Denver: Pat Duffy, welcome back to The Business of Giving.
Pat Duffy, Co-founder of The Giving Block
Pat: Yeah. Thanks so much for having me.
Denver: Pat, The Giving Block has made such incredible strides since you and Alex founded it. Can you take us back to those early days and share what inspired you both to create this platform?
Pat: Definitely. I mean, right out of the gates, the first thing that got us interested was the crypto component. We were friends from college. We both ended up in DC, and we were trading cryptocurrency at the time. Alex got me into it. I spent about a year trying to talk him and everyone else out of cryptocurrency. I listened to one podcast about how it’s backed by nothing. It feels like vaporware.
And I’ve still got friends who are mad at me because I talked them out of cryptocurrency, and then I saw them five years later and all my money was in it. They were like: You are the one who told me not to do this. But Alex made me read the Bitcoin white paper. It got me super into crypto.
And then as the stars aligned, I was working at a charity at the time… so I was at the Lupus Foundation… we were fundraising, and we saw a couple really interesting news stories. The Pineapple Fund where $55 million in Bitcoin got donated to all these charities. We saw Ashton Kutcher go on the Ellen DeGeneres show, give $4 million in crypto. So Alex and I immediately started messaging each other and said: We got to set up my charity to take crypto donations.
Found out fast that the options out there weren’t good. There was nothing really for charities. And even for the charities who were already set up, we started doing interviews with them to figure out how they did it. Everyone had kind of a jerry-rigged solution that not only were they not really getting donations through, but they were sort of afraid to promote because the process was so burdensome.
So that was our light-bulb moment. We realized we could automate away some things for my nonprofit, first to get us equipped, and then two, we saw that there were at least a couple dozen nonprofits at the time who might be interested. And then we kind of scaled it up from there.
Denver: How have the attitudes toward crypto changed since those early days, as a matter of fact, changed since you and I spoke on this show a couple years ago? What have you seen?
Pat: Yeah, among the blue-chip nonprofits, it’s pretty universally adopted. So last year was the first year that the majority of the Forbes Top 100 nonprofits had crypto fundraising programs. So like that was a really important tipping point for us.
The big nonprofits who kind of look at the trends… and I would say have the flexibility and the sort of roles and responsibilities to explore innovative priorities… tackle things like this a bit sooner. It’s been good to see that level of adoption and how many nonprofits have taken it.
But even for us as a platform, like we’ve got about 2,000 nonprofits that we fundraise crypto with directly and then more through integrations, but they use those kind of passively. It’s still a really small sliver of the sector.
So what I would say is that when you look at nonprofits who are large enough to have a broad spectrum of innovative priorities, or they’re small and mid-size nonprofits who really look for innovative priorities and ways to fundraise, the adoption has been really exciting. But there’s still an overall, I’d say, level of awareness, education, adoption in the nonprofit sector that’s behind where we would’ve expected it.
“…one of the biggest barriers to access is just education for nonprofits. Not really around crypto. It’s not like people need to know how blockchains work to get into this, more about what problems have been solved from the time that Alex and I first started looking into this. There’s a lot of concerns that nonprofits have that have been evaporated by stuff that we’ve developed and others have developed over the years.”
Denver: Yeah. Have any particular strategies worked? Because I know having worked in nonprofits my whole life: first of all, we don’t like things that are new and different and strange, and we feel a little: I’m not that equipped to do it. Plus the fact there’s no bandwidth, and something that people will intend to do, but they’ll never get around to it.
What have you been able to do to get some of those mid-sized ones in particular to realize the potential here and come around to embracing it?
Pat: Yeah, I’d say a big thing is meeting with the nonprofits, doing kind of like this book-a-demo approach, versus trying to create one of those tech companies and websites where people click a box and a button and start like self-onboarding. I think there’s this push for infinite scalability.
But one of the biggest barriers to access is just education for nonprofits. Not really around crypto. It’s not like people need to know how blockchains work to get into this, more about what problems have been solved from the time that Alex and I first started looking into this. There’s a lot of concerns that nonprofits have that have been evaporated by stuff that we’ve developed and others have developed over the years.
So, for instance, crypto’s volatility is a concern for nonprofits. They’re like: Well, if I receive something and the value goes up or down, that’s concerning for how we document that, how we report on it. Nonprofits now know if they talk to us that it instantaneously is sold for US dollars as soon as it hits accounts, like that program to automatically sell crypto for the going rate resolves the volatility issue for charities.
And then there’s like, Okay, well, how do we receipt the donors? How would we possibly tell them what information should be in there? And what about those tax documents– 8283s, 8282s? Okay, and where do we put it on our site? And who on our team should handle what? And then our gift acceptance policy.
So over the years, we’ve gone, check, check, check. All of it is automated, it’s sample text, it’s copy-and-paste donation forms. Those things kind of evaporate when you sit down with someone on our team or you watch like a video, something that we do, and you go: Oh, the real issue with crypto isn’t understanding how a blockchain works or building processes or trying to figure out which cryptocurrencies we should accept. It’s really just a matter of: Do we want to make this option available to our donors?
Denver: Well, some of those nonprofits who got crypto donations a few years ago might have been well served to hold onto them a little bit longer, you know?
Pat: That’s absolutely true.
Denver: Quite a run-up. So talk a little bit about the tax implications. We hear about that all the time. How do these work for donors, and how do you guys at Giving Block help the nonprofit work through all the different changes that may be occurring?
Pat: Yeah, we were talking about this a little bit before the show here, but something we say is like: it’s as weird to donate cash to nonprofits as it would be to go buy your groceries with stocks or cryptocurrency triggering these taxable events.
The long and short of it is, when you donate assets– investments that have appreciated to a nonprofit, like the Kars 4 Kids type songs, but that’s stocks, that’s real estate; it’s cryptocurrency. There’s a magical process that ensues. One with the donation itself, and then two, with what you can do after your donation with crypto in particular.
So when it comes to giving the gift, a donor has a few options if they have money in the bank, and then money and investments. Let’s say they’re giving a hundred grand to a charity, they could give the money that they have in the bank and it’s a hundred grand, and they get a hundred-thousand-dollar write-off. The charity gets a hundred grand. That’s the end of the transaction. Still pretty good with the write-off.
And then the alternative with their assets is they can sell those assets and donate to the charity. And then let’s say, depending on when they bought it… with state and federal cap gains, maybe the charity gets$ 85,000 out of it and they’re giving some money to the federal government and to the state.
So the write-off is smaller, the gift is smaller. Not exactly the best move. When you donate the assets directly to the charity, that’s kind of where the magic happens. So with cryptocurrency, you give a hundred grand of Bitcoin to the charity. Charity gets the full hundred grand. You get the hundred-thousand-dollar write-off.
Now comes the tax bill, right? Except it doesn’t… you don’t owe taxes on the crypto you donated. The charity doesn’t owe tax on that crypto. And now what you have is this tax arbitrage move that a lot of crypto donors, stock donors do, where they take the hundred grand that they had in the bank, and they buy more crypto.
And now what happens is you have the same cryptocurrency position as if you donated the cash, but that crypto is at today’s cost basis, so the crypto you donated would’ve only been worth $85 grand in the wild because you would’ve owed the tax man. You have the same amount of crypto, but the 15 grand in capital gains liability just evaporated.
So it’s a really cool way to donate to a charity where you can either choose to increase your gift size, but with improved tax liability reduction, or you give the same gift you would’ve given otherwise, but you’re getting this kind of magical tax benefit as a result.
Denver: You say cool, I’ll say sweet. Tell us a little bit about the demos of the crypto donor and how are they different, let’s say, from your traditional philanthropic donor?
Pat: Yeah, they’ve changed a lot, I’ll say, thankfully. Because in the early days, there was a higher percentage of them that were anonymous. The user base was even more predominantly male. And one of the big issues, especially back in the day is very few crypto investors were working with advisors just because there was no connection there. Like Coinbase wasn’t this publicly traded company, kind of tied in with all the regulators. There weren’t the Geminis of the world or these Bitcoin, Ethereum, ETFs.
Like everything’s kind of gotten intermingled with the traditional financial institutions, which makes it safer for everyone, increases access, but also means they’re working with advisors more often. The donors today are now like 60% of crypto users are working with advisors. It’s gotten to like a 65-35, male-female split. So it’s reaching much closer to parity.
And then the anonymous giving is going down a bit just because more of these donors are more traditional, right? They’re investing with their advisors; they’re connecting with the charity they already know. And because the nonprofits are promoting this giving option, they’re more willing to share those details.And because they’re working with an advisor, they know that this is an option. Because prior to that, they were crypto traders trading crypto on Coinbase with no advisor, just self-trading. Coinbase isn’t telling them about donation tax incentives, and charities didn’t have the giving option promoted, so that connection wasn’t happening as often.
“…I think getting from credit cards to other ways to give… and then on your site you have bank transfers and DAF transfers and stock transfers and crypto, feels a lot more tenable. So I think the automation of the more traditional asset giving that allows for that, like buttonization of it in the actual promos and the appeals, is what’s going to make room for cryptocurrency fundraising to be integrated as an option in those more traditional arenas.”
Denver: All indicators that it’s becoming more and more mainstream, which is so good to hear. I’ve always looked at The Giving Block sort of at the crossroads of blockchain and philanthropy. And I wonder, Pat, what new technologies are you most excited about that make crypto donations easier and more efficient?
Pat: I would say it’s kind of new technologies. It’s kind of a spin on older donation methods, but the automation of accepting and collecting donor details around other traditional donations, and how that’s kind of intermingling with crypto.
So by that, I mean even when we got started, most nonprofits had this crypto donation form where similar to a credit card, you could click this button that we were providing. They could enter some details, initiate a transfer, and be done with a gift, touchless, in a minute.
But if they went to a different page on the site, they would find donor advised fund giving, and it would just say: Hey, go log into a donor advised fund somewhere and initiate a transfer, and then give us a call to let us know where the check is coming from, to which donors said, No, thanks, I’ll put that in my estate plan for 30 years from now.
And then the same thing with stocks. In stocks, it would be like, you can put this in a will if you’d like, as like the default option, or you can scroll across to a microsite and call Mary in major gifts and she’ll send you a PDF and we’ll talk to your advisor, and we’ll get the process rolling.
These other donation methods I think becoming automated, like now that donate stock forms, donate DAF forms like Chariot, Chariot is the one that we integrated just because it’s seamless, those things being okay to give online and automated, I think is getting more nonprofits to think: I’m willing to put this in front of my donors. I’m willing to have a button at the bottom of a capital campaign email that says: Other Ways to Give.
And I think nonprofits, up until then, were kind of terrified to show anything other than a credit card option.
Denver: You’re right.
Pat: Because the conversion rates and the tracking and the stewardship were just nightmarishly different.
So getting from credit cards as the only option in the capital campaign email to credit cards and Bitcoin feels like a really big leap, I think, for a lot of nonprofits. But I think getting from credit cards to other ways to give… and then on your site you have bank transfers and DAF transfers and stock transfers and crypto, feels a lot more tenable.
So I think the automation of the more traditional asset giving that allows for that, like buttonization of it in the actual promos and the appeals, is what’s going to make room for cryptocurrency fundraising to be integrated as an option in those more traditional arenas.
Denver: I’ve never heard “buttonization” before, but I’m definitely going to use it in the future.
NFTs are a hot topic in the crypto space. Talk a little bit about what they are for listeners who may not be familiar and how Giving Block is integrating NFTs. And what potential do you see for NFT-based philanthropy?
Pat: Yeah. This is where my technical limitations will come in, and everyone on my team who knows more about this will be screaming into their headsets. But at a super high level, NFTs use blockchain in the same way that cryptocurrencies do, but they use it for something other than like a financial asset. So when you think about how Bitcoin works, why do people use it? Again, like I said, some people look at it like magical internet money that isn’t backed by anything.
What Bitcoin is backed by and what these cryptos are backed by is blockchain technology that allows users to, with no banks or intermediaries, send any amount of money anywhere in the world in a matter of seconds, or generally speaking, very low cost, and know that it’s going to get there. And that there’s no way to change the transaction records or direct it somewhere else.
So it’s this decentralized network of algorithms that are getting approved, and it allows you to really know this Bitcoin that I have is a Bitcoin. It’s the one that was meant to be sent to me. No one else can lay claim to it, and no one can say four years from now: Oh, they changed the transaction records, they updated a spreadsheet, it isn’t where it’s supposed to be.
It’s the most trustworthy way to move value and to know where something actually is. So people bet on that. They think it’s an amazing innovation for the financial ecosystem. NFTs are just non-fungible tokens, and that just means it’s similar to a cryptocurrency, but it’s used for things like, let’s say, art, which is one of the primary use cases.
So in the same way that if you have a Bitcoin, you want to know it’s not a counterfeit; it’s an original, it’s on the network. I am the actual owner; no one else can lay claim to it. When you can do that with art online, you now, for the first time ever, have the ability to actually claim verifiably ownership to a piece of art that is digital, not physical. In the same way you could own an original Mona Lisa, and it’s verifiable that it’s not a copy, you can do that digitally.
So these artists can release digital versions of their art. People can bid on them, they can buy them in auctions, they can trade them with one another. And anyone who buys or sells or holds these things knows, with a hundred percent certainty, that it is a verified original with a marketplace that understands the value. So people are also using NFTs for things like digital IDs.
So refugees is a good use case where they’re crossing borders… countries have their own documentation system. How do I know this is the person who has access to these accounts? They’re issuing NFTs that are just their virtual id. And because that person’s the only one who has the blockchain credentials to prove that this is me, not someone else, they’re able to get into a financial account in a totally different country with a totally different ecosystem of rules.
So from the nonprofit fundraising standpoint, after all that complexity, it’s actually a lot simpler, because now there’s billions of dollars worth of art being traded online. That means there are virtual opportunities to do auctions and fundraisers. So we’ve done them with Gary Vaynerchuk, we’ve done them with Stella Artois, with Sotheby’s. They do these auctions with these NFT artists, and the beneficiaries are the charities. 99% of the time it’s just a charity receiving cryptocurrency proceeds from the sale.
Denver: Yeah.
Pat: And then occasionally, you get the case where they want to donate the art itself, and then it requires, just like anything else, an appraisal process.
“Stablecoins, in short, it’s like a cryptocurrency, like Bitcoin, but it’s pegged to a fiat currency with a stable value. So by that, I mean it moves like Bitcoin; it sits in accounts like Bitcoin. It’s on a blockchain like Bitcoin, but its price is always pegged to the value of a dollar, so you don’t have that price volatility.”
Denver: Appraisal. Yeah. Yeah. Well, I am glad you’re burdened by these technological limitations because I actually understood that answer. So thank you. And I say that on behalf of all our listeners as well.
Stablecoins offer, I don’t know, an interesting bridge between crypto and traditional currency. What benefits do you see in using stable coins for donations?
Pat: Yeah. Stablecoins, in short, it’s like a cryptocurrency, like Bitcoin, but it’s pegged to a fiat currency with a stable value. So by that, I mean it moves like Bitcoin; it sits in accounts like Bitcoin. It’s on a blockchain like Bitcoin, but its price is always pegged to the value of a dollar, so you don’t have that price volatility.
What that allows for when it comes to giving is the ability to transfer value, with an understanding of: it’s going to be the same amount of money tomorrow or the next day as I’m initiating that transfer. And it also allows people to send donations when they don’t want to exit a position. So it becomes almost like a traditional donation.
So, I tend to not be the biggest fan of stablecoin giving, even though it’s like one of the top assets we receive. Because to me, it oftentimes is an indicator that there is a crypto investor out there that is still going off that misconception that so many stock traders have and crypto traders have. They’re like, Why would I get rid of this thing that makes me money when I could just give them the US dollars that are inflationary and I hate, right, which means they probably don’t know that, like tax arbitrage system, like this tax incentive.
So what I think ultimately is as it becomes a more common way for people to store value, I guess not store value, but like hold dollars in between trades where they occupy investment positions, it allows for these people who don’t want to exit a Bitcoin position because the market is volatile, it’s trending up or it’s trending down for whatever reason they go, it’s going to be worth so much more tomorrow than today to still initiate donations. And to do that in a way where they can track it and have it be transparent and accountable.
Denver: Sounds like a failure to commit, you know? Who knows?
Pat: Yeah.
Denver: Many might have expected meme coins to be a passing fad, but they’ve become a major source of charitable donations. What are meme coins, and why do you think they resonate so strongly with crypto philanthropists?
Pat: It is amazing because, I mean, the six years that we’ve been doing this, there have been 12 to 15 windows, like small periods of time where like meme coins have like dominated our donation volume because one of them goes on an absolute tear, and it produces a few situations.
One, people make a bunch of money all at once, and that makes people want to donate to charities, like regardless of the tax incentive. This is international giving where they don’t even give that tax incentive out. We just see this surge in wealth creation. It’s just people being good people and saying like: I want to do something good. I just made a bunch of money for the first time in my life.
That comes out of meme coins because of the extreme volatility when you have those peaks. The other piece is these meme coins are so community- based, right? It’s popular because it’s popular a lot of the time. Like the technology has some of these features of these cryptocurrencies that are really trying to solve a particular technological problem.
But they tend to be this copy and paste code with then this meme identity. It’s Shiba Inu, it’s Doge, it’s some cat-dog combination mixture. And then what happens is people get really excited about it in the same way that an internet meme will spread, where people are using kind of that same imagery to get a point across and make each other laugh. The cryptocurrency takes on life of its own in that same way.
Denver: Yeah.
Pat: And then they start forming these Discord channels and these accounts, and people start joining each other for these X spaces. And they start having these little gatherings and conferences; they’re wearing the same hats. And then as it grows and grows, more people invest in it… it increases the value of the asset itself.
And part of what they like doing as they want to build a community or take advantage of the funds they’ve developed through that community development, is they get a charitable partner. And that charitable partner helps them accelerate this growth of a community. Like we’re all doing this thing not just for fun now, but because it’s also helping people.
And I think a really good example would be the Bored Ape Yacht Club with Orangutan Outreach. You had all of these meme NFTs that were coming out of it and like built up a community in a very similar way, and a charity that had literally raised $500 grand a year prior to that, tripled their budget in a year because that community had said: This is a Great Eight nonprofit, we are a Great Eight project. These things tie together nicely and all of our work that we’re doing together is going to promote this cause.
Denver: I love what you say about a community there, and one of my theories that I have as to why text giving never took off, and that’s because you’re there, you’re by yourself, you got your phone, somebody’s giving you a number to send in $10. You send in the $10, nobody knows you send in the $10, there’s nobody around you. And it’s like, No, if I’m going to give, in many cases, I want it to be fun, I want to do it with other people, and I want some community about: we’re working together to change something. And certainly, this seems to be able to do it.
I think you gave me, I can’t remember, a sneak peek about something that you were really excited about and that was quadratic funding. I think you said it was a game changer the last time you were on the show. Tell us a little bit about what quadratic funding is and how you envision the method scaling in the nonprofit sector, and what that will mean.
Pat: Yeah, there’s a huge… I think a lot of tech communities have this in general. We see it in AI; we saw it with the social media founders. In crypto, we see it a lot, an effective altruism overlap where folks who are really good at building things and solving problems want to not only contribute to nonprofits, but they want to have an impact on how the nonprofit sector operates and try to make the funds that go to that nonprofit, not only from them but from other folks, generate more impact.
And sometimes that can be super misguided for sure. You definitely get the egomaniacs who come in and talk to people who have been doing something really well for a long time, helping a lot of people and saying: Look at my net worth, I could probably figure this out better. And that’s not always productive.
But some folks are really smart and they develop systems. So we have someone called Vitalik Buterin in the crypto community, this really brilliant programmer, and he was one of the co-founders of Ethereum, now the second largest cryptocurrency. He has been involved in a lot of different projects. Made a bunch of money off of Shiba Inu and some other cryptocurrencies as well, and has been a huge advocate for quadratic funding.
And at a very high level, the idea here is similar to what you discussed when you were talking about: you want to do it with other people when it comes to giving. It’s someone who is high net worth and highly impactful, giving a large lump sum, trying to find a way for fundraisers to value individual contributors being at a certain level of total humans as highly as they value that one person coming in and giving a large sum.
So it’s more or less giving a multiple when you’re running campaigns or fundraisers and sponsoring things to where one nonprofit gets, let’s say, 500 people to contribute. They can raise as much money from these benefactors as they could if they got one high net worth board member to just write that one big check.
And I think it’s a good way to get nonprofits to diversify their fundraising, and also to value, I think, younger donors who have long-term giving capacity in a way where they would otherwise, I think, continue to bet on a smaller pool of older donors with higher current giving capacity, leading to kind of an aging donor base.
Denver: Yeah. When they evaluate the health of a nonprofit organization, when you’re getting too much of your money from a single donor, one of those big donors, that’s not good for the health of the organization because if something happens to that person… or they decide to give somewhere else, you’re in big trouble. But that’s never going to happen with a pool of many, many, many, many donors, if you can leave, but you’ll still have that platform.
I think it was about two years ago, Pat, that The Giving Block was acquired by Shift4. Tell us a little bit about that acquisition and how it has changed in terms of the way you guys operate and go about your business, and maybe some new opportunities that have opened up as a result.
Pat: Yeah. We didn’t get tricked by the company that bought us. It’s a very rare founder acquisition story. They told us all the things they tell everybody: You guys will get to keep running this company as an independent brand. You guys will be the leaders of it. It’ll be almost like its own kind of department, just doing its own thing.
We report up, we’re part of a publicly traded company, of course. So if for whatever reason, Jared or someone else like really disagrees with a high-level strategy, then it’s up for discussion, obviously.
But outside of that, the way that it ultimately worked, we had this payments company, Shift4, founded by Jared Isaacman, who we were talking about, grew up in the area… in New Jersey.
Denver: Where you and I grew up… in Jersey, yeah.
Pat: That’s right. And he’s one of those people that makes you reevaluate how special you are, like very humbling in a good way.
Denver: Explain that a little bit. That’s an interesting… what phrase you just said: What does he do, and how does he do it?
Pat: I just mean that as a tech matter. He is unbelievably smart and complimentary. He is not like chipping away at anyone. I just mean when you look at his accomplishments, like this is an individual who, again, like myself, my co-founder, you build a company, you scale it a little bit, you’re doing stuff, and then you meet one of these guys.
He dropped out of high school. He had a multimillion-dollar company as a teenager. He parlays that into acquisitions. He was a billionaire by the time he was in his thirties. He invents tons of stuff. He is one of the most accomplished fighter jet pilots in the world and now is the first commander of all civilian space missions, a commercial astronaut who’s literally about to do the first commercial space walk. So…
Denver: It’s a pretty nice resume.
Pat: Pretty nice resume, yeah. And then you’re sometimes like, this guy must have gotten really lucky. And then you take a meeting with him, you’re like, Oh no. Just very different hardware.
So, in short, I guess what I’m saying is like we will spend six months putting a plan together. It’s really rock solid. And he’ll come into a meeting and within 15 minutes, he’s just fully up to speed on everything we want to do. And he’s found three or four holes that actually make complete sense. Just brilliant guy.
So, in short, very lucky with the founder, who ended up acquiring us. We’ve learned so much from him. And then the company, Shift4, as a whole is this $260 billion a year processing company that’s just like sneakily in everything. So next time you go pick up a pizza, you’ll probably see it on the little payments, POS.
“So really getting them aware of the fact that they have it as an option, knowing that there’s a tax incentive, seeing it on different campaigns, considering it, and then like building it into primarily their end-of-the-year giving plan, is the best way to build the most consistent and kind of high revenue programs.“
Denver: Yeah. Yeah. Tell us a little bit about crypto campaigns. Any organizations you’re working with right now that are doing a crypto campaign? Or what are some of the elements and dynamics of really launching and successfully completing a crypto campaign?
Pat: Yeah. So the main way that people fundraise crypto is like through an integrated approach. So just as like a quick aside, the best ways that nonprofits are getting cryptocurrency donations is they’re sending out a big direct mail campaign like they would normally, and then on the back of a piece of paper, you’ve got QR codes for other ways to give: crypto, stock, DAF, ACH, et cetera. Like you’re giving donors opportunities to give a different way when you already have a really compelling campaign with an appeal going out.
Same thing with emails. It’s sitting in a pamphlet at your gala. It’s a piece of paper sitting in the bag at a walk program. It’s posted about on social media. It is just kind of another way to give. And that kind of Rule of 7 marketing and consistent exposure across space and time, is what generates the most funding.
Just because it’s tough to run just a one-off crypto campaign, knowing that you have to get nonprofits donors from not thinking of it as a donation method into the consideration stage, and then ultimately converting on a donation that might not necessarily make tax sense for them, let’s say, the week that you’re running it.
So really getting them aware of the fact that they have it as an option, knowing that there’s a tax incentive, seeing it on different campaigns, considering it, and then like building it into primarily their end-of-the-year giving plan, is the best way to build the most consistent and kind of high revenue programs.
The crypto campaigns themselves then…once your donors all know it’s an option, they see it in the ways to give menu; they’ve seen it in the emails and appeals. It tends to be tying kind of classic fundraiser stuff… the donations that you’re getting… to some crypto-specific goal with a one-to-one impact metric.
So a really good example would be, for instance, the Cancer Crypto Fund. American Cancer Society is raising $10 million for cancer research. They have the scientists lined up, the grants. They know where the funding is going. The audience is aware of it. The appeals are put together. The campaign’s already rock solid.
And what they did is they took a hundred million dollars of that goal and they said they want to raise it in crypto, and they called it the Cancer Crypto Fund. And then that particular set of grants would be fully funded using cryptocurrency, which had never happened for any cancer research ever.
That got really powerful press releases. It got crypto media coverage. They posted on social, and it was the top performing social posts other than, I think, maybe one celebrity death announcement in the history of that entire organization. Like it just got this tremendous reach because you made a crypto- specific appeal and space for crypto donors.
And in a matter of weeks, they’d raised a million dollars in cryptocurrency to help fund that broader campaign.
Denver: What do you see as the future of crypto in the world of philanthropy? If you were to fast forward five years ahead, what do you think you and I… you’re going to be back on the show in five years, in case you… what are we going to be talking about?
Pat: Hopefully, the larger role that it’s playing in nonprofits winning out, hopefully versus losing out when it comes to the great wealth transfer. I think a lot of what we talked about, like with the older donors and aging donor bases, people treat it like nonprofits are just dinosaurs and like that’s not what it is. You operate on an annual fiscal end of year budget, right? You’ve got your 990 and your reporting, and every 12 months you have to raise a certain amount of money.
And most donors, especially with overhead myths, want you to get that money out the door. They’re not looking for experiments and crazy stuff. So what happens is you have these older legacy donors who are your top contributors. They have brand affinity, like it’s obviously where nonprofits should be spending a decent amount of time.
The issue with that is not the donors that are being appealed to, but I think the ways that nonprofits learn to build community, to message, to fundraise, and ultimately what donation methods, I think, boil up into their donation pages and their fundraising processes.
Nonprofits fundraising crypto actively isn’t just a matter of, I think, getting younger donors to give to you in the way that we think about younger donors like bolstering and growing a younger pool. The average gift size is $5,000 to $15,000. It’s a serious major gift.
And I don’t think that’s just because of the tax incentive. I think it’s partially because it’s one of the only ways I’ve ever seen, even major nonprofits, speak to donors in their late twenties to, let’s say, early forties, like they do to donors in their fifties, sixties, seventies, who are these contributors who are treated with kind of respect and a major gift lens and the expectation of these larger transactions. It’s this bridge into major gifts that I think ultimately will future proof a major gifts program or leave a major gifts program behind.
Like I think if you look at the nonprofits who are fundraising crypto seriously, I think they’re more likely to have touchless donation methods. Like Apple Pay. When you go to their walks, I think they’re more likely to take things like Zelle. I think their stock donation forms will be automated, and I think that ultimately means something that Jared said to me once because he donates all this money to St. Jude… he raised $250 million for them in this major campaign.
He was trying to give a very large amount of money via stock to the nonprofit. And he was just like, Why would you make it so hard for me to give you this much money? And the second thing was: If it’s this hard for me to give you this amount of money, why would I think that like your ability to prioritize innovation in general, when it comes to how you allocate these resources, is going to be as effective as a nonprofit where I can see that in their processes when it comes to taking gifts.
So the bridge for the highest net worth, I would say millennials, Gen Zs, Gen Xs into nonprofits, which will ultimately, I think, dictate the winners and losers when the great wealth transfer continues to play out, will largely, I think, be based on the types of donations that the nonprofits accept and how they use them as bridges into major gift conversations.
Denver: Yeah. And I think Jared is so right, too. It truly is a leading indicator. And I’ve often said that to people who interview for a job, and they tell me about the interviewing process and how awful it was and how it went on for months and they couldn’t make a decision. And you say to them: This isn’t an aberration. This is the way this place is going to go about business, and Jared is right in terms of donation.
And the places that do it well are the ones that understand, remove as much friction as you possibly can. Don’t ask for every piece of information because people are going to stop, and they’re going to go somewhere else. So that is true.
Finally, Pat, we have a lot of nonprofit organizations that are listening to this show who are probably doing very little, but more likely nothing in crypto. They probably have listened to you. They’ve listened to what the American Cancer Society has done, and they’re saying, Well, maybe I should get started. What do they need to do, and what do you have on your website that can help them get the show on the road?
Pat: Yeah. I think the best thing to do is to just book a demo with our team. And the reason I say that is like, even if you don’t end up using us as a solution or moving forward with crypto, at the very least, what it’ll do is it’ll remove the confusion around like what barriers there are to entry, right?
You put together a bullet point list of questions, what concerns or things you’re looking for out of a solution, right? And you’ll just discover stuff that we talked about, Oh, it can automatically sell. Oh, I can turn off the anonymous donation feature. I can make information mandatory for the donor to submit before we even give them a crypto wallet to send a donation.
Oh, it’s connected to an exchange that has a block on blacklisted wallet addresses in sanctioned countries. Oh, it’s SOC 1 and SOC 2-compliant. It’s like, even if you don’t want to do it now, I think so many nonprofits are convinced it’s not regulated in the way that it is, that the volume, like the size, let’s say the opportunity isn’t where it is, that there aren’t 600 million people with it online, that there aren’t $2 trillion invested in it.
Like just sitting down with someone, getting the questions answered that you know are questions, and then also just hearing a bunch of information that you otherwise wouldn’t hear, will at least give you the ideas that you need, I think, to become an advocate for it internally if you decide to be one, or choose that it’s too early, at least, while being informed.
Denver: And your website is?
Pat: Thegivingblock.com.
Denver: Fantastic.
Pat: So you just click the button there in the corner, and it’ll let you book a demo.
Denver: Great. Well, thank you so much, Pat Duffy, for being here today. It was a real delight to have you on the program.
Pat: Yeah, thank you so much for having me. Always enjoy it.
Denver Frederick, Host of The Business of Giving serves as a Trusted Advisor and Executive Coach to Nonprofit Leaders. His Book, The Business of Giving: New Best Practices for Nonprofit and Philanthropic Leaders in an Uncertain World, is available now on Amazon and Barnes & Noble.