s still digitally compelling and aesthetically pleasing but that doesn’t have some of those more negative implications for the communities who are receiving aid.”

Corporate donors, international aid groups or philanthropic foundations can buy the NFTs the same way they would a piece of collectible art on an NFT marketplace. Instead of having to jump through hoops, wait for money transfers and, in some cases, be forced to pay bribes to local officials, the aid workers on the ground can have the funds immediately deposited into their crypto wallet as U.S. dollar-linked stablecoins.

Stablecoins, a type of digital currency pegged to a fiat currency (such as the dollar), are a breakthrough technology for the aid sector, McKay says, because they insulate donors and the aid organizations they fund from volatile currency fluctuations, which cost the sector millions of dollars each year.

If using crypto to distribute aid sounds far-fetched, McKay notes that the United Nations last year began a pilot to distribute funds to Ukrainians internally displaced by the war using a U.S. dollar-linked stablecoin and digital wallets. And in emerging markets where participation in the formal banking system is low, mobile payments are booming and crypto adoption has been strong.

“The entire time I lived in South Sudan, there wasn’t a functioning ATM in the whole country,” McKay says. “A lot of the innovation in mobile money and peer-to-peer exchange systems is coming out of these kinds of environments because that’s where people have been really in need of tools that will help them to manage their finances in a better, safer way.”

McKay and her partners are raising a seed round now and will release a prototype product by this summer. Their eventual vision for Coala Pay is that it becomes the last-mile infrastructure for localization the aid sector has so desperately needed, enabling donors to find and fund the most impactful local aid organizations with ease and confidence. 

“From due diligence to thinking about new ways to support donors and their local partners, we are enormously grateful to have a trusted actor who can help guide us,” McKay says, “so that we’re doing things in a way that is maximally safe and secure for the heroes with whom we work.”