 Welcome and thank you for joining us for another fantastic episode. Today we have Pat Duffy, co-founder with The Giving Block. Pat is here to talk to us about cryptocurrency and non-profit. So stay with us. We want to make sure that you get all that you can out of Pat and his knowledge and area of expertise. But before we dive into the cryptocurrency, we of course want to make sure that you know who you are tuning into. So Julia Patrick, CEO of the American Nonprofit Academy. We would not be here if Julia did not have this grandiose idea that she thought would last two weeks. And here we are on almost two years and 400 episodes. But Julia is the CEO again of the American Nonprofit Academy. If you have not checked out that website, please do. There is a plethora of information there at theamericannonprofitacademy.com. I'm Jarrett Ransom, her sidekick, also known as the nonprofit nerd CEO of the Raven Group. And again, I am so blessed and privileged to serve alongside Julia as the co-host as we continue to have these high level conversations with thought leaders around the nation. And we would not be able to have these guests on if it weren't for our amazing presenting sponsors. Many of them have been with us now for the almost 400 episodes strong. And we are so grateful to have their investment in the shows, but truly in the sectors at large and in your community. So I like to say and remind you that these companies exist to help you do more good. So please do check them out and see how they might be able to help you move your dial forward. And again, thrilled to have today's guest talking about cryptocurrency. Pat Duffy, welcome and thank you for saying yes to joining us on today's episode. Yeah, thank you so much for having me. I'm really pumped. Okay, Pat. So give us the background story, the giving block. How did you and your partner start this? Give us some some context here as we move forward with this discussion. Yeah, I mean, as you might imagine, when we started years ago, it seemed like a pretty bad idea based on how little nonprofits were fundraising it and pretty much how big of a gap there is between the charitable sector and the crypto sector. I mean, demographic stuff still today, vast majority of users are millennials and Gen Z's, the average nonprofit employees in their 50s or 60s, depending on the poll you look at. And it was one of those things where it's almost like trying to bring soccer to the to the United States is like an analogy we use where it's just like, it's probably it's a big deal, but not a big deal here. So like, good luck changing the culture. But yeah, back then in 2018 already, we were seeing amazing stuff back to the soccer analogy in terms of like, how big of a thing crypto was already. Coinbase passed, ended up with more users at the end of 2018 than Charles Schwab, eTrade, Fidelity. We saw, you know, it was burgeoning about to be a trillion dollar asset class. And then at the end of 2017, going into 2018, we saw a few hundred million dollars get donated in cryptocurrency to charities, there were only a handful kind of in line to take it. So back then, like a few hundred million dollars, I guess for a sector doesn't seem like a whole lot. But we saw kind of the adoption how quickly the user base was growing and how little nonprofits knew about how to take it one and then two out of it effectively fundraise it consistently. So we set up the charity I was working at at the time, Alex got me into trading crypto, I got him into nonprofits. We started setting up the charities to take it and building fundraising programs. And since then, we've grown to a little over 500 clients today directly and a few thousand through through integrations. Wow. Wow. Just that short amount of time, Pat, I feel like my jaw is like on the table because you've said already so many amazing things. So the majority, and I know we're going to go into kind of like the profile of the crypto donor, but what I just heard you say is that is typically 20s and 30s. And then the staff of the nonprofit fifties will be generous. And I think that, I mean, that already is like wow. So you look at this gap, you look at the implementation gap. And already there's challenges, I think when it comes to adoption. So I'm excited to learn more and I want to share and you remind me so much of my of my friend's son. Sorry to say this, but when he was in high school, he, and this was years ago, but he did a report, a research on bitcoins. And I was, I remember sitting there going, what is Bitcoin? What is cryptocurrency? Like let's go down to the basics. What is this? And I wonder if you can do just that because I thought this guy is on to something and here he is in high school knowing way more than most other people. And now he is that 20, 30 year old, you know, age donor making contributions in this manner. So take us to the basics. Okay. For us, us old dogs, us old fogies. What is a crypto? Like what is a Bitcoin? What, what is this? How do you define that? Yeah, definitely. There's, I guess, two things for charities. One is what is cryptocurrency? And then two, I guess, why are people donating it? Which, which are two kind of separate things for what is it as a technology? I guess a good analogy would be sort of like when talkies became a thing for movies where it's sort of like the idea of movies having sound was a bit kind of paradigm shifting. It's just like, this isn't radio. This is a movie. It shouldn't have that. There's sort of a, I guess, a misunderstanding when you have existing schemata around, I guess, what a thing ought to be when you start combining aspects of different forms of, in this case, assets, people get just kind of confused because they're used to understanding currencies as currencies, gold as gold, stocks as stocks and cryptocurrencies in short, I guess, just take different features of all these traditional assets and they formed a new financial tool that serves a lot of those functions but blends a lot of the benefits. So you don't use Bitcoin, let's say, to buy a hot dog at a baseball game and people get confused about that and they're like, oh, because it's a cryptocurrency in name that would mean that the adoption curve isn't there. But then you just say to that, you'd go, okay, well, you don't use stocks and gold to buy a hot dog at a baseball game, either those are a hedge against inflation, those are stores of value, those are speculative assets, they have capital gains, taxes, you'd rather use a currency with a stable value for transactions like that. So I mean, if you just want to go down a bullet point list, the main thing that cryptocurrencies like Bitcoin did was they made it possible to have a digital currency where you can actually know where it is, where it's moved and no one can claim to have a unit of it that you claim to have, no one can claim that it was transacted with the person where it wasn't. They can't change transaction records in short, otherwise you would have like when people used to torrent MP3s, you can make fake versions of digital currencies. So Bitcoin was the first cryptocurrency to make it impossible to make a fake one. So since Bitcoin's origins 11 years ago now, no transaction record has ever been changed, no Bitcoin has ever been claimed to exist in more than one place at a time, it's then called the double spend problem and you can't print Bitcoin like you can with the US dollar. So things like Venezuela, Germany after World War I, or even India where they just deemed half the notes invalid overnight, you can't mess with the supply and you can't cook the books. So it's a digital currency that operates really efficiently, very effectively, you can send it anywhere in the world no matter of seconds. If you have it, you actually have it versus when you walk into a bank and you say, I have $100,000 here, you actually don't. It's called fractional reserve. The bank is pretending that that money exists. So as a result of all those things, because you can't print that people like sitting their money in Bitcoin versus something like the dollar because the dollar inflates and gets less valuable and over the last five to 10 years Bitcoin and cryptocurrencies been the best performing asset class. Interesting. You know, I'm thinking about the nonprofit sector who has had, and you mentioned this in the chitty chat chat about how hard it was, if you think back, not that long ago for nonprofits to start taking credit cards, to have an online donate now button to do anything that's mobile technology, let alone the number of nonprofits that walk away from asset donations such as real estate, land, art, you know, other holdings, collectibles, things of that nature, because they haven't even understood how to manage this. If we keep taking that road, cryptocurrency has got to be at the back of the line for adoption. It's got to be a really tough thing. Funny enough, it's not. So as of 2018, we could do retroactive research, I never have, but even in 2018, we were first getting started. Donate Bitcoin since 2018 has been googled more than donate stocks year over year. It's already more common. The reason for that is, like a lot of people have stocks, of course, but it's not having a property asset that makes you need to donate it. It's having capital gains tax burden, which means you're trading it. So a lot of people have stocks, very few people trade stocks, and you have to trade them to accumulate burns. You have to trigger what's called a taxable event. Cryptocurrency, I say only, but a little over 200 million users, which is still a lot of people, much more actively traded, and literally every time you move between cryptocurrencies, you trigger a taxable event, and then you combine that with the volatility, the fact that it goes up and down a lot, which charities usually think is like a bad thing. It's like, no, not for a charity. Volatility is what changes the price and only changes in price will drive people to give. In short, you combine all of those things, and you have the asset type that is made in a lab for charitable giving. It's the easiest type of money to send. It's the most volatile market, meaning you have changes in price which drive the reason to give. And then you have people moving it a lot, which is accumulating that stack of capital gains tax burdens. You can offset with a charitable donation. So in short, like in the US, at the end of this year, there's going to be tens of millions of people who are not only incentivized to give crypto, but most incentivized to give crypto, making it one of the biggest donor demographics already and by far the fastest growing. Okay, so then let's have you dig into that a little bit, because I'm really interested in to kind of revisit this or amplify it. What is that donor looking like that's going to be using this? Because we in the nonprofit sectors, you know, a lot of times we have these messed up versions of what we think our donors look like. And then we just go after that demo. And it's really oftentimes a full Xerrant. Yeah, this is definitely an example of that. And it's it's nothing. It's reasonable to have the misconceptions that are there common of crypto donors. But like once you dig in, then the data doesn't suss that out. So in short, when you think about like a millennial and a Gen Z donor, it's like you can think of the traditional nonprofit value proposition. It's like this person is probably digitally valuable. They're more likely to spread events. If you're doing a Facebook fundraiser, like an online walks program, virtual everything, it's like that young donor base is spreading the word, they're probably growing your donor pot much quicker, they're bringing their friends in, they're activating around your social, but they're not going to give as much like their average gift size is probably lower than your Gen X or your baby boomer. Crypto flips that on its head just because you do have these generally speaking young people from 18 to 35 donors. But the odds of them being a millionaire is dramatically higher because again, they're in the most rapidly growing asset class, the best performing asset class of the last five years and the last 10 years. They're digitally native, they're incredibly tech savvy, they're aggressively financially literate because again, every time you move it, it's a taxable event or move into cryptos rather. So like you got to learn fast. And the assets have been performing quite well. So as a result, the average gift size on our platform, for instance, is between 10 and $11,000, which is just an average donation, despite the fact that our donors are on average in their late 20s. So, wow, I was born in the wrong time, because I would love to be in this 18 to 35, you know, asset growing range. How do we prepare for this? So I'm thinking now, and I know we have so many nonprofit leaders joining us today. And I like to ask those questions, Pat, that's like, okay, but what do we do, right? Like, how do we as a nonprofit say we want to integrate crypto, we want to invite this type of donation? How do we prepare for that? Yeah, this is our answer to that question, like comes down to also like our ethical and business philosophy around how we constructed it. We took a different approach, which makes it like the best way of putting it, I guess, is we treat crypto donors as a donor demographic, not as a donation method. So there's actually two parts of this. Usually it would be if it was a donation method, then what you want is a easy solution where you can check the box of adding crypto as an option for your donors as they go to check out and give you a gift, which is, you know, half of what we do. So that part is important. But then the second part is because it is the fastest growing donor demographic because these donors are so high net worth because the market is incredibly volatile and driving like aggressive tax incentives right now. It's uniquely important to not like take the if you build it, they will come type approach and to build an active crypto fundraising program within your comfort level. So even if that just means participating and plugging into the crypto opportunities that exist outside of yourself that are just easy to get in front of the crypto giving pledge or bag season, the end of year campaigns, all the way up to doing things like we do with American Cancer Society, Save the Children United Way build like what we call a crypto philanthropy program that can drive seven, eight figures on an annual basis. In short, the two things you need to do is one, figure out how to take it, we check that box and then two, decide how actively you want to fundraise it because in our early days, I guess, for instance, like the first 30 clients or so, we got probably 25 were already set up to take crypto, including American Cancer and Save the Children, but like didn't get donations. So what we do I guess is one, set up the solution to automatically sell it for US dollars to automatically shoot tax receipts in a compliant way, just make it really easy to set it up and add that option. And then two, we run, like I said, the crypto giving pledge, we run the corporate philanthropy programs for crypto exchanges and companies, we run Bitcoin Tuesday and crypto giving Tuesday on giving Tuesday, which is a lot of Tuesdays, when we run the community campaign for the kickoff of what is called bags using the end of year campaign. And then we build individual programs at the nonprofits. So I'm circling back over my tracks, but in short, figure out how actively you want to fundraise this stuff, or if it's like we want to check the box out of payment solution, no headaches. And then obviously do homework and on the best way to take it, hopefully you'll find that to be the giving block. And I'm curious because I'm thinking of the donor database, right, our CRM, we have become accustomed to the credit card, the check, the ongoing pledge, or what that might look like. So has the CRM side also integrated, this is a cryptocurrency donation, and this is how it's received and tracked so that we can also keep our data institutionalized in that manner. Is that already happening? Yeah, it is happening, but slowly, like we're trying to push more groups to do it. So we just did an integration with Neon, where they're just made it really easy one to seamlessly accept crypto payments and then to reconcile that within a nonprofit database. But like we want everyone, you know, Salesforce, BlackBaud, all of the different CRM offerings to have this integrated. And unfortunately, it's a very fractured market as nonprofits know you got to work with 80 different vendors just to have basic technical solutions. But yeah, we're working on getting that in place. But the nonprofit sector just like with every other technological innovation usually lags a bit behind. So we've got, you know, 95% of hedge funds invested in or diversifying into crypto now. And we've got less than 1% of charities taking it. So it'll be a bit of a learning curve for sure, but we are pushing very hard and we have full time folks on our team driving to make those CRM integrations happen. And are you seeing this also at events? I've heard of a benefit auctioneer in New York, and he was working a gala and someone, you know, said, Hey, I'll donate crypto. And he is great. Yes, we're taking crypto also. And I think little did he know they were not at that time. But you better believe that, you know, a good benefit auctioneer will say yes, absolutely. Right there on the spot, we will make this happen. Have you been to events where that has been the focus, or it has been integrated into the fundraising, where, you know, it is it is invited to to make that donation or that commitment or pledge right there on the spot at the event. Definitely. It's actually a lot easier than it seems to. It's just a you can have a QR code that opens up your donate crypto page. And they just check out through the widget like they normally would. And then it's just API is like it normally would if you want to have a live feed of how many donations are coming through right now through that source. That's like an easy thing to just have automatically generate up onto the page. But again, if you're using say, nonprofit event fundraising software, you have a specific vendor your partner with who doesn't have like an integration with us. That's probably not easy to do all the things that I described. But even for a small nonprofit, if you had like an institutional crypto account through us, you could very easily just pop that QR code up as a way to give. And then people in the crowd could just open up the page or you could have it in your pamphlet and they donate from their phone like they would with whatever other software. The resurrection of the QR codes, man, they have come back and they are here to stay. I was just I mentioned this in a previous episode, Julia, about having the QR at the bottom of, you know, a virtual event, virtual gala. And I found myself scanning my news station last night because they had the QR code to a go fund me. So I love that and the integration of that technology piece. Sometimes, Pat, we get some some live questions and this comes from our friend and I know that she's in South Carolina. So my home state and she has this question, our organization uses BlackBod, which ironically BlackBod is also in Charleston, South Carolina. How soon do you think we could integrate crypto donations? So they currently use BlackBod and asking right now, what does that timeline look like to start the implementation? Yeah, I think so. The first part of that answer is I wouldn't wait for integrations to start taking crypto one because like once we integrate, then the same solution will just plug on the back end. You might be able to update instead of just having a donate crypto page and your other ways to give drop down. You and your regular donate button BlackBod giving form, we can then add a you know, through the giving block a crypto integration there as well. It's definitely no reason to wait until you have that button instead of just like popping up a widget on a different page just because again, now is like a really good time to fundraise crypto. We're doing six figures a day. So I guess in short, I'm not sure when BlackBod will have it. We're talking to at this point, quite literally every nonprofit services companies, they have a lot of other priorities, which is reasonable and they have to balance that based on what drives the most revenue for them and the most value for their clients. Some of the groups we talked to say crypto is it and we're pushing integrations like we just did with neon now or with a bunch of companies through Q4 and Q1 of next year and then other companies, you know, it's going to take them a little while to see the value and prioritize it above everything else they're working on, but we're slowly but surely making those arguments. So get on it, don't delay, reach out to the giving blocks. They great guys and they will definitely be reaching out to learn more. Pat, this takes us to as we move in while we are in Q4, I was used to saying as we move into Q4, but here we are. How does a crypto donation impact the tax element of a donor? Yeah, we touched on this a little bit, but like the basic idea here, right, so stocks are an example, like a lot of nonprofits already take them, they're brutal to take and brutal to give right now. There are some cool companies working on it from the stocks side. The issue, I guess we lifted stocks and crypto back in 2018, but issue with stocks is they're not really actively traded and they don't have like a donor demographic. You can't really where my stocks people at at a gallon. We definitely like the natural kind of firepower of crypto in short. So like all of the press releases, the social content for the charities we work with, like it's always their best performing. I think we have one press release we've ever done with a charity on them take crypto that was out performed by another press release. They released that year. Like it's almost always the top performing content period on the tax side of it outside of like the energy and the excitement piece. The main reason donors are giving it is because they are actively trading it. They're moving into not a positions and as you trade stocks, cryptocurrency, et cetera, all of those things combine into your overall capital gains tax burden that you'll need to pay and tax at the end of the year. So in short, if you whittle it sounds like a really simple example, let's say you have a million dollars in stocks, a million dollars in crypto and a million dollars in the bank and you go, hey, I'm going to give a million dollars to a charity this year. You want to give the property asset. So either the stocks or crypto and you want to give based on which one has the greater capital gains tax burden. So which one is appreciated the most because otherwise you'll have to pay taxes. So if I give the million dollars in the bank, charity gets a million bucks, I get a million dollar right off. That's it. If I give the million dollars in stocks, charity gets a million dollars, I get a million dollar right off and let's say I erase $50,000 in capital gains taxes. If I give the Bitcoin or whatever the cryptocurrency is, charity gets a million bucks, I get a million dollar right off and you're erasing maybe 100, 150 grand in tax incentive just based on the fact that it's appreciated more. Now if your stocks appreciate more than your crypto has, then you would give that instead. So long as you're actively trading, but the use case usually lends itself to crypto being a more likely option if you're holding both assets. Okay, it's like this time has flown by and we mentioned to you, this is going to go by fast. I'm really, I feel like we haven't even scratched the surface and there's just so much here to think about. Thegivingblock.com is where our viewers can find you, where they can learn more about that. But what's the best way that we as nonprofit leaders can educate ourselves about moving forward with this? Yeah, I'd say it even goes beyond crypto. I would just recommend nonprofits have like an iterative and scheduled like innovation or innovative tech exploration plan. Like you should be sitting down and looking at things. So an example we give is because we work with a lot of universities now, like we'll talk to their endowments, their trust management type folks, and they'll be like we're not really looking at crypto. And the example that I always give is not even an example, but what we say is quite frankly, I guess we don't say this like two people's faces, but as a concept, if you're managing a pool of assets, especially a big pool of assets and you've ignored the best performing asset class for over a decade, you can't be doing your job effectively. You can say no, we're not going in like it's overvalued right now where it's not a good time to diversify into it. That's probably reasonable. But if you haven't considered it, I think we're at the point where that's unreasonable. So in short, it's not just crypto, but like looking at Venmo and Zell and Cash App, just ways that people move money, looking at ways to take stocks and other non-cash assets really effectively, mobile optimizing your site, getting your social game up to par, understanding like how ads and just different digital platforms work, just moving in that direction. So you can get on top of these trends. You don't get left behind with an aging donor base or a lack of innovative tech to keep up with the times is important. And with something like crypto, just like any other form, like I would just look at how can I take this stuff? How does it work? How big is it? And then prioritize it with other trends. So if you're not taking stocks and other things, you think that's a better play, start with that. Instead of crypto, our argument, of course, would be generally speaking, it appears that cryptocurrency is the fastest growing and most actively traded. So I'd recommend it as the first new type of donation method to take, of course, by virtue of what I do. But I would just look across donation methods and prioritize accordingly. And you also include it in your gift acceptance policy? Like is this something that needs to be added into that language? Yeah, I would say yes, please. Because the other thing is we allow nonprofits to automatically convert to US dollars. We also have nonprofits to hold it or build crypto endowments. What do we don't like seeing in some charities? Bitcoin is just going up a lot right now and it's up a ton over the last year. So they'll watch it go from 15K to 58K. And then as it's heating up, they'll be like, turn it off. Just like you should probably have not only a gift acceptance policy, but a plan if you're going to be holding it. I would say yes, in advance, it doesn't need to be complicated. But it's just like when we accept it, we're going to automatically sell for US dollars or you go, we're going to accept it and we're going to hold it all in Bitcoin or stablecoins, earning interest, whatever it would be. But that's like a thing that we can easily help nonprofits figure out what works best for them. Before we leave, I really am curious, if you could give us some names of, you mentioned the American Cancer Society, but could you give us some other names of nonprofit brands that we might be familiar with that are using this? Yeah. I'm trying to think of like bigger ones we have. We have American Cancer Society. We have United Way Worldwide, PETA, World Vision, Save the Children, I can't remember if I just said them, International Medical Corps, Team Rubicon. I'm going to miss someone significant and notable. I would love to check out their websites and see how they talk about it, how they promote it, what language and buttons and all the doodads that they might have out there. I know I have a lot of reading up to do, so I'm not so nerdy on this topic, but I want to be and that means I might need to reach out to you, Pat, because this has been fantastic, really just phenomenal to learn more about. I shared very transparently, not my area of expertise, so this is something that I was really leaning into and looking forward to learning more about. I crown you a nerd and that is a compliment coming from me. I always love it when someone can nerd out and really just get into the topic, so passionate and you've definitely done that today, so grateful for your time and your expertise is extremely valuable, so thank you so much. Go ahead, Pat. I was just going to say, no, no, no, I was just going to say, Julian and Jared, thank you so much for having us. I appreciate it. It's been great. We had Pat's information, check out the Getting Block. Again, I'm Julia Patrick, CEO of the American Nonprofit Academy, been joined today by the nonprofit nerd herself, Jared Ransom, CEO of the Raven Group. Again, we want to thank all of our presenting sponsors. Without you, we would not be having these types of discussions, and I think we're going to have this particular discussion more, so Pat, as you see things moving forward in our sector, we really want to know what you all are seeing at the Giving Block because it's just really an exciting time for us to be looking not only at this currency, but I think the thing that you said that was the most interesting was the demographic of that donor, and understanding that gap that we have that is so substantial. And if we are only looking at this one type of donor profile, we're really missing out a future, multiple generations, actually, of donors. And so that I think is just super fascinating. Okay, Jared. I love it. I know I'm super stoked. I'm ready to learn more. So grateful. One of the things that I know many nonprofits struggle with is their aging constituency base. And so this, I think, really does help to build that donor pool and let's get this demographic engaged now, and it means cryptocurrency. So reach out to the Giving Block. Thank you so much again for your time. It's been phenomenal. It's been really great, Pat. Thank you so much. As we like to end every episode, we want to remind you to stay well so you can do well. We'll see you back here tomorrow, everyone.