The following is a conversation between Patrick Duffy, Co-founder of The Giving Block, and Denver Frederick, the Host of The Business of Giving.
Denver: If there’s one activity that many nonprofits know very little about but feel an urgency to know an awful lot more… and fast… it would be accepting cryptocurrency contributions. And here to help with that, it’s a pleasure to be joined by Patrick Duffy, the co-founder of The Giving Block.
Welcome to The Business of Giving, Pat!
Patrick: Thank you so much for having me.
When you hear about people buying Bitcoin and cryptocurrency, what they’re doing is they’re making a bet on: “Hey, this is the future of a more effective and efficient financial system.”
Denver: So let’s start at the very beginning by having you tell us: What is cryptocurrency, and how does it work? Where do you go to purchase it?
Patrick: A lot of people get bogged down on the how-does-it-work angle. There’s kind of two ways of thinking about how does it work. One is fundamentally down to the nuts and bolts technology. And then the other how-it-works is: How do we interface with it? What does it mean for the state of global finance? What is it going to mean for my bank accounts? Or in this case for my nonprofit organization? in terms of the nuts and bolts with just a light touch, we always like to say things like a microwave, a Bluetooth, WiFi, combustion engines. We really don’t fundamentally need to understand from an engineering standpoint how everything works, but it is nice to… a little bit.
Cryptocurrency solved a handful of problems that digital currencies couldn’t solve for a while. One, you want to make sure that you can’t make fake versions of it, something you can counterfeit, copy and paste like an MP3 file, torrent it across the web. So they solved that. It’s called the double-spend problem. Bitcoin was the first digital currency to do that.
And then you add a number of additional variables. You want it to be easily fungible and divisible, something like a dollar. You can walk around with it at the store. You can easily transfer it online and get from position A to B. And you don’t have to send a whole lot of it to make a transaction. You can send $1, $2, et cetera. Bitcoin solved that as well.
And kind of the last and final piece, this blockchain technology that tracks and traces transactions. You have to take over more than 50% of the computing network to change a transaction record. And all that means is all of these computers, when you hear the term “mining” all over the world– “mining” Bitcoin to authorize transactions– they’re cracking these algorithms on millions of computers all over the globe. You would have to be in control of all those computers, so you’d have to run them in a different way that said, “Hey, the transaction we just authorized that said X actually says Y” in order to alter even one transaction record, which today, it has still never happened.
So you think about all the money laundering and foul play, cooking the books that happens in the traditional financial system, Bitcoin solved that as well. So when you hear about people buying Bitcoin and cryptocurrency, what they’re doing is they’re making a bet on: “Hey, this is the future of a more effective and efficient financial system.”
Denver: I saw Mark Cuban just spoke about that the other day, and he’s really bullish about the whole thing. What is the size of the user base?
Patrick: Great question. So the last measurement was taken months ago, but it was 106 million users. So I’m sure it’s gone up from there. It’s grown fairly rapidly.
For context on that, it’s more than every major US brokerage combined. People think it’s small, but it’s pretty big. 106 million, so bigger than Venmo, Google Pay, Zelle, some of these big up-and-coming payment platforms
Denver: And Pat, what’s the demographic of that in terms of gender age, et cetera?
Patrick: It’s still pretty heavily male, but that’s coming down pretty quickly. It started off very heavily male in the early days. It was a lot of deeply technical developers. Cryptographic proof of work was the system behind it. So that’s starting to balance out more. And then the user base is very young per capita. The average crypto user is young — millennial, Gen Z. They’re heavily, heavily into it. There are certain polls that say they’re more likely to invest in crypto than they are to invest in stocks already.
But the amount of capital that is held, it’s important for nonprofits to note, a lot of it is now held in the hands of the boomer, Gen X generations as institutional money pours in. So there are a lot of big players with big piles of capital that have moved a lot of their assets into crypto. So it is still like a really important major-gifts targeting thing for someone you have in their 50s, 60s, et cetera. They have a lot of money. They’ve probably got some sort of a pile of crypto beginning to assemble.
Denver: We hear so much about the investment phase of crypto. I see it on the news all the time. I turn on CNBC, it’s there. It’s in the mainstream. But where do we stand with regard to the utility phase? And that is: How can it be used to buy goods and services? How ubiquitous is that at the moment?
Patrick: There’s a bit of dissonance on this. It’s two different angles, and one is not intuitive, so I understand what it comes from.
But the first thing I would say is you don’t use stocks to buy a cup of coffee. You don’t use stocks for an everyday transaction. One, because the ease of use never came up. But then two, because in a for-profit purchase, you’re triggering a capital gains taxable event when you’re moving out of a speculative asset class into US dollars, whatever, to make that purchase.
So cryptocurrency, in terms of reaching the height of its utility, things like Bitcoin and speculative cryptos definitely don’t need to be something you buy a cup of coffee with. It would be like saying the stock market still hasn’t arrived because I’m not buying a baseball ticket with it. But having said that, cryptocurrencies did, as we said earlier in the program here, they solved a lot of these problems around divisibility and fungibility. I can send a billion dollars in Bitcoin to someone across the world in a couple minutes in a way that I can’t do with stocks. It does have these currency attributes.
There’s something called stable coins that are starting to rise to the fore. And it’s an amalgamate. It’s a merging of the traditional financial sector and all of the utility of cryptocurrency. There’ll be pretty much from a code base very similar to Bitcoin, all of the blockchain technology that tracks and traces transactions, but it’s going to peg that price to the value of a US dollar. So as those come to the fore –because those will hopefully, as the regulatory system catches up– they’ll deem those more of a currency. Right now, cryptocurrencies are deemed property assets like stocks.
When those stable coins are considered currencies and they just work better, then you’re going to see a lot more of that where banks and institutions are authorizing and reconciling transactions on their backends using crypto because it happens a hell of a lot faster. And then the second thing is you’ll see consumers using it just because it’ll be much easier to institute reward systems and track and trace your money.
We’re the main company that people use to donate crypto to nonprofits, and then we’re the main company that nonprofits use to get set up to take it.
Denver: Interesting. Pat, tell us about The Giving Block, what you guys do and the role you play in the ecosystem.
Patrick: We do two things primarily. So, we’re the main company that people use to donate crypto to nonprofits, and then we’re the main company that nonprofits use to get set up to take it. So if you know of a nonprofit who’s fundraising cryptocurrency, they’re probably using our tools and solutions. And if you know someone who’s donating crypto to charity, they’re probably coming through us.
So the unique value proposition, I guess, for us and really what we think is a unique angle on the system we’re developing, we’re trying to be more of like a Bo Jackson versus like a LeBron James or A-Rod or Derek Jeter. We’re trying to be the best cryptocurrency payments company… We want to be the CSR company of the crypto space. And then we also want to be the best at nonprofit services. So, everyone on the team is incredibly expert at: What a nonprofit form should look like? What leads to conversion rates? What makes a fundraising platform effective? How calls to action should work? Fundraising campaigns, et cetera.
It’s not like a technical tool… you arrive at a crypto site, and now you’ve got to figure out the rest on your own. We’ve created this really, what was originally a very messy amalgam at the center that’s become this really unique value proposition with a lot of tentacles.
Denver: Let’s talk about nonprofits. If I’m a nonprofit and I’m thinking about this, what is generally the biggest hurdle, the most significant obstacle that a nonprofit will have that you run into in terms they’re just not quite ready to go crypto yet?
Patrick: Of course, I’m going to feel this way. I’m a little bit biased, but I think a lot of it is kind of a lack of familiarity with it. It’s either there’s this feeling that it hasn’t quite arrived yet. That’s kind of gone, I guess, as of this year though for the most part. It’s more or less arrived, but now it’s moved on to something like maybe it’s kind of ephemeral. I don’t think nonprofits know, again, that there’s 106 million users. It’s the fastest-growing user base. It’s the most tax-incentivized way to give. There’s $2.5 trillion in it, so that’s more than the market caps of PayPal, Visa and MasterCard combined. So I guess all three of those companies could go away also, but it’s reached a point where that’s probably not going to happen.
And then I think the second thing, which used to be reasonable in 2010, 2011, is fear of the technology. They think there’s something elicit about it or sneaky. It’s like dark web money. And that comes from when it first came online, back in the day, no one was trying to trace it even though it was leaving the most detailed trails and records of any financial system ever using blockchain. So people were buying and selling drugs and stuff online with it thinking it was the best thing since sliced bread. And then the DA decided, “Hey, let’s start tracking it.” They realized you can follow every bitcoin transaction back to when it first originated on to the blockchain ledger. So a lot of people got caught.
Denver: Yes. I got you. Well, let me bring up another concern that maybe they have, and that is going to be time. Because you know that nonprofits right now are just strained. They are just spread so thin. And they probably have this idea, “Oh my goodness. Do we really have the resources and the personnel that we can dedicate to doing this when we have so many other things that we are leaving unattended?” Tell us a little bit about the kind of time a nonprofit has to put in to accepting crypto contributions. Is it a lot, or is it a lot less than they might think?
Patrick: That’s a great question. If you’re a very small nonprofit… so we usually, will set the baseline normally at around like half a million-dollar budget just for some sense of stability. You probably have an active individual giving program. You have an active social media presence, someone who’s running the helm on those things. We always want to make sure that the baseline like you’re saying… tools are in place. You shouldn’t create a distraction that is a new payment rail when you haven’t made your individual giving program and everything efficient and effective as is.
But we’ve plenty of groups that are even below that number. Like if we have a conversation, and we realize those boxes are checked for even smaller groups, then it’s still fine. For anyone above that, for the most part, 99.9% of nonprofits above that should absolutely take it. You need–
Denver: How many of them are doing it now?
Patrick: On our platform, we have a little less than 300.
Denver: OK. So there’s a long way to go. A lot of room for growth.
Patrick: Yes. Well, I mean, if you think about the blue chips. So on our platform, the American Cancer Society, United–
Denver: They just came out in January, I saw. That’s great.
Patrick: Yes. And they’re great to work with. They’re very agile. Sneakily agile for such a big organization. Save the Children. No Kid Hungry, International Medical Corps, Leukemia Lymphoma Society, Team Rubicon. You can go down like the blue chip, big budget nonprofits, almost all of them are doing it just because there’s enough people on those staffs I think where there’s at least one person who’s gotten super deep on crypto and is convinced before we even arrived there, which is nice.
Denver: Absolutely. You always need a champion inside those organizations, and they’re knocking on the door of the CEO saying, “We got to get into this.”
Patrick: A hundred percent. And if you’re not one of those organizations with like a giant budget, what I would say is if you show up to our site and you book a demo, or you sit down and talk to someone, for the most part, anyone we sit down and talk with is on the platform within two weeks. The conversion rate is very high. The biggest hindrance, to answer your question, is not showing up and looking into it.
So with endowments, for universities, for instance, we talked to them all the time where they’re not holding any money in cryptocurrency, and we’re always like it’s totally fine. And we’re not going to advise you to move your money into crypto. It has to be something that makes sense for your plan. What we say is “If you haven’t looked into it, if you’re running a university endowment, and you’re listening to this, and you haven’t even explored cryptocurrency, which is the best appreciating asset class of the last decade, best-appreciating asset class of the last five years, you’re probably not doing your job as well as you could be doing your job.” You might say no after you look into it, but if you’re not even exploring what is the most rapidly growing financial assets system, you’re probably not going to fare super, super well.
Denver: You can’t just dismiss it. So what are some of the benefits of making a cryptocurrency donation?
Patrick: So it’s the same taxes out of a stock, but it’s got a couple of unique attributes that make it objectively the most tax-efficient and pretty much the most optimized way that you can make a donation to a charity.
So when you donate stocks– I’m sure the nonprofit folks listening, for the most part, know this– but if I’ve got a million dollars in stock sitting in a brokerage account, a million dollars sitting in the bank, and I decided to donate the money in the bank instead of the stocks, what I have effectively is 750-, 800-, $850,000, whatever my tax burden was on those stocks with that whole state cap gains. So I’m left with $150,000 less than what I should be up with because I gave the wrong asset. I did something that was unintelligent. If I donated stocks instead, the nonprofit pays no taxes on them, I pay no taxes on them. I get a million-dollar write-off, the nonprofit gets a million dollars. I just erased $150,000 or whatever it is in capital gains tax incentive, and I still have my million sitting in the bank. Great. I gave the more efficient asset.
Cryptocurrency has that same tax incentive as a property asset except: one, it’s much more volatile as an asset class versus the stock market. Bitcoin is up like 4X, I think, since this point last year, something similar to that. So the need to take advantage of that incentive is much more front of mind than it should be normally. And then second, like we said, how easy it is to transfer. It’s a pain to donate stocks. If you’re not a major giver, you’re probably not… coming through your platform giving stock on Giving Tuesday because how those systems connect is very messy.
But what we’ve done is we’ve pretty much made it easier to donate cryptocurrency in a few clicks through a widget than it is to give with a credit card, and you get all of those tax incentives. So now, for donors even giving you $100, they have to throw away a $20 tax incentive every time they give with a credit card instead. So if your users are using cryptocurrency, slowly over time, especially for major gifts, if you don’t take the asset that gives them a major tax incentive, they’re going to start putting their money elsewhere. That’s kind of what we hit on.
It is exactly the same by every observable standard as stocks are. It’s traded on an open market. It’s a speculative asset. You put money into it based on your belief in a system or a company.
Denver: That’s a huge benefit. Crypto is property. Is it going to stay that way, you think, or are there forces trying to reclassify it in some fashion?
Patrick: It wouldn’t make sense to. When we got asked that question, I can’t say for sure that it wouldn’t. It would only change though if stocks got reclassified as well. So it’s–
Patrick: It is exactly the same by every observable standard as stocks are. It’s traded on an open market. It’s a speculative asset. You put money into it based on your belief in a system or a company. And then you watch that go up, hopefully, knock on wood, over time. The only thing that is different with crypto giving, which is so incredibly annoying, is you’ve got to get an appraisal for donations above $5,000.
We’ve actually got a bill on Capitol Hill that’s hopefully going through soon that’ll erase that because, obviously, cryptocurrency is much more like a stock than it is a painting. You pretty much have to pay someone a couple of hundred bucks to tell you what it says your crypto is worth on publicly available exchanges.
Denver: If I’m a nonprofit, again, what do I need to be wary about or cautious about so I don’t make any careless mistakes?
Patrick: Which cryptocurrencies you take, for one. There haven’t been like a whole lot of issues around this, but there’s certain things you wouldn’t be familiar with. So like what cryptocurrency is owned and operated in a way where it might be deemed a security; or maybe the way that they launched their cryptocurrency wasn’t filed the right way or, regulatory compliance wasn’t resolved correctly. So like open an account with an institutional exchange like Gemini, who we strongly recommend. That’s who we use as our backend partner. When nonprofits worked with us, they open a unique account through us on Gemini that’s actually designed for nonprofits. But it’ll be a limited list of cryptocurrencies you take.
And then the second big thing is don’t open a wallet, which is the same thing. It goes back to open an institutional exchange account that’s designed for nonprofits specifically. Your donors, especially if they’re crypto users, will tell you to open a wallet because that’s what individuals do. You can just pop open a wallet and send money back and forth, which is fine if you’re an individual. You can say that this is my wallet. You can report that to the IRS. They’re happy you’re reporting your income and your role.
But if you go to that same IRS person, you’re like, “Hey here’s the nonprofit I gave to you as a wallet address,” they’re going to say, “How do I know that this wallet address is tied to a charity?” because now they’re not taking your tax, they’re giving you a tax incentive. And now you’ll say: “Because the charity has it. You can talk to Craig in accounting.” It’s like, “We’re not going to talk to Craig in accounting. Give us the paperwork.” And there is none. So don’t let a crypto user convince you to open a wallet. They won’t know any better. They’re not trying to hurt you. They’re just more used to it. It’s easy.
Denver: Well, that’s a good warning. You mentioned a couple of US-based nonprofits before. Have you noticed a geographic concentration of nonprofits around the world where crypto is being accepted as donations more in one place than another?
Patrick: Yes. The US is leading on this front for sure, which is good. I think there’s just more capital in the US, which is part of it, and then there’s just more forward-thinking, more innovative, agile nonprofits and universities out here. The US is definitely leading.
But in places like Africa, we’re getting a lot more interest. We have nonprofits in Asia. We have nonprofits in Europe. We have nonprofits serving South America. It’s really spread out. And it’s growing more and more in New Zealand, Australia. We’re spreading out kind of a little bit everywhere. The one place we were trying to spread and we’re getting a lot of interest is Canada, but Canada doesn’t incentivize crypto giving yet. So people are still giving it in Canada, funny enough, but they’re getting the same benefits as a credit card instead of a stock.
If you’re trying to be a more innovative nonprofit that can serve a younger donor base and build a younger donor base up that will actually connect with you… maybe make their first cryptocurrency gift and lock in for lifetime giving, Crypto’s a powerful asset for that.
Denver: What’s been the impact of COVID? Has it been a catalyst for nonprofits to accept crypto or not?
Patrick: I think so, ultimately. I think some of it is almost like a misconception, which I guess we, as a company, are happy for it, and we’re happy that the industry had this misconception. They’re sort of like “We need to get digital. We need to get online.” It was like this general idea kind of happening in the nonprofit space, and they looked at cryptocurrency as the way to get more digital, even though… I mean, credit card payments are digital at this point. Dollars are almost entirely digital, but you’re doing it on the computer and you’re giving that way. But people see cryptocurrency as something that’s inherently more digital, which is somewhat true for sure.
But I think it was more kind of this spur of we need to diversify our revenue streams. We need to open up to new payment methods and opportunities to receive payments, and we need to get younger. I think that happened as a part of this digital push. And those three things, in particular, those subsets, are all very true about cryptocurrency. Younger folks are going to be using this payment method more and more. It’s more incentivized for them. It’s more convenient. It’s more exciting. And they have money in there, and they have to throw away tax incentives every time you go… or pretty much… no, we only take credit cards.
So those fronts are dead on. If you’re trying to be a more innovative nonprofit that can serve a younger donor base and build a younger donor base up that will actually connect with you… maybe make their first cryptocurrency gift and lock in for lifetime giving, Crypto’s a powerful asset for that.
Denver: It’s almost the extension of a branding campaign in some ways in terms of: we know what’s going on.
Patrick: It absolutely is. So it’s one of those things… This is the perfect example. So the American Cancer Society is no slouch, obviously. They have a lot of tools and resources to get in front of a lot of people and they do so incredibly effectively. Their best performing tweet other than the announcements of celebrities passing from cancer, which they get a lot of engagement on those things, their best performing tweet ever was a tweet about a new crypto they’re accepting last week.
So we sent out this information, copied and pasted language about this crypto that’s coming out, very popular, dogecoin. I’m sure you’ve– you were talking about it earlier, the Elon Musk stuff. They announced that they’re taking it, and within 24 hours, it had thousands and thousands of retweets, and it was going all over the internet. And they raised a bunch of crypto from it. But the branding tool of that, the number of people that because of that are now thinking about the American Cancer Society, how many credit card gifts, and someone’s going to send an ACH, like we won’t be responsible for all the capital that comes through as a result of it. But in terms of a brand that’s like “We’re innovative; we’re forward-thinking,” and just getting people to pay attention and focus on you versus someone who’s similar to what you do, crypto is an amazing differentiator, for sure.
Denver: I can see that. If I’m a young person and I’m thinking about going to work someplace in the nonprofit sector, I would think that if the organization is accepting crypto, I am going to be more inclined to want to work in that place because I realize they’re not afraid of ideas, and they’re forward-thinking. So I think that has a lot of indirect benefits over and beyond the contribution aspect of it.
Patrick: Yes. I wish I had numbers on it. We always want to say this. We’ve talked about it internally, but we don’t want to point to it without direct studies or evidence on it. I would assume, like you’re saying, that: yes, that has to be the case. If you’re going to a nonprofit who’s actively fundraising crypto, and you’re 21, coming out of college right now, it’s like… and the other nonprofit, everything else is held equal, I feel like you’d be dramatically more incentivized to go to a place that’s actually dealing with technologies that you find stimulating.
Cryptocurrency, what’s unique about it also, is it’s not a donation method. It’s a donor demographic. And the more nonprofits come to realize that, that it’s not just a method of payment that you can take, but it’s a community that you can activate around that method of payment, and that adds power to everything you do.
Denver: Right. Because you also figure it’s going to obviously be across the organization in the way they approach everything. So you’re not just looking at that one aspect.
So you said you had a really high conversion rate. You can get in front of people and they’ll take your message. Let’s say I’m that nonprofit, and I speak to you about wanting to build a crypto campaign. What would your pitch be to me?
Patrick: When you say crypto campaign, you mean–?
Denver: Like a currency campaign.
Patrick: Like a campaign strictly focused on bringing in crypto donations.
Patrick: So the first thing is boring, which is not what you’re going to want to hear, but we always sit on it anyway, which is your donation form and process. So this is, again, back to what we were talking about that we’re not just a crypto company. When we set up nonprofits to take crypto, we’ll set you up with a solution, the widget. We don’t just give you the widget and say, “Let your website be what it will be.” The first thing that we would do is we would look at your donation page. Like when you click that donate button on your top right corner, where does it take you? Does that donate page allow you to get back to other ways to give? Does it clearly say, “Hey, here’s where you give credit cards, but go here to give other assets?” If you don’t have that, you just created a giant dead end.
Then the other way is to the give page… you want to make sure that’s connected to your, ultimately, donate crypto page. The donate crypto page needs to be up on your site. But you also need copy on that page that’s going to hit all of the keywords around donating crypto, the different cryptos you take, the tax incentives, et cetera. So that makes your search engine optimized. And then you need to load that page up with content about your mission.
So those two things… couples that when you go online right now and you go like donate Bitcoin kids or any of the topics that we cover, you’ll see the first however many results are all nonprofits we serve. You’ll click on their site. You’ll go to their donate crypto page, and it’ll be one of our widgets right there. We’ll set all of those things out first and foremost, make sure that it’s a good thumbnail so when you post link on social, it actually creates a visual piece of content, with the bitcoin logo and the kids, your mission, whatever it might be. And then finally, once all these things are in place, then we’ll figure out: What are relevant hashtags? What is the message we want to send? What is our goal? When you donate $100 in Bitcoin, what happens? What is the impact statement?
And then ultimately, once all these things are in place, you’re just going to run a campaign about you and your mission the way you normally would. Or you can have a handful sprinkling of language around different cryptocurrencies that are exciting, why people should donate crypto, the tax incentives of donating crypto, and ultimately, we’re trying to raise X amount of crypto to do what. And then you can just use a headline. “We got this much in crypto, and we just fed 500,000 kids with Bitcoin this week.”
And then crypto users love seeing… again, you’re doing the same thing you normally do, same fundraiser serving the same mission. You don’t need to reinvent the wheel. But you just show that what’s making that gear turn is cryptocurrency donations coming in from them in their community. Because, ultimately, to put a pin in this whole thing, cryptocurrency, what’s unique about it also, is it’s not a donation method. It’s a donor demographic. And the more nonprofits come to realize that, that it’s not just a method of payment that you can take, but it’s a community that you can activate around that method of payment, and that adds power to everything you do.
Denver: And that is a very challenging community for a lot of nonprofits who are trying to figure out: How do I reach that younger demographic and get them to support our cause?
An initiative of yours I want you to speak about — the crypto giving pledge.
Patrick: Absolutely. It’s a thing we were cooking for a while. The ultimate catalyst was selfish and selfless. In cryptocurrency, it’s a feature, not a bug, but you can’t do poll transactions. So you can’t set up like monthly giving for the most part. You can’t set it up to be like just money getting pulled out of an account. No one can agree to that. They have to log into their account and push the money out, which is cool for consumer protections, but it’s also not cool for consistent giving from a donor and engagement, especially when they give anonymously.
So we created the crypto giving pledge. The first, top of mind, is we need a system in place, a way to get people to commit to this year-over-year giving. And then we also thought it’d be an amazing way to get like… there are these people we work with in crypto, the people with the most capital, the most influence, these relationships we built up over the last few years, and every time we run a campaign, we knock on their doors and they show up, and they do something really cool for charities.
There was nothing kind of holding them in place, locking them in as their commitment to charity, advertising them as someone who’s doing this, locking them in with relationships with particular charities, and then end of year, telling their stories where they’re giving this money in these little sprinklings. But it didn’t highlight them effectively or the charities effectively. There’s nothing pulling that all together in a cohesive way. So we created this founder circle as a part of it. We’ve got influencers, celebrities, and people with a lot of money in crypto.
And then on the organizational side, some of the biggest companies in crypto. So FTX, for instance. They just bought the naming rights for the Miami Heat stadium for the next 10 years. Big, big, big company. They just locked in and took the pledge. So that’s going to be a lot of capital for nonprofits year over year. But instead of just trying to grab them on the fly when some campaign we’re running is popping off, we want to build a relationship with a company like that, figure out what charities and causes matter to them, how we can get the capital to those groups, how we can tell those stories and op-eds and reports.
And ultimately, end of year, we can tell this wrapped-up narrative — “Here are these companies and individuals and people giving crypto.” We can blow that up through the month of December to remind everyone else in crypto to make that annual end-of-year gift. If we can rinse, wash, repeat that for the next few years, I think it’s going to create a lot more consistent crypto giving.
Denver: I don’t think a lot of people realize it in terms of corporate social responsibility, you guys are really tapping into those crypto and blockchain companies who are taking some leadership in this kind of giving. They’re not just being a recipient or part of their business model but are really giving back.
Patrick: They’re amazing. All of the companies, and even the companies we’re not working with super closely now. So an example would be Coinbase. Ultimately, our paths are going to cross a little more directly. We worked with them a bit more in the past, but they’re doing their own thing. So even someone like a Brian Armstrong and Coinbase as a company, they’re doing this thing where they’re serving their own nonprofit entity they created. They’re doing things on platform to drive funds over to that. They were doing direct payments over to folks in Venezuela and a handful of other things.
We are ideologically not opposed but in different directions. We think it’s better to work with charities directly. That was a choice we made, an angle we took. We think that their leadership and expertise will actually lead to better outcomes. But I get their perspective, too. They’re trying to like cut out the middleman, and every dollar should go to charity thing. We disagree with that. We think the dollar should go to whatever gets it done faster. But even that, they’re being incredibly charitable. The leadership there is awesome. The company is fantastic. All of these companies in crypto, I think, and I take the pleasure to be a part of this, I’d be highly surprised if it wasn’t the most charitable industry and known as being such within the next couple of years.
Denver: Let me ask you about the next several years. Has anyone made any projections, and I’m probably having, maybe you got some ideas, as to how big a slice crypto will be of the philanthropic pie over the course of the next 5-, 10-, 20 years?
Patrick: It’s a really good question. What it has to do with more than anything is something we probably should have hit on even earlier in the show, but this will happen eventually. I don’t know if it’ll happen in the next 5 years or 10 years. I would hope that it happens within the next 5 to 10 years, somewhere in that gap. But people are going to stop giving to nonprofits using US dollars. They just will at some point. It would be as crazy as buying, again, like we said, buying a cup of coffee with stocks.
The US dollar is a really stupid form of money for the charitable sector. You’re just throwing away piles of tax incentives every single time. The only reason you would give with a credit card and just erase those incentives is because it’s overwhelmingly more convenient. Once that gap gets bridged, and every time you show up to a payment form, it’s toggled onto crypto or stocks or whatever it might be. And when you toggle away to the credit card instead, it erases that little number below that says how much you would have otherwise saved. Everyone’s going to stop doing that.
So there’s the percentage of charitable giving that will be crypto-based on how fast the market will grow, and then expecting crypto giving to look like it does today. And then there’s the percentage of the market, it’ll be once we see a flipping in the ecosystem, which I highly expect to happen, where giving US dollars, cash, checks, ACH, wires becomes a marginal, infinitesimal part of the ecosystem, and almost all giving is property asset giving. At that point, then, I think cryptocurrency, depending on the adoption of the sector, could be more than half of the charitable market.
Denver: Finally, what’s the biggest challenge you and your co-founder have had with The Giving Block, and what’s your great aspiration in moving forward?
Patrick: Oh my God. It’s a great question. So many. I guess iterating. I think it’s really important. We’ve done a good job of it. I wouldn’t say challenge in terms of it’s something that didn’t come to us naturally, thankfully, but challenged in terms of like where most of our work goes in. I think we, better than the companies we’ve met so far and interface with… there are lots of companies that do a lot of things better than us in the nonprofit sector. We’re learning from everyone and partners all the time, but I do think we iterate more effectively than any company we’ve come in contact with.
So like a year from now, the products will look different. The strategies will look different. We don’t just lock into an idea and block it off and defend it. We’re immediately willing to let go of our favorite idea in the absence of good evidence or when presented with better evidence of an alternative.
So for instance, a year ago, we were doing month-to-month packages, and we didn’t have a fundraising platform. We were just setting up nonprofits with an account, and they were using QR codes and they were copying and pasting onto a page. Then we were working with individual charities to build individual crypto fundraising…consultancy. And then I guess it was more like a year and a half ago, but like within that timeframe, we’ve been able to change that to what has now become the main website.
People go online and they go to donate crypto. They give through us. Like 80% of the [unintelligible] process happen on thegivingblock.com, not on nonprofit sites. Despite the fact that, like we said, Save the Children, United Way, American Cancer Society, millions of followers. We have 4,000 followers on Twitter. Our site still does 80% of what we process.
So like people don’t just come to us to get set up to take crypto. They come for access to our audience, and audience and crypto users we’re actively building. I’d say that’s been most challenging, and it’s a lot of work trying to keep the trains running on time while constantly looking at evaluating our systems and figuring out: What’s the next big move and how do we get there?
Denver: Well, to summarize, it sounds to me that you have fallen in love with the problem and not with a solution. And that is a great way to iterate, to be able to say that we thought we had it solved, but we didn’t. So you just go back to the problem again.
So for listeners, who are interested in learning more about the topic and how The Giving Block may be able to help them, tell us about that website of yours and the information they can expect to find on it.
Patrick: If you go on the site, if you want to look at the charities we support, just click: donate, or click: view nonprofits. That’ll take you to the aggregator. You can filter by categories, and you’ll see groups that are active now. That list is updating daily as we onboard new nonprofits.
All throughout the site, you’ll see our services and a breakdown of stuff that we do. But ultimately, the best thing you can do is just click contact us and grab a time to book a demo. The demo team will walk you through the platform, how everything works, answer your questions about cryptocurrency in general. You can book a demo and use most of the time asking baseline questions about what is crypto and who are the nonprofits you serve and testimonials, et cetera.
But that’s the best thing you can do. Grab a time, book a demo, and a member of our team will walk you through how everything works.
Denver: If your track record holds, they’ll be in the fold in two weeks. Right?
Patrick: Generally speaking,[unintelligible] but usually, yes, the hardest thing to do is to get folks on the phone. Sometimes we’ll end up with like a 15-person meeting, especially at a big nonprofit. There’ll be one champion and they’ll get 14 people who are just pissed, [unintelligible]. And then a week from then, two of those people in that room will be sending 3:00 AM emails about which cryptos to buy, and we’ll be like, “We can’t tell you that.”
Denver: There you go. They get it in their bloodstream. And once it’s in your bloodstream, it won’t get out. Well, thanks for taking the time to be here today, Pat. It was a real delight to have you on the show.
Patrick: Thank you so much for having me. This was really fun. I appreciate your time.
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