 Well, hello and welcome. Thank you for joining us. Another episode of The Nonprofit Show. We are going strong and today we have with us Jackie McLaughlin, CPA, Client Services Manager at Chazen and Company. Jackie's here to talk to us about cryptocurrency and nonprofits. So Julia just made this, oh goodness face. For those of you listening, it's going to be a wild ride to stay with us. Before we jump on this roller coaster, we of course want to make sure that we acknowledge who you're watching and possibly listening to. So hello to you, Julia Patrick, CEO of the American Nonprofit Academy. I'm Jarrett Ransom, Julia's personal nonprofit nerd, but yours as well, plenty to go around. Honored to serve as a co-host, also CEO of the Raven Group. And again, we are just honored to be here each and every day to provide content and conversations to all of you. So thank you to our presenting sponsors that allow the Nonprofit Show to continue and to grow strong. So I'm going to give some verbal shout-outs starting with Bloomerang, American Nonprofit Academy, Fundraising Academy at National University, Be Generous, Your Part-Time Controller, Staffing Boutique, Nonprofit Thought Leader and Nonprofit Nerd. If you haven't checked out these companies, we invite you to do so, but the reminder is to do that in about 28 and a half minutes, not quite yet, but as soon as we're done with this conversation with Jackie. If you miss any of today's episode or any of our previous episodes, you can find us on Roku, YouTube, Amazon Fire TV, as well as Bimeo. And I've been hearing Julia that we have become the next Netflix binge series. So people are on the Nonprofit Show. And if you want to listen to us, you can of course listen to the Nonprofit Show wherever you stream your podcast. So go ahead and queue us up wherever you prefer. We're there for you. So just as Jackie, our guest, Jackie McLaughlin, again CPA, Client Services Manager with Shazen & Company is here with us today to talk to us about cryptocurrency and nonprofits. Welcome Jackie. Thank you. I'm very excited to be here and very excited to talk about crypto, my favorite subject. Well, that is a good thing because it is a subject. I feel Jackie that is changing every day. And you've been on before talking about some basic things, but we're seeing some disruption or changes. And so I thought, let's get you back on because you were just such a great guest when we first started talking about this. But before we move into this, tell us a little bit about Shazen & Company and what you do within the organization and what Shazen & Company is. I'd love to, thank you very much. So Shazen & Company was founded about 17 years ago and we cater to nonprofit clients almost exclusively and we provide anything from day to day bookkeeping up to CFO level services. Our goal is to make nonprofits more successful. Awesome. Fantastic. That is so very needed. I love that focus on the nonprofit which ties in perfectly of course to crypto and nonprofits today. We started with that kind of Halloween theme of maybe this is scary for so many people but start us with what is the status of cryptocurrency donations? Can you just like baseline with us Jackie? Where, what is the status of this? There aren't a lot of nonprofits accepting cryptocurrency so the status of it is a fraction of what it could be. And I love really talking about crypto because people are so afraid of it given everything that comes out in the news every single day. And for a nonprofit, there's really no need to fear it. Now, if you're going to invest in crypto, yes, it's very scary and I'm certainly not here to talk about investing in crypto but for nonprofits to accept crypto donations there is really no downside to it. So my mission is to get nonprofits over their fear of cryptocurrency and encourage them to accept it in donations more often largely because a couple of reasons. In 2021 crypto holders numbered 21 million people in the US and that number is expected to double, almost double in 2022. So you're looking at a huge number of crypto holders. Additionally, what I find is many of the, or one of the challenges that our nonprofits are facing is their donor pool is getting older and so that's affecting their donations and they're having a more difficult time attracting the younger donor pool. The average crypto holder, in fact, 94% of crypto holders are between 18 and 40 years old. So by accepting cryptocurrency you can also begin to attract a younger donor base which is what a lot of nonprofits are challenged to do right now. Yeah, that has been, I wanna say, like since I started my career 20 plus years ago, Jackie, the thing that so many nonprofits were terrified of, is their aging constituency demographic. So bringing this in, but I wanna talk about, because you said that nonprofits do not need to be fearful about that. We talked a little bit before we went live about how nonprofits are typically the last to adopt like new trends. I mean, can you talk to us a little bit more about that and how we can maybe push aside this fear? So I think if we start to unpack crypto a little bit and people understand it better we can push aside the fear. So the first thing I think that makes people fearful is this word blockchain. Crypto is on blockchain technology and no one understands blockchain. I don't understand it in detail but I can tell you all that blockchain is is a virtual ledger. So, you know, back in the 50s, 60s, 70s we used ledger paper and it was often green and there were lines on it. Now with crypto, it's blockchain. So you can't see it, there's no paper it's behind the scenes. But for nonprofits accepting crypto which is what I'm encouraging I'm not encouraging investing in crypto just accepting it. They don't need to worry about blockchain they don't even need to pay attention to all the news stuff about blockchain because blockchain is where you start to hear all the scary stuff about the carbon footprint and hacking and all of this stuff. So blockchain is important if people wanna mine for crypto or hack crypto. Now hacking crypto is illegal so certainly nothing I would recommend. And mining crypto is beyond most people's computer yes, computer abilities. So blockchain is just not something that nonprofits need to worry about or follow or be afraid of. The second thing that makes us afraid of crypto is the volatility in the market. So I think we're seeing right now especially that crypto has come down significantly in value but again I am not encouraging investing in crypto. And so as long as you're not investing in crypto that market volatility really doesn't have an impact on nonprofits accepting it. Now let me answer some of your viewers skepticism right now with that statement that I made because if they received a crypto donation yesterday and I'm gonna make an extreme example and each Bitcoin was worth $100 yesterday and today Bitcoin fell to a dollar. Yes, that nonprofit kind of lost $99. But you know what two days ago they didn't even have a dollar. So by accepting it even if the value comes down significantly they still have more money than they had two days ago or a month ago. So you never, ever, ever in any organization wanna put barriers between your organization and accepting money. You never wanna put barriers. Absolutely, we've had a guest talk with us about accepting vehicles and houses, other property, things like that. It makes me think about a gift acceptance policy and how so many organizations truly have that outlined. Do you recommend that we have a crypto policy? Absolutely, absolutely. If a nonprofit decides to start accepting crypto they do need to incorporate a crypto policy, gift acceptance policy into their current gift acceptance policies. There are decisions that have to be made. There are two ways that a nonprofit can accept crypto. One is similar to the way they accept stock donations and the second method is similar to the way they accept credit card donation or donations made through credit card charges. So they might want to address in their crypto gift acceptance policies which methodology they're going to use to accept crypto. Also similar to organizations that have a stock donation policy they'll wanna incorporate rules for crypto. How long are we gonna hold it? How long can we convert it, et cetera. And that's where the volatility of the market really comes into play. Most organizations that we deal with their stock donation policy is to liquidate it within 24 business hours. The same can be said about crypto that you wanna liquidate it within 24 hours of receiving it. And that way you don't have to ride the roller coaster of the volatility and also you don't have to rely on an internal person to make the decisions about I don't know if I wanna sell it. It might go up later and then it ends up coming down. You just have a flat gift acceptance policy. Wow, that's fascinating, the 24 hour window. I'm fascinated by that, very interesting. Yeah, it just takes all the decision making away from internal people about what and including with stock donations. Am I gonna hold this Apple stock that was donated and hope it goes up or what if it goes down and I've made the wrong decision? So just take that away. Very novice question, like who manages this, right? So you said like is this our CFO or chief financial officer? Is it our board treasurer? Like who manages this for us? The gift acceptance policy or the crypto? The crypto itself, just like the stocks, like at a very base level, who manages those decisions and actually hits the button that makes that happen? So the same people who manage any other part of that gift acceptance policy. And I know for example, in a lot of nonprofits, if we're not talking about crypto and we're talking about savings that they have, an investment committee, which is a subsection of the board will typically set out guidelines they want. And I'm making these numbers up, 30% in equity, 40% in growth and 30% in growth and income stocks. So that same governing body would make some of these decisions about crypto. That makes sense. That makes a lot of sense to me because I'm thinking, if we're fearful to accept crypto, we're probably fearful to do anything with it once we receive it, correct? Or even to understand the process, Jarrett, to your point, like you use the word hitting the button. Well, what's the button? And how do you even steward the gift because you gotta know? So that kind of takes us to our next question and that is Jackie, talk to us about the process. I mean, what does this actually look like for our nonprofits out there? So I mentioned earlier that there's two primary methods that a nonprofit can accept crypto. One is similar to stock donations, one is similar to accepting donations via credit card. So if a nonprofit would choose to accept crypto in the same way they accept a stock donation, they would have to set up a crypto wallet. And there are online organizations that provide this crypto wallet service. They each charge varying fees. This is not the method that I would recommend institutions accept crypto because it's going to be a little more risky than accepting it the other way. But if they choose to open a crypto wallet, you can think of a crypto wallet like the wallet you have in your pocket or your handbag or wherever you carry your wallet. It's the same thing. And it's a mechanism whereby donors can deposit their crypto when they wanna give it to you. So the crypto wallet has two components. It has a public address and a private key. So the public address is something that I think of, this is an analogy. I think of it as a URL. If I want to go shopping at Amazon, I'll type in amazon.com. That's the URL, amazon.com. The public address is very similar in theory to amazon.com. Now it's much longer in characters and it's a code that if I have a nonprofit and Julia wants to give my nonprofit crypto, I would send her this code, this public address. And she would go into her crypto wallet and tell her crypto wallet to send my crypto wallet at that address, $10,000, or however much she's going to donate in crypto. 10,000 sounds great, right, Julia? You'll do that. I'm like, yeah, baby. You know what I'm saying? Put another zero on it, 100. 100. So then, and here's where organizations would be challenged with having the crypto wallet. So then it comes into my crypto wallet in this example, if I have a nonprofit, but I have to be able to get at it. And I do that with a private key. And the private key is where organizations can lose all of their crypto donations if they don't handle it correctly. Because the private key can be maintained online, which then is subject to hacking, or it can be written down on a piece of paper and kept in somebody's drawer and it's subject to loss, or it can be put on a USB drive and kept in a safe or whatever, in which case it's subject to forgetfulness as staff turns over. And so five years down the line or however many years they know they have this crypto, but nobody knows how to get at it anymore. So that's one of the reasons having a crypto wallet for a nonprofit organization, in my opinion only, is not the best solution. Additionally, when you have a crypto wallet, you've got to build all kinds of internal controls around it. Who's going to give out the public address? Who's going to be the keeper of the private key? How long do you keep it? Do you hold it or do you liquidate it immediately? Et cetera, et cetera. And it's more difficult to set up than the second method. And the second method is going to an organization, much like I'm sure a lot of your viewers are familiar with authorized.net for credit card processing. They're one of the bigger night players. Well, there are the same types of organizations for cryptocurrency where they process donations in the same manner. So you can put a donate now button on your website. The donor goes in, hits the donate now. It goes to a company that's analogous to a credit card processor. That company accepts it, liquidates it and ACHs the money or EFTs the money into the nonprofit's bank account. I wondered, just like we have donate now on our website, should we include donate crypto now? How should we, if we're one of those organizations that's not in the fraction that's using crypto and accepting crypto, how do we get started? That communication marketing component, do you have any best practices for that, Jackie? Well, I think to begin with, you'd get started with your investment committee. Because again, they're going to have to buy off on this idea of accepting cryptocurrency and develop the policies around it. My recommendation would be liquidate it within 24 hours. If you use this credit card processing ESC supplier, they do it for you. You don't need to worry about it. But I think it should start at the investment committee, which will ultimately need to be signed off on by the board because it is so scary. It's a big deal for organizations. Again, I'm trying to strip that fear away because taking it really isn't very scary. Investing in it, yeah, that's scary, but not taking it. So it should start up at the board. Once the board makes that decision, and I really hope boards would not push back on this decision, then organizations can go out and look for this crypto processor. Well, the board is going to decide whether they want to have a wallet or a crypto processor as part of the decision that the board is making. Again, in my perfect world, they're going to have a processor and not a wallet. So once all these decisions are made, then probably the CFO would be the most likely one to be tasked with finding a processor to provide the service. And at that point, it's no different than signing up to accept credit cards. They're going to fill out an application. They're going to get approved. The supplier will give them HTML or Java coding or whatever they're using today to embed in their website and they're off to the races. You make it sound so easy, I have to say. It is very easy to accept it. Now, from an accounting perspective, and I won't completely geek out on this, but if an organization decides to hold it, it becomes a little more complex because it's considered an intangible asset, much like copyrights are or patents are, which means that it has to be revalued and written down if it's impaired. So in this environment, we're sitting here in 2022 with crypto going crazy. This environment, if an entity had decided to hold crypto, they'd be incurring lots of impairment losses on their statement of activity. So yet another reason not to hold it. Now, donors like it, again, not in this environment, but when crypto is up, donors love this because if they've made, let's say, millions of dollars in cryptocurrency by selling it and they are staring down the barrel of a big tax bill and they have some crypto they haven't sold yet, they can donate it. And what happens is they get, not all the time, tax people are never all or nothing, but more often than not, they get a charitable deduction for the fair market value of the crypto. So when crypto's way up, that can be a very large deduction for these crypto millionaires. So there are lots of incentives for donors to donate it when it's doing well. Yeah. Let me ask you this, and I'm not expecting you to speak on behalf of the crypto processors, but is it realistic to align yourself with an organization knowing that they'll be able to liquidate it within 24 hours? I mean, is that like a normal process that they would be seeing? Sure, it's no more abnormal than when they're using a processor to take credit card payments or credit card donations. It's exact same theory. And you feel like that is a structure or process that most of these processing companies would be able to do, would be able to turn it that fast and to be able to say, yeah, we're dialed in and in three days you're gonna get the cash. Yes, absolutely. And I believe, and I haven't looked at this in a while, so I could be wrong. With stock donations, for example, if my organization got a stock donation on Friday at three, it's not gonna be liquidated until Monday. Whereas with crypto and again, each organization should check this because it's spent awhile since I looked into it. But I believe with crypto because it's always being traded and moved. If I got a crypto donation at three on a Friday, it could be liquidated within a few hours. Right, so it's not going to be tied to the actual trading hours coming out of New York. It's a 24 seven situation. And so it's in the process. Correct. It comes in, it goes out. Correct. Interesting. So I think it's an exciting time to be a nonprofit. I think nonprofit in the crypto world, I think if a nonprofit really wants to set itself in front of the pack, particularly with younger donors, being one of the first or one of the very few to sign up to accept crypto would be a good thing for a nonprofit wanting to attract a younger donor pool. Additionally, there are some foundations that are cropping up who give grants only in crypto. So right now the competition on that is slim. If some of your viewers start taking crypto and start applying for some of those grants, they're big fish in a little pond. Ooh, I haven't seen that yet, but that is interesting. We have a question from one of our viewers wanting to know if the donor is on the US Treasury sectioned list, how can you prove you vetted that donor? Sanctioned list, yeah. It's a really good question. I actually have to defer that to another day. That is a big question and I don't know the answer. Maybe we can get it on our ask and answer. So to this anonymous attendee, we will look into this. We can count on Chazen to get back to us. I know with this answer, I'll go ahead and copy this. So we have it. That is a fantastic question. So we will have to do some digging on that. Yeah, really good question. And you know, I would imagine Jackie to your point about foundations and certain organizations looking at crypto donations. This has got to be somewhat geographic and a regional draw to, let's say, Northern California around Silicon Valley, now in Southern Texas, moving up to New York. I mean, it's a really, it's got to be something that we're seeing these impacts starting in Spain. It's got to be something that we're seeing these impacts starting in specific parts of the country. True. However, with, you know, the wonderful rise of the internet, you can be a nonprofit anywhere and accept crypto from somebody in California or Texas if they're very aligned with your mission. And additionally, there's also some donor advised funds as well that will give money if you can accept cryptocurrency. That is so fantastic. Well, I love that you came on to demystify some of this and to even pull out some of the fear because again, you know, we're often fearful of the things that we're just unaware of, you know, not familiar with. So Jackie McLaughlin, you've been a fantastic to take some of the fear away of the unknowns when it comes to crypto and nonprofits. You can look at the website, find out more information from Chazen & Company. That website is Chazen, C-H-A-Z-I-N and company.com. But we can count on you for more than crypto, I know. But this is, Julia, talk to us about this cryptocurrency and nonprofits that we're pulling up here. So it's really interesting. Chazen & Company started this really innovative video series that they offer for free. You don't have to be one of their clients. You can access it through countingonchazen.com or chazenandcompany.com. And there are a series of videos that are designed just for nonprofits to learn more about the link between best practices in accounting and finance to the nonprofit sector. I am very fortunate. I was able to spend time with all of their amazing talents, Jackie being one of them. And so these videos are really interesting because they access the technology and the talent that Chazen & Company has to some concepts that a lot of times, like cryptocurrency, we're fearful of and we don't really know. But as nonprofit leaders, we need to know. And so Jackie is on with us on a couple of those and they're all different. They get into budgeting. They get into the 990. All different, varied, varied topics. And so check them out because it's a really great way to get yourself up to speed so that when you are working with your accounting and finance department, whether they're internal or external, you'll be more confident. You'll know the questions to ask. You'll know how to take a look at what the work is, how the work is being done and steward it. And so yeah, I would say check it out, counting on Chazen. And again, Jackie is part of that brain trust with Chazen & Company. So hey everybody, again, I'm Julia Patrick. I've been joined today by the nonprofit nerd herself. We have been so thrilled to have you with us. We're also very thrilled that each and every day, 600 plus episodes coming on three years, we've had the amazing support of folks like Blumerang, American Nonprofit Academy, Your Part-Time Controller, Be Generous, Funding Academy and National University, Staffing Boutique, Nonprofit Thought Leader, and Nonprofit Nerd. These are the folks that join us on these amazing conversations like we've had today with Jackie LaLaughlin from Chazen & Company. Okay, Jackie, you've made me a lot less stressed out. Good. About the whole brain. It has been a pleasure being with you. Thank you so much for having me. I love it. Love talking to both of you. Thank you. It's been a lot of fun. And I suspect that this conversation is not over because it's changing every day as you said, Jackie. And so it's great to know we have outside voices and help us to navigate this whole process. Hey, everybody, as we end every episode of the Nonprofit Show, we want to remind our viewers, our listeners, our guests, and ourselves, I'm speaking for you and I, Jared Ransom, the Nonprofit Nerd. I hear it. Thank you. And I'm sending it back to you as well. This is our message. Stay well so you can do well. Thanks, everybody.