Exploring Cryptocurrency: Introducing New Giving Methods to Your Nonprofit

Carlyn Schulzke and Matt Hayes will discuss how current data on donor demographics impacts major-gift donations with specific emphasis on simple, safe and secure methods of attracting and engaging with cryptocurrency donors.

Full Transcript:

Steven: Okay. Matt, Carlyn, I’ve got 3:00 p.m. Eastern. Is it okay if I go ahead and get things started officially?

Carlyn: Do it.

Matt: That’d be great.

Steven: All right. Awesome. Well, good afternoon, everybody. Good morning. Almost good morning if you’re on the West Coast. I guess it just turned noon. But if you’re watching this as a recording, no matter when and where you are, I hope you’re having a good day because we’re here to talk about exploring cryptocurrency. Yeah. New giving methods for your nonprofit. This is going to be a cool one. I’m so happy that all of you are joining us today. And if you’re watching the recording, thanks for tuning in. I’m Steven. I’m over here at Bloomerang, and I’ll be moderating today’s discussion as always. 

And just a couple of housekeeping items, just want to let you all know that we are recording today’s session and we’ll be sending out the recording as well as the slides later on today. So if you get interrupted or have to leave early, maybe you got another appointment, don’t worry. We’ll get all that good stuff in your hands. You’ll be able to review the content, maybe even share it with a friend or a colleague if you want to. That always makes us happy. So just be on the lookout for an email from me later on today with all that good stuff. 

But most importantly, we’d love for these sessions to be interactive. So don’t be shy. Send in your questions and comments. There’s a chat box and a Q&A box. So you can use either of those. If you use the Q&A box, it might be a little bit easier for us. A little bit higher chance that we may see your question, but a little insider tip for you. But either way, love to hear from you. You can even send us a tweet. We’re going to say some time at the end for Q&A. So don’t be shy. Don’t sit on those hands. We’d love to hear from you.

And if this is your first Bloomerang webinar, welcome. We do these webinars just about every Thursday throughout the year. And something we’re really known for here, but if you’ve never heard of Bloomerang beyond the webinars, Bloomerang is also a provider of donor management software. So check us out if you’re interested. There’s all kinds of good stuff on our website. You can learn more about us. So if you’re thinking of switching software, you know, consider us, check us out. But don’t do that right now. At least wait an hour because like I said, this is an exciting one. This is a topic we’ve actually been getting a lot of questions about and never covered on the webinar. And I’m a man of the people. So when Carlyn and Matt came to me with this idea, I was like, “Yes. We are going to do this.” So we’ve got our friends, Carlyn and Matt, here joining us. How’s it going you two? You doing okay?

Carlyn: I’m great. Excited to be here.

Steven: Yeah. This is awesome to have you. Carlyn is a buddy of ours. She’s a friend of Bloomerang for sure. She’s done webinars for us before. If you don’t know her, she’s over at Campaign Counsel. Check them out. Really cool agency. They do a lot of really good work for their clients. And she’s been doing that for over a decade. She’s hanging out in Montana. So shout out to Montana if any of you were also there. 

And, Matt, my new friend that is going to be her little partner in crime today, co-founder and COO over at Engiven, you’re going to want to check them out. They’re a cool donation platform, specifically for cryptocurrency. So if this presentation is intriguing to you, which I think it will be, you’re going to want to check them out. He’s over in beautiful San Diego. So got the West Coast connection today. I’m so appreciative of that. 

And yeah, just happy that you two are sharing your knowledge today because like I said, this is definitely a hot topic and one I don’t know anything about. So I’m going to pipe down because you all don’t want to hear from me. I’m going to stop sharing, and Carlyn, I think you’re going to pull up the sides, right? Let’s see if we can get there.

Carlyn: Yes, I am.

Steven: Here we go.

Carlyn: You’ve seen it?

Steven: Yeah. Looks like it’s working. Cool. Take it away, my friends.

Carlyn: All right. Thank you. Thanks, everyone, for being here. I really appreciate it. He just gave you a little bit of a background, but we focus at campingcounsel.org on capital campaigns entirely. So we’ve got a small efficient staff located everywhere from Montana down to Arizona and over to Washington DC. So with our capital campaigns, we’ve done over 80 campaign planning studies and for our clients that have been in campaigns, we’ve helped them raise over $200 million for their project. So now I’ll let Matt give a quick highlight to you and then we’ll get into the agenda.

Matt: Thanks, Carlyn. And hello, everybody. Like she said, I’m the co-founder and CEO of Engiven. We are a platform that’s dedicated to enabling the nonprofit community to accept cryptocurrencies in a safe, simple, and secure way. Myself and the rest of the leadership team have a background in developing technology solutions and particularly technology solutions for nonprofit organizations. And we sold our last company in 2016 which was a standard donation processing platform for nonprofits and that took a little break and then got interested in cryptocurrency. Founded Engiven, we’ve been doing that for about two and a half years.

Carlyn: Awesome. Thank you, Matt. So getting into our learning objectives and our agenda [inaudible 00:04:48] a second. So I’m going to cover the different changes in-depth, major gift demographics that we’re seeing now as things are shifting into these different directions and then I’ll talk about how you can make some adaptations in your donor relations as we look at incorporating things like cryptocurrency into the ways that you can accept gifts. And then Matt is going to take a deep dive into our crypto donors and the different fundraising resources and how you can learn about how to accept those and as well as how your . . . Sorry, and understand how your nonprofit can accept crypto in these safe, simple, insecure environments. And those three S’s are things that we’ll come back to quite a bit during this webinar.

So diving in here, “Forbes” published an article pretty recently that revealed some interesting trends that we’re seeing and shifts in these giving tendencies. So what’s that shift? It’s really happening in three ways. The dollars that are being given in America are moving from the middle class to the wealthy, from income to assets, and from boomers to millennials. So they’re not all the same trends, of course, but there is a lot of correlation. So if we overlap those trends, really the wealthy asset-holding millennials is where the philanthropy is increasing the most. So in other words, philanthropy is shifting from the middle-class boomers to people like Mark Zuckerberg. But don’t worry, you can still get fundraising from millennials even if Mark Zuckerberg is not in your database. And we’ll talk a lot more about that here in a little bit. 

So many of you likely familiar with the Pareto principle. So in fundraising, that’s inferring that 80% of your dollars are going to come from 20% of your donors. But now we’re seeing more evidence that this is really shifting. So fewer donors are giving, but they’re giving more. So this is really causing a look at the ratio to maybe shift from 85% or maybe even more of your dollars coming from 15% of your donors. 

So when we consider the wealth that’s being generated over the last generation, this giving shift does make sense. And kind of along those same lines, the same “Forbes” article projects that there’s a greater share of the giving that’s going to come from appreciated assets rather than cash. So the donors that have appreciated assets for more than one year, they may find that it’s beneficial for their tax purposes if they donate those assets rather than donating cash. And so this, of course, includes the more traditional assets like stocks, and bonds, and land, but also this exciting new asset, cryptocurrency, which is why we’re all here today. So thankfully for all of us, myself, especially, Matt is going to be the one that’s going to take the deep dive on that subject in just a couple minutes.

So I’m admittedly a millennial. And when I started in fundraising 12 years ago, we talked a lot about how we could get millennials or in my case, it was young alumni to give back to our university where I was fundraising for. So now that we’re all older, it makes a lot of sense that these major gift prospects are now the millennials and shifting to this generation. And actually, millennials are making up the majority of the workforce right now, which also makes sense. But as we’re thinking about the people who have these shifting major gift assets like cryptocurrency, it may actually surprise you that it’s not all millennials who are out there buying Bitcoin and all the different cryptos.

So thinking about these early technology adopters, gen-X, so those people born between 1965 and 1980, those are the people that are really described as entrepreneurial, they adapted to the computers pretty early on. They learned to use them in high school. So actually a lot of the crypto owners fall into this gen-X category as well as some gen-Y and millennials. So there’s definitely a mix of both, but the majority of the ones are actually kind of in that gen-X category. And Matt’s going to talk more about that in a couple of minutes. 

So thinking about this information, what do you as a nonprofit need to do in order to cultivate your asset-holding donors? One of the best things you can do is adapt your donor relations. So first you can expand your toolkit by making sure that you have strong gift acceptance policies that are already in place, particularly related to appreciated asset-giving, wealth transfers and bequests.

A big thing that I can’t stress enough and it was something that I had to do before I gave this webinar is becoming confident in your ability to talk about these different ways that people can give. For many of us, it’s new language. It feels very different than what we’ve done fundraising before. So really just working through that and building your confidence so that you know more about these different types of gifts that can be accepted, maybe even making some handy one-pagers that you can hand out as you have these donor meetings is a really great thing to consider doing too. But just keep in mind that at the end of the day it’s really up to the donor to decide how much they want to trust you. So help to build their confidence. Trust is so key in this whole process.

We’re finding that a lot of these younger major gift donors already are working with some trusted financial advisors or maybe even wealth managers. So having that information ready, again, just like already prepped in your toolkit is a great way that you can speed up that cultivation and solicitation process rather than scrambling to try to put together a document that that financial advisor is asking for before they can make a transfer. 

So if the donor’s comfortable with you building a relationship directly with that wealth manager or financial advisor, that’s an awesome starting point. So the more trust both of those people feel in your process and your ability to accept their gift, the better. So in fundraising, I know that that feels crazy, right? We’ve only worked . . . we’ve always worked in the past to try to make sure we’re connecting with the donor and that we’re making the ask with the donor because that’s the way we can cultivate them even better. We’re making sure that we know we’re making the best ask possible, we’re staying true to our mission throughout that.

But it’s shifting, and I know it’s a hard thing to give up. So if the donor’s comfortable with you building that relationship with that wealth manager, by all means go ahead and make that change and start to add them and just kind of think of them as a couple where you’re cultivating both of them. So, again, building that cultivation toolkit with those clearly written one-pagers with the information about the different channels of giving is really going to be instrumental in conveying that thorough and transparent information. All just really comes back to building trust. And another way you can build that trust and enhance your donor relations is by increasing the information that you have available on your website about these mechanisms too.

So if you have a way, and Matt will talk more about this as well, if you have a way for them to give a gift through your website in a safe, simple, and secure way . . . there’s those three S’s again. Then you’re going to be in a really great position to cultivate and solicit lots of donors that are interested in giving to you through appreciated assets like crypto. Matt will get into the specifics about this, but it’s hard to identify who might be a crypto owner. So one of the best things that you can do is making the information available out there that you can accept crypto gifts and then they’ll maybe come your way. A little bit of if you build it, they will come, but not entirely. And Matt will talk more about that too. And I’m actually going to pass it right over to him now so he can take a deeper dive into what crypto is and how you as a nonprofit can securely accept it.

Matt: All right. Carlyn, thank you very much. Appreciate it. And I appreciate the chance to even have this conversation and be included in it. I was excited when Carlyn invited me. And so one of the really neat things about the business that that we are in at Engiven is that we get to talk to a whole bunch of really interesting organizations that are doing amazing things. I was sharing with them that I’m typically doing, you know, four to five trainings or demos a day with nonprofits and learning about what they’re doing. And that is sort of the mission of Engiven, is to empower these nonprofits, to be able to accept cryptocurrency really to just to be a resource to fuel those organizations. But one of the things that we always encounter, probably 95% of the organizations that when they first begin to engage with us is that there is some hesitancy and, you know, an understandable lack of confidence around cryptocurrency, blockchain, and Bitcoin.

And we joke around, but we actually get asked this question. I think it’s a reasonable question is what does a Bitcoin look like? Bitcoin and cryptocurrency and blockchain from a conceptual perspective represent such a massive paradigm shift that it’s hard to get our heads around what really is cryptocurrency, what really is Bitcoin? And so I wanted to start just at the basics and, you know, some of you who are on this webinar certainly are probably crypto enthusiasts and crypto experts. But if our data is correct of the, you know, a couple hundred that are on probably 95% really are just getting started. And as a company and just as a professional, those are the folks that I’m excited to engage with. So we’re going to just start at the beginning and really start with just the words that get used around this space and demystify the vernacular.

So the word that that we all know is Bitcoin. It was the first cryptocurrency, and that really is an important differentiation to understand, which that Bitcoin is a cryptocurrency. And we’ll see later, there are many, many different types of cryptocurrencies. In fact, there’s thousands of them at this point, but Bitcoin represents one. It’s the most popular, it’s the most well-known, it’s the most-widely distributed, and it’s the most adopted, but it is one of many, many cryptocurrencies. 

And then cryptocurrency, which really means digital money, cryptocurrency is one use case of blockchain technology, and blockchain technology is that other term that you will kind of hear bandied about that you may not totally understand what it means now, but blockchain technology is this overarching technology which really was empowered and made possible by the internet. So the internet being sort of the preceding technology which then allowed blockchain technology to come to fruition, but cryptocurrency is really the first use case of a blockchain technology.

So another way we can look at it, Carlyn, if you’d just advance the slides, that’d be great. Is this, so blockchain is sort of at the top, it’s this overarching technology that over the next 10 years, what we are all going to see our use cases of technologies based on the blockchain in a whole bunch of different spaces that have nothing to do with cryptocurrency. So there are applications being developed in real estate that will use the blockchain for voting, for healthcare, for finance, which is different than just money. So, you know, lending and more esoteric derivative assets. But then cryptocurrency, again, is really one of those use cases and cryptocurrency is the one that has gotten the most traction, that’s been the most successful. It’s really the first use case of this blockchain technology and it’s the one that more and more all of us know about and are learning more about and then as you can see under cryptocurrency, there’s all these different types of cryptos, Bitcoin being one of them.

Yeah. So Bitcoin, and this is sort of where it all started. And it’s, I think, fun and worthwhile to just go to the beginning and provide a little bit of context for how did this thing happen. Bitcoin is the first and it is the largest cryptocurrency. The market capitalization for Bitcoin currently when we started this webinar was about $750 billion. So that was the value of all the Bitcoin that’s out in the world that has been minted, which means had been created by the protocol. It is about $750 billion. The total cryptocurrency market sits this morning at about $1.7 trillion. So it’s seen rapid expansion, rapid growth, massive appreciation, particularly over the last 18 months, two years.

But Bitcoin is the largest and it’s the first cryptocurrency. It was invented or the software, the protocol, the rules of Bitcoin, which are sort of instantiated in software code were pushed out onto the network in 2009. It was really right after the financial crash. Most people agree that Bitcoin was in some ways a reaction to the financial crash of 2008 and sort of this pervasive distrust of the banking system and global finance. So it was pushed out in 2009. Almost nobody knew about it. It was mostly the domain of cryptographers and as Carlyn said, sort of those early adopter computer scientists that were gen-X folks that were interested in just the geekiness of the technology, the anonymity of it. And Bitcoin really weren’t worth anything at that time.

And when it was deployed, it was deployed by this person named Satoshi Nakamoto. No one knows if it’s one person, two people, a man, a woman, Mr. or Mrs. Nakamoto has never unmasked themselves. But they deployed it. There is no Bitcoin company. It’s simply a network that then exists on the world’s computers. But then it took a couple of years of more and more folks, again, mostly computer scientists. It took a lot of effort, a lot of research and technical know-how to even get into Bitcoin at the time. 

And Bitcoin really wasn’t worth anything because for something to be worth something you’d have to be able to exchange it for something else that has accepted value. And the first time that happened was in 2010, which is kind of a fun story. The very first transaction that ever happened was a guy who was really into Bitcoin convinced his local Papa John’s pizza store to sell him two pieces for Bitcoin. And he ended up paying 10,000 Bitcoins for those two pieces at the time of 2010. You can do some back of the napkin math, Bitcoin currently sitting at $40,000. So he paid $400 million for those two pizzas. So $200 million a piece in today’s money, which wasn’t that long ago, 2010. So you can kind of see just how rapidly and how quickly things have changed and just how radical the appreciation of that asset has been since.

One of the interesting things about Bitcoin and most cryptocurrencies is that the basic economics of that money, of that currency now is determined ahead of time and everyone can know it. So there will never be more than 21 million Bitcoins that are sort of minted or produced by the protocol. They’re produced over time. And we don’t want to totally get into it, but they’re produced at a knowable rate. A government can’t just come in and decide to print more like the U.S. government might decide to print more U.S. dollars. The rate of those Bitcoin being introduced into circulation and the total amount is a known and knowable thing and the last Bitcoin will be minted in 2,140, and it will be the 21 million Bitcoin and after that, that’s it. So hopefully that was interesting. And it’s, I think helpful to sort of know where the beginning was so we can kind of see understand where we are in the context of the history of the technology.

So obviously Bitcoins is one of many cryptocurrencies. What is a cryptocurrency? A cryptocurrency is a fungible, digital asset that acts as a store of value and a medium of exchange. What does fungible mean? Fungible is a financial or economic term and it essentially means that one unit of a thing is interchangeable and has the same value as another. So if I have a dollar bill, Carlyn has a dollar bill and we were to switch them, we’ll still have the same thing even though she has the dollar I used to have and I have the one that she used to have. So they’re essentially the same thing and they’re divisible. So we can break my dollar into 20 nickels and hers into four quarters. I mean, the same way you can break cryptocurrencies down into fractional amounts, in fact, very, very fractional amounts. Some to the ninth decimal point, some to the 18th. And it’s a store of value, obviously. It’s the person who owns it or the bearer of that crypto or custodian of that crypto has that value and it’s a medium of exchange. Like we said, originally the first time it was a medium exchange was for pizzas. Now it’s fairly ubiquitous and the top cryptocurrencies in general have a fairly knowable value.

And then lastly, there’s a definitive ownership record that’s stored on the blockchain-based ledger. And what that really means is that there is a clear definitive record of how much of the asset is in all these different accounts much like a check register would be. But a check register, the definitive record is with the bank. And so it’s called a central ledger because the bank is the definitive authority on what’s in each account. And so like a centralized ledger and the sort of gigantic differentiation with cryptocurrency and blockchain technology. That ledger is distributed and it rests on thousands and thousands of computers all over the world and those computers all have the same ledger and some. So it becomes highly resistant to tampering, fraud, change, etc. or to the whims of that central ledger holder be it a bank or a central bank or a government. So that’s basically what cryptocurrency is. Hopefully that’s as esoteric and techie as we’re going to get. But hopefully also it was helpful.

So crypto donors, that’s what Engiven is all about, you know, that’s what the seminar or webinar is focused on, is, you know, are we able then to provide an opportunity for donors who have appreciated assets, donate them, and turn them into spendable money for the nonprofits? So do these donors exist or, you know, are they just unicorn? We have been in operation for about two and a half years. The last year have been very, very busy, that first, you know, year and a half, we were spending a lot of time on regulatory matters and making sure that the platform was all buttoned up and it was also early. But the general population is sort of woken up to crypto. And so we’ve seen a significant number of donations flow through the platform to our nonprofit clients. 

And the average donation, what we’re seeing is that they’re large gifts. So they’re what you would expect from like a gift of an appreciated asset. They’re not high-frequency donation. High-frequency transactions are just not normative in crypto yet. And a lot of that has to do with the tax code in the United States, some different things, but what we’re seeing across the platform is lower frequency. So, you know, one to four gifts a month is a successful nonprofit, but the average gift being in that four to five-figure range. We have processed gifts from the six-figure range. That is not uncommon as well.

Demographic data, like who are these people? So, first of all, who owns crypto, which is there’s a nuance, and Carlyn, I think alluded to it. The folks that own crypto might not necessarily be those donors that you’re looking for today, but as far as who owns crypto, there was a great study that Gemini, which is an institutional exchange out of New York. They commissioned an excellent study that came out for 2021. And the estimate of the study is that about 14% of the U.S. adult population owns crypto. That’s heavily skewed male. There’s, you know, three quarters of those crypto holders currently are male. And if we were sort of boil it all down, that average cryptocurrency holder is a 38-year-old male that makes you know, $111,000 a year. However, that average cryptocurrency owner also has a crypto portfolio that totals a little north of $2,000. So that is not necessarily as a development person or as a nonprofit looking to engage crypto donors. That’s not necessarily the person that you’re going after in order to let them know that that you can accept cryptocurrency. So if we go to the next slide, Carlyn.

So who is it really then that we should be targeting? What we have found is that the number of . . . the donor that we’re really looking for is that individual. And a lot of them are gen-X. I saw somebody in the chat say, you know, how come gen-X always gets forgotten. I’m gen X. But those folks that grew up when the internet was coming of age, you know, folks that are more tech savvy, it’s sort of the nuts and bolts, that sort of generation oftentimes is the ones who’ve gotten into cryptocurrency early and those are the donors typically who have a sizable position of an appreciated crypto asset, which means that they bought that cryptocurrency somewhere between 2012 and probably 2018. And to do that, you really had to be really on the . . . you had to be on the cutting edge and you had to have some technical knowhow. 

Purchasing cryptocurrency is quite a bit easier now, holding it easier now, but back then, it took some doing. And so a lot of those folks now really are that gen-X and even older, so their 40s, 50s, some even in their 60s who hold those larger stores of appreciated assets. And what we’re seeing is that it’s somewhere between a half and 1% of any of our nonprofits’ donor networks are those folks that not just hold crypto, but hold a sizable, appreciated portfolio of crypto.

So how do you target that? Well, it really goes back to this basic blocking and tackling and what we encourage our nonprofit clients to do once they get a solution to be able to safely securely and simply accept crypto is to then communicate to the whole donor base in a professional way that you now are able to safely securely and simply accept cryptocurrency so that you might unearth those couple donors, that small percent who are the holders. 

What we have also found is that it’s often surprising. So there is no correlation currently on our platform between the size of the organization and their donor base and the amount of gifts they’re getting. So we have organizations that are completely surprised when they unearth a crypto donor who they know and have talked to but they didn’t know they had crypto, but once they communicated, that they are now able to accept cryptocurrency, they were able to unearth them. So just doing, doing the basics which is finding a, you know, a good solution and then communicating to that donor base that you are now able to ingress those gifts really is the most straightforward way. 

What we really counsel against is trying to convince people who are already faithful givers to donate crypto instead because you’re just switching and there’s no benefit to you or trying to teach people how to get into crypto so that then they can donate it. Both of those, we view as losers at this point. It’s a huge burden on you to try to educate a donor about crypto. Rather, what you’re looking for are those crypto experts in your donor community who already have crypto and they’re going to be thrilled that now you have a way to ingress it as a donation. 

And the reason they’re going to be thrilled is, honestly, right now, the biggest benefit, a hot button issue, particularly coming into this Q4 is just the tax advantage of giving crypto. The IRS classifies crypto as a non-cash asset and as property. And so crypto that has been held more than a year, which all of the appreciated crypto has been held more than a year, the donor gets the full value of the donation as a write-off when they give it to a public charity.

And those crypto donors are looking for ways to offset the capital gains tax. And so that really is, you know, sort of one, two, and three of the reason that these crypto holders are becoming philanthropic as the IRS tax code is becoming more and more solidified and the different regulatory agencies are getting their heads around crypto, the people who own crypto are also becoming more educated about the tax issues surrounding crypto. And so being able to provide them with this opportunity to make a donation of the appreciated asset, get the full value and having you as a nonprofit be able to realize that full value really starts to make a lot of sense. Unfortunately, with crypto, particularly with our system, it’s pretty easy. You do not have to become a crypto expert. That was our goal was to obfuscate the complexity.

That being said, there are plenty of ways besides Engiven the nonprofit can use in order to accept cryptocurrency. And so I want to go through a couple of them. The first one at the top, and they’re sort of in order of complexity, the first one at the top is self-custody which at this point, really the best way to do that is to be a hardware device. And when I say hardware device, you can kind of think like a USB. I think Carlyn at the end has a picture. We can show you some pictures of them, but kind of like a USB device. It’s something that is not connected to the internet. You can plug into your computer when you want to make a transaction. 

And that is what a hardware device is. They’re super secure. They essentially are unhackable and that is why people like them in their cold storage, meaning they’re kept off of the internet. But they do require a fairly high degree of savvy on the part of the nonprofit or someone in the nonprofit to be able to sort of custody or take care of that thing because that device can be lost. And if it is lost, there are ways to recover it, but those ways are a list of 24 words that you have to type in an order and it can get a little bit overwhelming. And the other issue is it’s a place to hold crypto and crypto right now for most organizations is not super spendable and most nonprofits, when they receive an appreciated asset from an accounting, you know, best practices from an accounting perspective and just in general, you have to liquidate that asset so then it can become spendable resources to further a nonprofit.

And so holding it in your hardware wallet doesn’t accomplish that. But it is a solution and it really is sort of the ultimate solution from a security perspective. It just requires a lot of savvy on the nonprofit’s part. So that’s that self-custody method. You can probably . . . I don’t recommend it. We actually started our company. We teach nonprofits how to do this because we felt like it was the most responsible way, but it’s very, very difficult and most nonprofits do not have the time to develop a crypto expert within their team and then most people don’t want to be that person who has all the weight of being the custodian of those assets. And then also at the board level, if you do that, you really, you know, we really suggest that you have a, you know, alternative asset management policy at the board level that would then guide when you were to sell those assets and turn them into fiat dollars. So that’s the self-custody or hardware. Like I said, we’ve got a picture of it. We can show at the end.

Direct exchange is the other way. This is probably the way that most people have heard about getting into crypto. And so there are three reputable well-regulated secure exchanges in the United States. One is Coinbase out here in Silicon Valley on the West Coast. Kraken, which is taking a little bit of a different route there. They’re trying to get a bank charter there in Wyoming, and then Gemini who Engiven is partnered with, and they are in New York. They’ve taken the route of going to the most heavily-regulated place they can and to invite that regulation and to partner with institutional finance companies like Engiven or brokerages, etc. So those are direct exchanges.

They are places where you can buy and sell cryptocurrency and cryptocurrency can be sent into those accounts. They have fairly low fees. They’re basically trading fees. So you’re looking at, you know, generally around 35 to 50 basis points per transaction that goes through. But there is no donor management and receipting. And right now it can take months and months to establish an account. There’s so much demand out there. And, unfortunately, nonprofits generally fall to the bottom of sort of the line there. And there is a pretty decent degree of crypto savvy needed as well in regards to then managing those assets. So you would want an asset management policy at the board level so that those assets that you’re holding in cryptocurrency, that there’s a policy that is able to shield the CFO and the other executives, you know, from any accusations of, you know, mismanagement. So you just want a very well documented asset management policy, if, as a nonprofit you’re working to hold cryptocurrency.

I will say that almost no nonprofits that we work with hold crypto. It was something that we were getting a lot of questions about earlier in the year, as the cryptocurrency market was sort of ramping up, Bitcoin went from 30,000 to 60,000 and we were getting a lot of questions about, hey, can you help us hold cryptocurrency? And that currently is not what our platform does. We’re introducing that solution in a month. So currently all of our gifts are turning instantly into U.S. dollars and push down to the nonprofit. But we’ve always cautioned nonprofits, trees don’t grow to the skies. You know, you really need some professional expertise in trading and asset management if you kind of want to go that route of speculating or holding cryptocurrency.

And then finally the last solution is what Engiven provides, which is more of a SaaS solution. It’s a software as a service. It’s a web-based platform. It is a donor management platform sort of service as simple as that. You create funds, you create a widget, you put it on your website and folks can give securely through that widget. It goes directly into an exchange and the moment it lands, it’s instantly liquidated in the U.S. dollars. A contribution receipt goes out to the donor on your behalf and you get notified that the gift came through. 

Engiven’s business model is that we don’t charge set up monthly or annual fee, but we do charge a 4% fee that is negotiable for larger organizations. And that’s kind of our business model. So there’s a couple others that do it as well. The Giving Block does it, and there’s a couple of other solutions out there that can I think be tailored to nonprofits, but that from a sort of a knowledge perspective, the Engiven solution doesn’t really require any crypto-savvy at all. It really is an accounting function. And so the gift gets made, it gets turned into U.S. dollars, and then it’s turned and then it’s pushed down the following day into the nonprofits bank account very much like a merchant card service or an ACH would if you take credit card or ACH as donations. So we try to model our solution very much in that way. It even kind of looks and feels like that on the nonprofit dashboard side.

So I think I touched on this, but sort of the development side crypto fundraising, and we like to say it’s the same song, a different tune. You talk to nonprofits, a lot of them get super excited about crypto. It is a new asset class that is a lot of opportunity. Certainly it’s our mission to help the nonprofit community not be the last one to adopt it this time, this new technology. But once the solution is in place, really the process for engaging donors ends up being the same thing. It’s still the basic blocking and tackling. So you want to define and implement a professional solution, which means you have a way for donors to come, donors who own cryptocurrency and make a gift to you. Whether that’s your hardware wallet through Coinbase, or Kraken, or Gemini, or through a dedicated solution like Engiven, you want to have that solution that’s available.

And then you want to communicate it in a professional way that you have simple, safe, and secure solution so that donors know that you’re able to do that. There is a high correlation on our platform between organizations who put it on their website and don’t talk about it and never let their donors know that it’s there mostly because they’re still a little bit unsure about how to talk about it. And those organizations that put on their website and then include it in their newsletter. It doesn’t have to be the feature, but they talk about it over those first one to three months and let folks know that it’s an opportunity. There’s a high correlation in the amount of giving that happens which is no shocker to those nonprofits that do let their donors know that this is now an opportunity.

And then the last thing I would say, and it’s not a magic bullet, crypto. We don’t turn folks on and then it’s just the crypto money rain. We’ve had some unbelievably wonderful success stories, but it’s another asset class and all the same development work needs to get done. And the goal is to just make it simple enough to incorporate as an organization that you’re ready for that opportunity when it does come, when you do unearth a donor or two that, you know, bought Bitcoin when pizzas costs, you know, $200 million. So next slide. Yeah. I think that’s it. 

Those are those wallets, which those are, you know, there’s a treasure wallet there, there’s a ledger wallet there, there’s PP. There’s a bunch of different, there’s literally either they’re software wallets, mobile wallets, there’s a hardware wallet. You don’t have to learn about the wallet. And, you know, the wallet is how the donor is going to cut custody. Their own crypto. You only have to worry about wallets if you decide to go a solution like this. But again, I would say that you only one to do that if you’ve got like a sort of a team member who’s, you know, properly authorized by the board who also is really crypto-savvy.

Carlyn: You want to look at the ledger too, Matt?

Matt: Sure. Sure. This is something . . . Carlyn and I talked and as we went through this presentation, you know, she asked if we’d put these up because, you know, when we talked about what is like blockchain technology is the idea of the distributed ledger like we talked about before. And a ledger, right? Is just . . . It’s a record of the ins and outs to different accounts. And that’s really all that most blockchains associated with cryptocurrencies have in them. They have ins, they have credits, and they have debits. They have outs. So they’ve got ins and outs. And so, again, the idea of a central ledger is that it’s a record that the authoritative record, the one that counts is centralized. I mean, it’s the only in one place. So that could be like your bank is a centralized ledger.

If your checkbook ledger, which if you’re a millennial, you probably don’t even know what a checkbook ledger is, but for the gen X-ers, they do. If your checkbook ledger says one thing, but the bank says another, the bank’s balance wins. The bank’s is the authoritative record. From on the right-hand side, what we’re looking at, those are blockchain transactions. And that ledger is distributed to all the nodes all over the world that are participating in validating those transactions. And that ledger, there’s a copy of that ledger, an exact copy of that ledger on all of those machines that’s being updated all the time. And so because it’s not in just one place, because it’s in hundreds of thousands of places, it’s highly resistant to tampering, and that’s probably from a cryptography perspective, it’s one of the reasons that it was really appealing to folks who care about safety and security.

Not something that we really need to understand so much, but it is a key differentiation that one of the great benefits or of the value proposition of Bitcoin and cryptocurrencies is that the ledgers themselves, the records of who owns what are highly, highly resistant to tampering, much more highly resistant to tampering or hacking than a central ledger would be like you would have in a bank or really, you know, anywhere that keeps a ledger. So that’s a really . . . And that’s it. Again, I super appreciate it. I love talking about this stuff. I do apologize if I got too wonky, but it is fun to talk about and would love to take questions.

Carlyn: I don’t think you got wonky at all, but, Steven, I see we’ve got a lot of really great questions coming.

Steven: Yeah, there are. But first, thank you both. Like I said, this is also one we’re getting a lot of questions about. So I really appreciate the overview. Yeah. I was just sitting here because I don’t know anything about this stuff. And this is personally gratifying because it took 10 years to get Dogecoin in a webinar. But it finally happened. So fun, personal milestone for me personally. But shout out to you gen X-ers. We love you even though you get ignored from the millennials as well. But yeah, we probably got time for maybe 10 or 12 minutes of questions. And thank you all for asking some really good questions. This group is always on it. Carlyn, I think you kind of said it first, which is, you know, it’s gift acceptance, right? It seems like a lot of this is just meeting donors where they are, right?

Carlyn: Yes. Yeah. Definitely.

Steven: And, Matt, you know, what have you seen? Is it simply just like a passive message on like the website that like, hey, we also accept these things? Is that really all it takes? I mean, we’re not necessarily just talking about putting together like complicated direct mail campaigns just to let everyone know about Bitcoin. Like that’s not, I would assume it, necessarily. Or what do you think?

Matt: Yeah. Well, I would say it’s definitely not passive. So what we’re seeing is what appears to be the most effective because a dedicated mail campaign to say that you accept crypto is also probably too active. That’s probably wasting a bullet or a piece of communication that you don’t necessarily want to do. But most organizations have some sort of regular communications that they do with their . . . so not dedicated, but maybe a monthly, you know, e-newsletter or a weekly e-newsletter. And so including it in that, and then also social, right? So including it . . . And you can do a dedicated social post and that’s different than doing like a dedicated email blast, right? 

And so really the idea is a wedding that you want to proactively and actively let your donor base know or your supporter network know that you are now able to safely and securely accept crypto. Just putting it on your website. It’s shocking actually. It’s pretty clear that organizations that talk about it even just in that standard way, maybe it’s the third bullet point on their newsletter, you know, three months in a row do so much better than those that just put it on their website and hope that folks are going to just be browsing their website and find out that they can give crypto and that that person is the crypto holder.

Steven: Makes sense.

Matt: So, you know, I think just one of the other things that I would say that I didn’t touch on is these folks that we’re looking for that have these large appreciated portfolios of crypto have been waiting for this for the most part. They have been looking for places to donate and still, even though, you know, we’re sort of overwhelmed with interest on our side, there’s tiny fraction of nonprofits who have sort of figured out how to accept crypto. And so it’s still very early. And I think there is some opportunity to be that nonprofit who’s able to meet the need of a donor really would like to make a contribution.

Steven: So given the massive tax benefits that you talked about simply letting someone know that we accept this may make the difference between, you know, getting 60 grand or not, right?

Matt: Yup.

Steven: That makes sense. So a lot of people have asked about the value, right? Just sometimes I’ll catch it on the news, like it’s up and down and it fluctuates by many thousands of dollars. First thing is why does that happen? And I know you’re not necessarily, you know, stock market “Wall Street” guy, but why, if you have any commentary then, and then more tangibly, if you got that donation, do you see most nonprofits just immediately liquidating it because it because it is such a volatile value or do they kind of, you know, see what happens? What do you think?

Matt: Yeah. It’s a great question. It’s probably one of the things that we spend the most time talking about with our nonprofits. The crypto markets are super volatile and that volatility index is only going to go down over time. There’s nothing probably in the near to midterm that’s going to circumstantially sort of change that volatility. So we’ve seen swings. You know, Bitcoin was at $60,000 two months ago, right? And then it fell nearly 50% to $30,000. But if we roll the tape back two years ago, it was at $10,000, right? 

So it is extremely volatile. A lot of factors go into that. Most of it is that it’s a very immature asset and technology has allowed for there to be some very transparent marketplaces. So there are a lot of exchanges and it is easy to buy and sell crypto and because of that, but because of the very uncertain future of how crypto will fit from a regulatory perspective, there’s all kinds of different government bodies that are wrangling over, you know, how do we deal with cryptocurrency? You know, I think we’re only going to see volatility for a couple of years going forward. You know, until it . . . this really is, it feels like, boy, we’re the last ones to figure out, if you just figuring out about crypto, I’m the last one to know about it because everyone’s talking about it, but it’s just not true. It’s still super, super, super early. So we’re going to see a lot of volatility going forward.

Our system is built to sort of answer this question as it really is best practices when you receive an asset, appreciated asset, particularly a very volatile one to liquidate it immediately. Our system is set up to do that. So literally someone makes a gift, it lands in your dedicated sub-account directly at the exchange and our system is listening and we liquidate it within milliseconds of it landing. So there is no market risk to the nonprofit. And we felt like that was really important. 

Again, there are nonprofits who will come and say, “I’d like to hold crypto.” And we can develop that solution for them that’s more custom, but we want to also make sure they’ve got all their teeth, the board squared away, and they understand what they’re doing. Because if you have a donor who gave you a Bitcoin for $60,000 two months ago and you decided to hold it, and that donor comes back to you in two months and says, “What did you do with the $60,000 I gave you?” And it’s now 30, you’re kind of in a . . . you’re not in a great spot. So you kind of want to make sure. And that’s really on a per nonprofit basis. And most of these folks probably understand all of that because it’s the same thing with stocks, right? The same thing with any non-cash assets. 

The nice thing about crypto is it’s a lot simpler. You don’t have to necessarily go through a broker. We can turn it into cash instantly and then we can push it down. But that’s what we do. And that’s kind of how we handle it. And that’s what we can do. And, you know, from Salvation Army to the, you know, tiniest nonprofits on our platform, that’s how they all do it.

Steven: That makes sense. So it seems like there’s probably not a scenario where you would ask a donor to liquidate it first and then donate the proceeds to you because they would lose the tax benefit and then you’re putting kind of labor on the donor, right? That’s not . . . 

Matt: Yeah. That’s the whole . . . And that is where a lot of nonprofits, that’s the spot they’re in if they can’t accept crypto, right? This person may have this appreciated asset, but if the donor liquidates it, they’re subject to those capital gains liabilities. And so if they donate it, if it’s $10,000 of crypto and they bought it for a dollar, you know, they’re got two grand in taxes, they’re going to give $8,000 where instead they could give $10,000 and the nonprofit could get $10,000. So that’s kind of the straight-line benefit. Yeah.

Steven: I’ve got kind of a hard question for you, Matt, and it’s something that I’m seeing in the chat and also, you know, outside the context of this webinar. It seems like there’s sometimes a negative reputation around crypto in terms of like . . . sometimes I see environmental things like, you know, the cost of the server and, you know, organized crime and money laundering and these things. Can you speak to any of that? It seems like the fact that you would immediately liquidate the funds would sort of maybe absolve the nonprofit from some responsibility. Now, certainly they’d still be getting the money, but is there any truth to any of those things or what’s going on there?

Matt: Yeah. And I think it’s more of a general question if we get to the specifics, which we can about what should have . . . like what is the real use case that nonprofit would be worried about? I mean, the real use case, and maybe we start with that. The real use case, and a nonprofit wouldn’t be worried about this, but that we worry about in this industry is money laundering. So that would be someone who owns crypto who is a bad person doing bad things but needs a way to turn it into cash. And so they get in league with a nonprofit, make the donation to the nonprofit, and somehow get what is called excess benefit from that nonprofit, right? Where they wash the money through the nonprofit. 

Now, the nonprofit generally doesn’t have to worry about that because if it’s the nonprofit worried about it, they’re not going to do that. They’re not going to launder money for someone, right? So if you even were to take a cash donation, you know, that came in a sack or whatever and you fed children with it, there’s actually no liability there, right? If you take a resource, you feed kids. Now, if you take the resource, turn around and you buy a boat for, you know, Guido or whatever, right? Then that’s really where the . . . so that’s where that sort of money laundering danger is. However, there is, and it’s important, and I think it’s a great question. Like there is a history in crypto that was pretty dark at the beginning. And I think what we, you know, and it kind of is, it’s very similar to the internet. So, unfortunately, for some reason, sociologically, technically, and economically, a lot of times the earliest adopters of new technology, a decent sector of them happen to be criminals.

Those new technologies are generally unregulated frontiers first, right? So you get this new technology, there’s not a lot of regulation, there’s not a lot of eyes on it because generally it outpaces those regulators, right? And so those areas sort of historically are playgrounds for criminals. So if we look at like what happened with the internet originally, I mean, it was originally used for a lot of fairly negative stuff, right? Yeah. You know, porn, gun sales, you know, human trafficking, just a lot of really illicit activity. And that is the history of the internet. Now, very quickly, legitimate enterprises started coming in and also, you know, seeing and realizing the benefit of that technology. And as a result, and then the regulators caught up too, right? And then as a result, you know, the internet is generally viewed as a productive and safe place for the most part, right?

Crypto is almost exactly the same. I mean, the two stories are super, super similar. There were, you know, crypto was a really effective way to secretly move value around and particular for illicit activities and there were some high-profile cases of that before crypto really became mainstream. There’s Silk Road and all, you know, all those things have happened. It became the currency of the dark web originally. For the most part, most, you know, I mean, when I say for the most part, where like 99% of the use of crypto now is legitimate, right? But those things still exist. It probably always will still exist, you know? It’s silly to put your head in the sand like they don’t, but for the most part, those things have been overwhelmed by actual good things like giving to nonprofits that are going to end up, you know, helping human beings or furry friends.

Steven: I just kept thinking of what Carlyn said at the beginning. This seems like more of a donor acceptance policy and diligence issue than it does with the mechanism of giving, right? If you do your due diligence on the donor, just kind of take the fact that it’s crypto out of the paradigm in a way. At least that’s kind of how I think of it. So going back to the gift acceptance policy, that seems to be really key, right?

Matt: Yeah.

Steven: Yeah. That makes sense. Speaking of you, Carlyn, it seems like there’s probably maybe a planned giving play here. Am I onto anything with that or have you seen that happen?

Carlyn: Yeah. That’s interesting. We are fairly new in learning about this too, so I can’t really say we’ve done any bequests for our clients related to Bitcoin or any other crypto, but, Matt, maybe you know more. And I saw some people asking about policy examples too. It’s not something I have either, but maybe Matt would be able to speak more to that based on your interaction with your clients?

Matt: Yeah. I mean, I think to Steven’s point, gift acceptance policy, that really is sort of the most important part. And crypto is just another non-cash asset. It really is. It requires an 8283 if it’s over $5,000. It’s the same. So you can really fold that in just by even adding in cryptocurrency to your, you know, your gift acceptance policy. Obviously, you probably want to run that by your attorneys or whoever your board does when you update your gift acceptance policy. But it’s not more complicated than that. Crypto really isn’t that complicated. In fact, it’s quite a bit . . . It’s a lot easier than giving stock or real estate, or land, or any of those things because it happens, takes about a minute, and then the next day there’s money in the account. But it is from the IRS’s perspective, a non-cash asset.

Steven: This is so interesting. We’re not going to get to nearly any of the questions, but one is kind of standing out to me. It might be a good one to end on. What about buy-in? You know, I imagine people listening to this webinar, they get it, maybe, you know, they want to dip their toes and do it, but maybe, I don’t know, the CFO, the board is saying, “This sounds a little weird, it sounds like a fad.” I mean, what have you seen work, Matt, to maybe get that buy-in to at least say, “Yeah, we accept it”?

Matt: Yeah. I mean, internal buy-in, I mean, that’s like, man, for us, that’s the big hurdle, right? How do we equip? Early on, it was, there be one person in the organization who was super into crypto and then sort of our job was to come alongside them and walk through the step of taking all the way up the mountain. It’s honestly becoming easier and easier now. I mean, so what we do is we offer to do . . . we’ll do live Zoom demos, myself, my business partner, our staff with sort of whoever in the organization, the stakeholders that need it, that have questions, that might be skeptical. Oftentimes it is in the sort of the finance office, the CFO, or the controller, right? That need to be educated and then equipped if they need to go to the board, right? 

And so we also have a tremendous CFO of a large organization who’s a CPA and a blockchain expert who’s on our team. They’re also clients. And so if there’s specific, like, “Hey, how do I handle this from a like process-wise, contribution-wise,” he’s available. So he does a lot of those like one-on-one with CFOs and controllers. 

Our philosophy is like, we’re all learning together. Like we want to make this normative and we want to make it a valuable new asset class for nonprofits. So we try to be as transparent as possible. We have huge organizations that just sign up. We never talked to them. We’re like, “Oh, my gosh. They just signed up.” It’s incredible. And then we have, you know, small, medium-sized organizations that we do eight demos and conversations with, and it’s all kind of part of the process, right? We’re all kind of figuring it out together. So I don’t think there’s a one-size-fits-all. I think it depends on your internal structure, personality, you know, risk appetite. And we’re happy to be as helpful as we can. 

We’re also not the only solution out there. You know, there are other solutions. We certainly would love you to check us out and we’d love to talk to you about what we do. We think that making it free to get set up and through the verification process, there is an AML, KYC verification process you have to go through is regulated. We’ve made that super easy, but particularly going into Q4, to me, it feels like it would make sense to at least explore it because it could take a couple of weeks to get all set up, get it set up so that in Q4, if you do have a crypto donor or donors, you’re ready and you’re not scrambling there, you know, the last week in December, which, you know, may be too late.

Steven: Yeah. That’s the quarter where it all happens, right?

Matt: Yup.

Steven: Well, dang, this has been really fun and fascinating. I really appreciate just the overview here and all of you listening in, I’m seeing similar chats. So I hope you enjoyed it as well. How can we get ahold of you? Again, there’s a lot of really interesting questions in here. Matt, can folks reach out to you? Is that cool with you?

Matt: Yeah. I would love that. And I see like Ian’s question. Ian, that’s a great question. Like probably all of these, I would love to answer. And those are great questions. My email’s right there. You know, I’ll give you my phone number and it’ll be on the recording. 760-803-9576 is my cell phone. But you can also go on our website, request a demo. But you can reach out to me directly and, you know, would love to help you. I just sort of navigate at least just the exploration and if that’s all it comes too, that’s okay too, that helps us learn as well.

Steven: Yeah. And, Carlyn, shout out to you for making the connection here. It’s always awesome to hear from you because campaigncounsel.org, check them out. They do really good work and I think you’ll learn a lot from them. And if you’ve got a capital campaign or something coming up, you might want to check them out too. They’re good people. 

So thanks for this. This has been really cool. And if you’re watching the recording, hope you enjoyed it. I just want to shout out next week’s webinar. It’s actually not next week. I’m going to call out a webinar we’ve got coming up, I guess in two or three weeks because it’s just a really interesting topic that we haven’t ever covered before, specifically how to use WhatsApp to connect with multicultural community, specifically Spanish-speaking communities. If that is maybe, you know, a demographic in your community that you think you’re not speaking to or connecting with, join us. My buddy, Naira, is really smart. She’s been blogging for us on this topic at Bloomerang and has really been gracious enough to share this knowledge. It’s going to be a really fun one, especially if you care about inclusion and equity and all those important topics. So mark your calendars for that. We’ll have a couple of webinars between now and then that you’ll get invited to for sure. 

And speaking of getting in touch, I’m going to send out the sides and the recording of this webinar just here. As soon as we adjourn, you’ll have it before dinner time. I promise. And hopefully we’ll see you again on another Bloomerang webinar. So, Matt, Carlyn, thanks again. Thanks to all of you for hanging out.

Carlyn: Thank you.

Steven: Go out and get those Dogecoins, right? That’s what we call that.

Carlyn: There we go.

Steven: So we’ll call it a day there. Have a good Thursday, have a good rest of your week and a safe weekend, and we’ll talk you soon. See you.

Carlyn: Thanks, everyone.

Matt: Thanks, Steven. Thanks, Carlyn.

Steven: Bye.