One of the challenges with running a volunteer-based organization or event is trying to manage what to do with surplus budget from an event. Clearly this should be kept for future events or to support the organization but without a clear leadership structure how do you create the necessary accountability? Who controls the bank accounts? In an organization with formal leadership this is a relatively straight-forward undertaking but when everyone is volunteering to be there, no accountability remains. Sadly, fraud is rife in this type of organization so money must me kept in a bank account by a ‘trusted’ individual.

An example:

1. My fundraiser, Grapes for Good, runs annually. It has a modest operating budget and so some of the profits from each year is held in order to fund the next year’s event. I’m the primary organizer so I keep the funds in my personal account until they are needed. No accountability is requested or required.

2. If I decide next year that I do not want to be involved, what structure is in place to ensure that funds saved from the previous year make it to the subsequent organizing team? How can that team be confident that funds carried over from the previous year will actually be distributed to them?

Multisignature addresses: Choose your Arbiter

Enter Bitcoin multi-signature technology. In a nutshell, multi-signature means exactly that: Multiple signatures, or co-signers, may be required to access funds in an address. In effect, this enables the ability to spread responsibility of an address across multiple individuals which is perfect for an organization that effectively has no formal leadership.

Wallets are often referred to as “M of N” in the multi-signature world: Out of N total signers, M must be provided in order to unlock the funds. The most common form, and the form that is appropriate for the Grapes for Good use-case is 2 of 3.

1: Myself

2: Co-organizer

3: Trusted 3rd party

In this configuration, the funds in question are not only more secure but more accessible. Only one of the organizers of the event is required to release funds and if any conflicts arise in the decision making process, the trusted 3rd party can provide arbitration. And since we’re talking about Bitcoin, the funds remain entirely visible, further increasing accountability for the organization. Imagine if international charitable organizations followed a similar approach!