For charities

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Rovas delivers a novel way to distribute cash — one that avoids being seen as handouts, while maintaining complete autonomy of the recipient, and their freedom to choose how to spend their money

The NEO rules implemented in Rovas deliver benefits that touch virtually all aspects of running charitable programs. Use of Rovas can make charitable transfers more efficient, incentivize contributions from donors, and deliver secondary benefits to the program recipients.

Donation Multiplier

It is a known fact in economics that the availability of liquidity promotes economic activity. Research performed in humanitarian aid contexts shows that this is true also when alternative (complementary or local) currencies are used instead of national currency[1]. Rovas has its own currency Chron, and the supply of Chrons into the system is maintained at optimal levels organically. Rovas workers are incentivized to use Chrons to pay for in-Rovas-made goods, resulting in lower levels of charitable funding needed to achieve a given economic goal.

The optimal amount of money in the system is controlled by the following rules:

  1. Any voluntarily chosen and provably performed activity is rewarded with Chrons. This rule maintains unrestricted inflow of currency to the system.
  2. The goods or services made by work reported in Rovas must be sold through Rovas.
  3. Buyers make payments to Rovas, not the seller.
  4. The seller receives between 10% and 100% of the sale price in the form of Merit* reward, not Chrons, and an amount of the paid Chrons equivalent to the Merit reward is destroyed. This provision ensures outflow of Chrons from the system.

Additional rules provide the incentive to use Chrons instead of national currency:

  • Rovas charges a conversion fee whenever users change Chrons for national currency, and fees are also charged when national currency is used to buy Rovas-created products.

The following use case illustrates how these rules incentivize the use of Chrons, instead of the national currency.

In a hypothetical refugee settlement, person A earns Chrons for helping to build a drainage ditch. Person B offers barber services to earn Chrons, but that obliges them to accept payments in Chrons. Person A needs a haircut and can get it either from person B or from a barber in the nearby town, who accepts national currency only. If the person A chooses to exchange their Chrons for national currency to buy the haircut in the town, they have to pay the conversion fee, which makes the haircut more expensive than buying it from person B, who accepts payments in Chrons.

The end result is that the settlement inhabitants have a monetary incentive to use Chrons for purchases of goods and services made within the settlement. This lowers the donation amount that is needed to maintain the desired Chron-to-national currency exchange rate.

* Merits are a non-transferable, non-material measure of skills and pro-social orientation.

[1] Source

Income Equality

According to rule #4 above, a portion of at least 10% of every payment made to a project is always converted to Merits. The manager of the charitable program could set an additional rule that would not only amplify the donation multiplier effect described above but also lead to virtual income equality for the program participants:

  • The participants can create their own child projects of the program project, but these must be set up to convert 100% of every reward they receive to Merits.

The addition of this rule has the following outcomes:

  1. All payments made by buyers of in-Rovas-made goods and services would be completely converted to Merits. The Chrons (or their national currency equivalent) paid would be destroyed, resulting in either an improvement of the Chron-to-national currency exchange rate for all of the program participants, lowering the program funding burden, or both.
  2. The worker who created the sold product would get assigned Merits in the amount equal to the sale price of the good or service sold.
  3. Over time, an unequal distribution of the Merit score among the population would emerge, which — as theorized — would provide motivation to supply labor, similar to income/wealth inequalities in the "normal" market economy.
  4. The possibility to use profit for the purchase of positional goods is greatly reduced, increasing social cohesion among the program participants.
Donor Benefits

Rovas provides several functions that should make it attractive to donors:

  1. Radical transparency: All activity and transactions, all the way down to work reports filed by individual workers in Rovas are visible to all Rovas users. The management activities of the charitable program itself can have own Rovas project, to make its operations activities visible to — among others — the potential donors.
  2. The Rovas Merit score is a universal indicator of an individual's skills and their contribution to the common good. Merits can be earned by producing valuable products in Rovas, but also by buying Merit shares in projects. The 2nd option allows investors to not only invest in projects but also make their investments visible and potentially earn Merits, if the projects they sponsor generate economic value.
  3. Rovas helps donors to choose between different charitable programs by comparing data from their Rovas projects. The projects contain descriptions of their program missions, the number of benefit recipients, and information about their reported work. The project Merit score is also visible, signaling its ability to generate measurable social value.
Program Management Benefits

Rovas provides functions that make it easier to run a charitable program:

  • Charities do not need to hire staff tasked with ensuring compliance with the rules, as the Rovas workers are incentivized to mutually control their work reports:
    • Every report-filing worker has a duty to verify reports of other Rovas-chosen workers. Repeated neglect of this rule excludes a worker from being able to post own work reports, and therefore earn Chrons.
    • Workers might realize that inaccurate work reporting by others could lead to more Chrons in the system and worsening of the currency exchange rate for themselves.
  • The visibility of all Rovas transactions to all Rovas workers makes it possible for everybody to perform additional auditing.
  • The Rovas Disputes function allows anybody to raise objections against (and gain resolution of) perceived violations in a distributed, crowd-sourced manner.
  • Program participants can be selected by the program manager or left to self-selection. In the latter case, the decision for a person to participate or not would likely be based on the current hourly pay rate, which in turn is dictated by the Chron to national currency exchange rate. As the value of the exchange rate is determined primarily by the funding amount, the project manager can increase the number of participants just by providing additional investment. In any case, the system always motivates the least well-off part of the population to participate.
  • The Rovas API allows any of its users (and therefore the program managers as well) to extract data from the Rovas database and generate reports, or in-depth economic analyses.
Use Cases

Alternative to Universal Basic Income

Use of Rovas as an alternative to universal cash aid has some distinct advantages against the direct money transfer typical for UBI:

Cost: A UBI program does not address the systemic problem that is the cause of the need for such a program in the first place — an unequal distribution of wealth typical for capitalism. In comparison, the Rovas mechanism described in the income equality section above ensures that any profits generated in the economy are constantly (p)redistributed. The need for external funding should therefore over time decrease and eventually disappear altogether.

Rovas addresses the common objection of a loss of motivation to supply labor when all earn the same wages, by the existence of the Merit reward, granted for the production of valuable goods and services. In a regime where the income of all is virtually identical, the possibility of signaling status through positional goods does not exist, and the Merit score as a publicly visible, non-transferable signal is expected to replace wealth as a force of motivation to work.

Work Incentives: Critics argue that UBI may disincentivize work or reduce labor participation. In Rovas, program recipients are receiving money only if they report a verifiably performed, albeit freely chosen activity of their liking. The prospect of gaining Merits that can be earned only for creating useful goods and services is over time expected to provide additional motivation to produce valuable products.

Distributional Effects: UBI may not target assistance effectively to those who need it most, as it provides the same amount of income to all recipients. In contrast, a Rovas-based distribution program managers can provide the amount of investment in a way that keeps the exchange rate at a level that attracts primarily the least well-off from the targeted population. This is due to the fact that more people reporting work generate more Chrons in the system, which worsens the exchange rate against the national currency and disincentivizes the better-off workers. Consequently, only the worse-off are motivated to continue reporting work and receive the benefit.

Non-universal cash grant programs

Unlike the UBI, the majority of cash distribution programs today are either short-lasting, targeting smaller than country-wide groups of recipients, or having both constraints. Rovas is well-suited to be used also in this context.

Let's imagine a city in a developed country that wants to provide financial aid to its inhabitants. The program managers would follow these steps to institute the program:

  1. Create a project in Rovas, and set the maximum hourly rate a recipient of the program might receive when exchanging Chrons for national currency.
  2. Set the project Merit share to 100%, ensuring that proceeds of any sales of products made by the project participants are returned to the project.
  3. Provide funding to the project, sufficient for reaching the desired Chron to national currency (NC) exchange rate. The project has two publicly visible currency baskets, from which exchange rate is created — the Chron basket reflecting the sum of all unspent Chrons earned in the project, and the national currency basket, holding money earned by or made available to the project.
  4. (Optional) Enroll the target group of people into the program, using the Rovas API. The invitees receive an email, asking them to confirm their registration, and points them to the program Rovas project page, where they learn about participation rules. When enrolling, participants provide at least one of — their bank account, telephone number (for distributions using mechanisms like M-Pesa) or PayPal email into their profile — which Rovas uses to send payments in national currency. Other payment methods can be added to Rovas as needed.

Once enrolled, participants can immediately post work reports for any work of their choosing, earn Chrons, and exchange them for the national currency. Optionally, participants can sell their products to Chron holders or the buyers paying with national currency. In either case, the seller receives a Merit reward equal to the sale price in Chrons. If the buyer pays with Chrons, these are destroyed and removed from the Chron basket, improving the exchange rate. If the buyer pays with national currency, the amount paid increases the NC basket, again improving the exchange rate. Consequently, every time a sale is made, the donor funding pressure decreases.

It can be expected that participants will from time to time report inaccurate labor time — either as a result of neglect or as a malicious intent. Experience from running Rovas for more than 5 years shows that the Rovas verification mechanism is effective. The Rovas-selected verifiers take their report-checking duty seriously and reject suspicious reports or notify their authors to provide more realistic times for reported activities. Additionally, the Disputes functionality built into Rovas allows anybody to challenge already-approved reports and reject them if they win a dispute. The same tool can be also used to challenge a work report whose product was not sold through Rovas, which the rules also prohibit. If an accused party loses a dispute, Rovas claws back Chrons from their account, equal to the amount reported in the problematic report.

Over time, due to the sale of useful goods and services, some participants accumulate more Merits than others, reflecting the natural distribution of predispositions for economic activity in the population. The resulting inequality of individual Merit scores is expected to provide a similar motivational force as wealth. The desirability of the Merit score might get amplified also by the fact that it provides a much richer signal than wealth. This is due to the Rovas requirement that all work reports need to be tagged with a specific NACE code, representing the kind of work reported. The Merit score is thus not a single value but reflects a diversity of individual skills and as such is a more meaningful metric than the position on a wealth scale.