On The Brink with Castle Island - Alex Wilson (The Giving Block) on crypto philanthropy (EP.268)

Episode Date: December 13, 2021

Alex Wilson, co-founder and CEO of The Giving Block joins the show. In this episode we discuss: Alex's path in the blockchain space, from consulting to founding The Giving Block The landscape of charitable giving, and how the company is assisting charitable organizations The pain points that charities face when accepting donations Perspectives from the donor's perspective and why donating cryptocurrency is so compelling How the company came to launch its campaigns To learn more about The Giving Block visit their website or follow the company on Twitter. Sponsor notes:  This episode supported by Public.com. Start investing with as little as $1 and get a free slice of stock up to $50 when you join Public.com today. Visit public.com/onthebrink to download the app and sign up. This episode is brought to you by Withum, a top 25 accounting firm with a cutting-edge Digital Currency and Blockchain Technology practice. To learn more, visit  withum.com/crypto  

This episode is brought to you by Witham in public. More on those companies later in the episode. Today on the podcast, I sat down with Alex Wilson, the co-founder and CEO of the Giving Block. The Giving Block builds software that enables nonprofits to accept crypto donations. And as anyone who's ever attempted to donate crypto in the past knows, that process can be very time-consuming, can be very complicated. And the Giving Block is doing a great job of just simplifying all that complexity. This was a fun conversation. We touched on Alex's path to starting the business. We talked about his perspectives on the nonprofit world's adoption of crypto and much more. So I think you'll enjoy this one.

Without further ado, here's my conversation with Alex Wilson. Matt Walsh and Nick Carter are partners at Castle Island Ventures. All of these expressed by them or the guests on this podcast are solely their opinions and do not reflect the opinions of Castle Island Ventures. You should not treat any opinion expressed by anyone on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only is an expression of their personal opinion. This podcast is for informational purposes only.

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You've printed a couple trillion dollars, and all of a sudden people start to worry. So out of this worry, we have something called the Bitcoin. Bitcoin. Alex, well, thank you very much for joining us today on the podcast. Excited to chat more about the Giving Block. Yeah, Matt. Thanks for having me on today. Well, why don't we just start off with your history in the crypto industry?

What was your background and what got you into the space? Yeah. So the quick backstory is before starting the Giving Block with Pat, my co-founder, I was kind of your more traditional management consultant. And I eventually worked my way onto a team that was focused on emerging tech. It was kind of a mix of like AI, IoT. And back then, it was really more enterprise blockchain applications. But at the same time, I went down the Bitcoin in crypto rabbit hole in 2016 and 2017.

We all know how the blockchain, not Bitcoin conversation ended. But, you know, it was a frustrating time to be working on like enterprise blockchain stuff, but ultimately, like, knew even during that time that crypto was where it's at, basically. And really, really went down the rabbit hole deep in 2017, you know, rode the 2017 ICU boom, like everyone else thought I was an absolute genius by December 2017. And more and more just realized what a big deal of crypto was going to be, basically. And I dragged Pat, my co-founder into getting involved in crypto to kind of kicking and screaming at first.

He was actually quite the skeptic. He was the guy talking people out of crypto originally, being like, no, this is a scam. Like, don't touch it kind of thing. So we had a lot of funny conversations. And then we went to college together. And we were both living in D.C. after college. So we were still in the same friend groups and stuff like. that. And eventually, I convinced them basically to take a closer look at crypto. He went down the

rabbit hole too. He read the white paper. And he actually happened to be working at a nonprofit at the time. So you can see how these forces kind of combined me being sort of the crypto guy, him being the nonprofit guy. And in 2018, we decided to start the giving block together. That's an amazing story. And it's, I've talked about they've done the podcast before, but I was actually a management consultant before crypto, got into it in business school and was a management consultant, kind of an internal strategy person at Fidelity before I got on to the investing side. And I also had a cup of coffee with the private blockchain movement. People don't talk a lot about it now, but there are a lot of intellectual calories wasted

on the private blockchain stuff back in the day. It's wild. I mean, think about some of these big companies like IBM, who hired like a thousand people for enterprise blockchain, right? And then I think quite a few of them have been laid off by now, It didn't really go anywhere. They weren't generating any revenue. A lot of the big four consultancies, right? Same kind of story. People were just allergic to the open networks is really my perception of it.

So there are a bunch of use cases where, particularly in financial services, where people saw that there were a lot of frictions and there were a lot of intermediaries taking tolls, I guess, as a way to think about it. And the kind of solution that a lot of people were at at the time was just sprinkle a little bit of blockchain on it and we're going to solve all the problems. that turns out that a lot of these issues that people were trying to solve were more behavioral in nature. And really, blockchain wasn't the best tool for the job, is at least my take. Exactly. For most cases, you could ask them, like, well, why do you need blockchain for this?

And they would never have a good answer, right? Or in some cases, just because it was so hot back then, they just wanted to put out a press release saying they had a blockchain project with XYZ company just for the press value. It saw tons of that, too. Totally. Yeah, we used to call that innovation theater. It was, I want to be perceived as doing a blockchain project. And if my boss asks me about it, I want to have it covered, but we're actually not doing anything over here. But talk a little bit about what your insight was around starting the giving block and the opportunity that you guys saw after kind of going through the idea is on just what this industry is all about. Yeah. So by the end of 2017, I mean, it was clear that crypto was growing. People were making a lot

of money in this industry probably wasn't going anywhere, right? And where we kind of connect the dots was, you know, crypto users were going to become one of the fastest growing and most valuable new donor demographics for nonprofits. We realize that, you know, the behavior of a crypto user is very different than their typical donor outside of even just them accepting crypto, right? So there was really, there was two things we were trying to do. We were trying to make it easy for both the nonprofits to accept crypto and also for donors to contribute to those nonprofits, but also, just bringing these two communities together. In 2017, there were some nonprofits already accepting crypto. They were usually using like a BitPay or a Coinbase Commerce or some sort of general

or generic payment processing service. But they weren't having a great experience or getting many donations because it wasn't built for nonprofits. They didn't have a way to connect with donors. The list goes on. And one piece that was kind of a tipping point to all this, I think, is the pineapple fund. Are you familiar with the pineapple fund? I am. But for the listeners, you should Talk a little bit about what it is. Yeah. Yeah. So at the end of 2017, I think this was probably our biggest sort of aha moment of like, all right, this is really going to be a big thing. This person or group of people going by the pineapple fund posted on Reddit and essentially said, hey, I've made a lot of money investing in Bitcoin. And now I want to give a lot of that

money away essentially. And hey, you know, basically apply here, apply in the comments. I want to hear your nonprofit story. And I'm going to pick some causes to donate Bitcoin to. So you can imagine a lot of nonprofits being really skeptical of an anonymous person on Reddit saying they're going to give them millions of dollars. But the end result was they gave away about $56 million worth of Bitcoin to 60 different charities around the world, which is unbelievable, right? I mean, that amount of money off of a Reddit forum. Yeah, with anonymous kind of organization behind it. Exactly. And for most of these organizations or at least many of them, this was their first time accepting crypto. And in real time, we basically saw a lot of these pain points happening, right?

How do I accept Bitcoin? Who do I do this with? Like, who's going to help me? Right? Like, and they were all scrambling in December 2017 to figure out how this works and heard a lot of crazy stories. We decided to interview all the nonprofits that were getting the crypto. And that's what we use is kind of the baseline to start building our product and developing the business. And now most of those pineapple fund recipients are actually our clients, which has been an amazing transition for them. And actually, funny enough, we're actually running a campaign right now with the Bitcoin subreddit where they're matching donations right now in December.

We organized it with the moderator there, Thamos, is matching up to 12 Bitcoin right now, which is amazing. Oh, that's amazing. I had no idea. And I also didn't know about the pineapple fund being kind of one of the things that spurred you guys into the idea. That's really cool. I remember when that was popping up.

I guess in the early days, who was really asking for the service? Was it more of the people that had appreciated crypto dollars or crypto wealth rather that wanted the infrastructure or was it the charities that were wanting the mechanism or was it both? I would say it was both, but at least in the beginning, probably more donor driven. Donors coming to nonprofits saying like I've made, I don't know, let's say a million dollars, right? And I need to be able to donate this crypto directly to you because if I sell it first, I'm going to take a, you know, 20 or 30 percent tax it and not going to be able to donate as much or write off

as much. And of course, nonprofits were, we're pretty skeptical of crypto like everyone else was and still are to a degree, right? But an interesting stat we realized was there was more people and still are searching on Google, the term donate Bitcoin, then there are people searching donate stock, which seems unbelievable when you consider how many more people probably own stock in the U.S. and around the world, right? Donating crypto has become kind of this perfect combination of being really low friction for the donor and really high tax incentives, right? In the past, well, from a tax perspective, it's very similar to stocks, but in the past, stock donations were really reserved mostly for high net worth donors, right? It's usually a bit clunky to donate,

or you had to open a donor advised fund account, do these other things to be able to do it. It wasn't, you just go to the nonprofits website, a couple clicks and you send your Apple shares over, usually much more complicated than that. So there were some barriers to doing that. It's gotten better over time, but crypto is still a lot easier to transact with. That's fascinating. So just to kind of double click on it from the perspective of a nonprofit, how exactly does it work right now with your solution? Yeah.

And I guess one thing I forgot to mention in the last piece before I get into that too is like this was quite the uphill battle with nonprofits, right, convincing them to accept crypto, especially when not that many nonprofits were doing it yet, right? No one wants to be first and take that risk, right? So the first couple of years, I mean, it was purely educational, right? Just spinning our wheels with a handful of clients, then a dozen. And then eventually you get some of the big names on board and you kind of hit a tipping point. But it took us a really, really long time to build that trust in the nonprofit industry. And, you know, we're lucky now that we've kind of become the

category king, but it was years of building that trust and that reputation and that brand before nonprofits were really ready to even experiment with this. And I'm sure the addressable market probably pushed people into the space, right? The rising tide of. Yeah, exactly. Yeah, in terms of actually how it works when we work with the nonprofits. So with the nonprofits, I guess the easiest way to explain is there's kind of three things

we offer the nonprofits. One being like the technical infrastructure to be able to accept crypto in a really streamlined way, offering things like automatic conversion to USD, automatic tax receipts for the donors, you know, all the kind of reporting and compliance that a nonprofit needs to accept non-cash donations. and just making their life easy, right? So they can do this without having any sort of internal crypto expertise where we just kind of automate the whole process in a way that it's just like getting any other type of donation for them on the back end when they actually get the money. The second piece is the crowdfunding component to this. You know, we've positioned our

platform as the place you go to find nonprofits that accept crypto since we work with over a thousand nonprofits now. And, you know, that means we're working with the majority of nonprofits other that accept crypto. So crypto users know you come there to find a nonprofit that accepts crypto if the nonprofit you wanted to donate to doesn't accept crypto yet. So we've created this donor funnel basically for the nonprofits on our platform where they get displayed in a random order each time they come to the site. And we've even found that 80% of donations to our clients are from donors who come to our site and donate on our site, which of course pretty powerful for the nonprofits to have help creating those donor funnels. That's fascinating. How do you think?

think this will evolve with the nonprofits as it relates to taking FX risk? Do you think that there are going to be these categories of nonprofits that say, hey, look, we're naturally long Bitcoin and so we want to hold 20% of donations actually in Bitcoin as opposed to converting them to dollars? Do you see that behavior evolving? Absolutely. And it's already happening, right? In the very beginning, no one wanted to huddle. Like literally no one. Everyone was terrified. And then they start working with us for a couple of years and they see the chart going up and to the right, you know? And the longer they work with us, the more likely they are to want to start poddling. So we're certainly seeing that behavior change. And even when there's big spikes in the market,

right, sometimes we get an email from a nonprofit saying like, wait, wait, wait, turn off auto conversion, like this is going to the moon. So we're in this funny position because we don't want to give them like financial advice, right? Or say like now is when you buy or hold or sell or whatever. We're just providing the service. You can turn auto conversion on and off as you want. But please, if you are going to hold, like make sure you at least have a plan in place. right? Do not panic sell or like change this every day, right? We don't want them to become day traders or anything like that. That's funny. I could certainly see a world where that evolves over time and there starts to be almost categories. You know, you'll have charities that want to auto convert, but also

maybe, you know, charities that see this as more of a programmatic way, maybe even start to think about an index of crypto assets over time. Yeah, definitely. It's happening. Just like we're seeing it on corporate balance sheets, right? Like the, you know, micro strategy being the most obvious. obvious example, that's happening more and more with nonprofits still. So talk a little bit about how it works from the donor's perspective and what sort of the tax implications are for people in the United States as it relates to donating cryptocurrency. Yeah. So the tax component is certainly a major driver of this. It's really a benefit of both the nonprofits and the donors. So starting with the donor perspective, very, very similar to donating

stocks or other appreciated assets in the sense that for the donor, they don't have to pay capital gains taxes on the crypto they donate to the charity, and they get a fair market value deduction on their tax return that year. So if we compare that to if they sold the crypto and pay taxes and donated, it's probably a 20 or 30 percent difference in how much they're donating and how large their deduction is. For the nonprofit, too, since as a charity, they're tax exempt. They're not paying taxes on it either. So they're also getting that same 20 to 30 percent benefit. So it's really a win-win for both sides. So you can imagine how anyone who was probably smart enough to make a lot of money on crypto, right, is smart enough to not want to pay 20 or 30%

tax and then donate less, have a smaller reduction, all that stuff. And the interesting thing is most crypto users aren't aware of this yet, right? So we have this educational hurdle with donors too, where so many, first of all, don't even know they can donate crypto, right? They don't know there's a thousand nonprofits out there they can donate crypto to. And then two, that it actually helps them financially to be donating crypto instead of fiat. So there's people that are probably donating fiat quite a bit that own crypto and should be donating crypto instead. And it would actually be better for their bottom line. There's even a tax arbitrage opportunity, really, right? If you're already donating, let's say, $1,000 a month to a charity that you really like, donate that same

amount with your Bitcoin holdings and repurchase $1,000 worth of Bitcoin, and you've just raised your cost basis, right? It's a really unique and interesting kind of tax arbitrage opportunity. That's really interesting. And so do you see people doing that behavior already on the platform in terms of that tax arbitrage? Yeah, definitely. And it's something that's a little bit difficult to get across really quickly to someone, right? Like, it usually takes a conversation like this to explain it a bit, but we're working closely with like the tax software providers, like, let's say a tax fit, right? Like the accounting firms, the tax attorneys, things like that, so they can work on educating their clients on this because the average person isn't just

going to stumble across this, right, unless they come across a blog or a podcast or something like this. In all of the record keeping on the back end, is that all automated through the platform? Yeah, that's all automated. If you're a regular listener of this show, you know that we take accounting and auditing pretty seriously. And that might seem a little bit strange in an industry that prides itself on the removal of intermediaries, but we think when it comes to digital assets, trust relationships with counterparties like custodians and brokerages is critically important. Witham is a top 25 ranked accounting tax and advisory firm. They have a digital currency and blockchain group that's working with some of the highest profile companies in the industry

on things like tax advisory, financial statements, token sales, stable coin audits, and much, much more. To contact their team, go over to witham.com slash crypto. That's WI-T-H-H-E-H-E. UM.com slash crypto and get in touch with someone on their team. And this episode is also brought to you by Our Crowd. All around the world, tech companies are innovating and driving return for investors. Our Crowd analyzes companies across the global private market, selecting those with the greatest growth potential and they bring them to you, from personalized medicine to cybersecurity to robotics, quantum computing, and more. In state-of-the-art lab, startup garages, and everywhere in between, Our Crowd is identifying innovators so you can invest when their growth potential

is the greatest, which is early. Our Crowd's accredited investors have already invested over $1 billion in growing tech companies, and many of their members have benefited from the 46 IPOs or sale exits of their investments. Now you can truly diversify your portfolio by investing early in innovative private market companies at Our Crowd. Join the fast-growing venture capital investment community at OurCrow.com slash OTB. That's our crowd.com slash OTB. So one of the things I'm curious about is you're seeing more and more of these longer tail defy assets spring up.

And you are seeing some donations, some very high profile ones, obviously with Vitalik liquidating some of his assets and donating them. How does this work on the longer tail where the markets are less liquid? It's harder to actually appraise what the value of these assets are. Does it get more complicated the further down you go? Yeah, it does. And for that reason, we're really careful about which coins or tokens we accept. Because ultimately, we would advise any nonprofit not to accept something that isn't highly liquid, right? If they can't turn around and sell it immediately, they probably shouldn't be accepting it.

And there's plenty of really random or even brand new projects that I've never heard of, and you've probably never heard of reaching out to nonprofits and saying like, hey, I just launched the next Bitcoin. I want to give you a million of these coins. This is going to be worth more than Bitcoin in five years, but you've got to wait five years, right? where people are trying to associate themselves with the nonprofits as a way of gaining legitimacy, right? Because everyone wants a partnership with a St. Jude or American Cancer, one of these recognizable brands. So we work really closely with the nonprofits to help them vet these opportunities, basically, to make sure they're only partnering with quality people and projects

when it comes to that, because we're sort of their advisors for all thing crypto. I guess you've already seen that play before with the ICO wave around riding on other people's credibility to get logos. We certainly see a lot of that still in this industry. Yeah, definitely. So, yeah, it's an interesting role to be playing for them and something that they're getting better about being able to do on their own, too, as they get more involved in crypto. But as a total newbie, right, like it's really hard to tell what is legit and what isn't. So from a infrastructure standpoint, what you're doing today would have been really hard to do back in 2016 in terms of just the custody for these assets, the trade execution, and how it actually

works. How have you thought about that side of the business that people don't see necessarily on the outside, just how you guys run custody, how you run trade execution, how you do all of the automation of market data? How is that evolved? And how do you think about partnerships in those categories? Yeah. I mean, when it comes to the back end for liquidation or just the execution of the trades, I mean, that, like, even as a retail user, that has trained so dramatically since 2017, right? Like, using an exchange to buy crypto now is 100 times easier than it was in 2017. So we've been fortunate to like benefit from this increase of like API functionality from exchanges, usability, like support models, uptime, right?

Like everything in all those categories keeps getting better and better, which helps a lot of different aspects of our business. And in a lot of cases, right, we don't have to necessarily reinvent the wheel for a lot of this stuff. We can use existing infrastructure from exchanges like Gemini. Gemini is a really close partner of ours on the back end and who we're using as really our backend exchange. All the trades are being routed through Gemini's exchange. And that also helps even with things like vetting which tokens to accept, right? Because if it's not tradable or

liquid on Gemini or another major U.S. exchange, we're probably not going to accept it. So that's definitely helped a lot. Yeah, that's been something that's been interesting to see just from my perspective over the years is that the market structure for custody and trading and all the applications starts to get bifurcated, whereas you would have had to be doing this in building your own custody infrastructure if you tried to start the business five years ago. It would have been a lot more challenging, I would think. Yeah, definitely. And then, you know, more broadly, how we're partnering with other crypto companies, you know, it's exchanges, it's wallet providers, it's tax software. And it's really anywhere where there's a lot of either users or trading volume,

right? We want to go to where the crypto users are to get in front of them, to educate them about crypto donations. So for example, Gemini, even on the front end of their exchange, added a donate crypto button. We've got on other platforms like one inch, put a donate crypto. And these buttons they're adding to their website are really straightforward, a link to our site, and then the user chooses who they donate to, but they're raising millions of dollars by adding these buttons and integrating with partners like, let's say, a tax bit, right, to be able to mark transactions as donations and then ultimately try to build into tax optimization

tools. So this is much more top of mind as a tax strategy. So really, just trying to get in front of as many users as possible and really build out that donation funnel to create sort of this culture of giving. And on top of that, you know, you may have seen recently our Twitter account blowing up because we're running these end of year campaigns right now in the industry where we're trying to bring together all the biggest industry players for our bag season campaign. So last week was Giving Tuesday. And this was the third year. We ran our spin of it, crypto giving Tuesday. Right. So Giving Tuesday globally is the biggest

day of giving in the year. You know, I mean crazy amounts, hundreds of millions, maybe even billions raised on that day in donations. So we use that as a kickoff day for a huge campaign in December because as you can imagine, this is when everyone's meeting with their accountants before the end of the year and like, oh my gosh, I'm going to owe, you know, $50,000 in cap gains taxes this year if I don't donate or do something else. And so we're very blunt with the messaging, like, would you rather donate to the IRS or save the children, right? Like that's a, that's an easy decision for most people. Yeah, certainly that's a no-brainer. You guys have been really successful with these campaigns. So you have the giving pledge, bag season, NFT, Tuesday. What's the thought process

behind organizing these campaigns? Obviously, this is feeding into the popular kind of understanding of your product. But what was the insight that led you to do this in a campaign way? The biggest driver for it was really the educational aspect, right? And in the process, trying to create this culture of giving. We've even seen in some studies that, like, Fidelity has done, that crypto users tend to be some of the most charitable people in the world when you compare them to the average population. And part of that is, of course, right, because people have made, you know, quite a bit of money pretty quickly, right?

So that certainly contributes to. But for us, that's like a theme across these campaigns and initiatives we're running is let's try to create a culture of giving within the community, right? So this just becomes part of your business model, part of your marketing, part of your user acquisition strategy, just part of something you do every year. And I think things like the crypto giving pledge are a great example of that, right? We have people like Ryan Selkis and Meltem Demiris taking the crypto giving pledge where they're saying, I'm pledging to donate, you know, at least one percent of my crypto portfolio every year to charitable causes. And the high level

goal of that campaign being like, imagine if we have the entire industry donating just one percent of their crypto every year, that would be unbelievable impact. And it would make crypto, the most impactful industry in the world by a long shot. Like, it wouldn't even be close. And imagine what kind of positive PR that would also result in for the industry. So a secondary component of this is changing the narrative around crypto, getting away from these misconceptions of like, oh, it's all like dark web stuff, right? Changing the public perception of crypto in the process of this, because imagine learning

about Bitcoin for the first time because your local YMCA just got a million dollar Bitcoin donation. That's changing the game for them. That's such an interesting way of getting introduced to crypto that I think really, really flips that narrative the other way around. And certainly you could see that having a huge positive impact just on the regulatory landscape and the conversations there. I mean, imagine if it was 1% to charity and then 1% to Super PACs.

I guess that's a different thing. Super PACs to support pro-crypto candidates. But I guess what you're saying is that this is actually the type of ground surge that would lead to more of a positive framing of the industry. And we'd be hearing less around Bitcoin is for criminals. and it's melting down the environment and more about the pro-social aspect of it. Exactly. Like, it would force them to really take a closer look at this, right?

And any time, and it ties into the Hill conversations and things like that too, right? Like, if you're suddenly trying to change a law and it's going to negatively impact nonprofits in a major way, you don't want to be the guy who just did something that's taking away hundreds of millions of dollars from nonprofits, right? That's an awesome point. How are you guys doing in terms of just the coverage of nonprofit? Do you think there's still this education hurdle where there's resistance or are the market forces just pushing more and more of these nonprofits to just get on the program?

I mean, there's certainly still an educational hurdle and general skepticism, just like there's general skepticism with the public and the average person, right? Like if you stop a person on the street, they are likely still to be skeptical of crypto, right? So I would say in terms of that, it's that still exists with nonprofits. I mean, we've, for us, really hit a tipping point, though, it feels like just because we have over a thousand nonprofits now, many of the largest in the country. So that's made our, you know, kind of selling a bit easier than it used to be, right? But it's still not easy, right? And it takes

a long time to build that trust with the nonprofit community. It's a very trust-based industry, right? It's not easy for someone just to spin up and start offering this and have everyone trust you that you're going to offer a good service, basically. So we've built essentially a great moat on that front. But it's still a lot of education. We still spend so much education or so much time educating nonprofits and ultimately just trying to get them excited about crypto, right? Whether or not they want to work with us, just helping them understand crypto, get excited about crypto, why do people care about it, all that kind of stuff.

So in some cases, right, it can be a longer, longer conversation, but end of the day, we just got to get them bought in on crypto. One of the categories that I think is so underpenetrated right now, and there are so many just universities that are doing this wrong is just enabling their graduates to donate crypto. And so you either see, you know, colleges that just completely aren't set up for it or they're on these janky solutions that no one can figure out how to use. And it's just such a massive untapped opportunity. I mean, some places I've gone are just totally not taking advantage of this right now. Yeah. I would say higher ed was a bit slower than, you know,

kind of the more general public charity market to adopt this. But we've seen a huge surge in universities and colleges taking crypto these last few months. Part of that was driven by a partnership we have with a company called Give Campus. They work with schools like Harvard to take credit cards or bank donations, and we integrated with them recently so they can offer crypto donations of their clients in a really streamlined way. So we've probably onboarded anywhere from 50 to 100 schools in the last three months. So I think you're going to see that change a lot. And now they're playing a bit of catch up, but they're playing catch up pretty quickly, especially because I think you're seeing, like you said, the pressure from their younger donors,

right, of saying like, hey, I want to donate crypto. That's literally all I want to give. Or it's all I have. I have 80% of my wealth in crypto. And so if you want a donation this year, that's how it's happening. Exactly. And we're hearing that from donors too. And that's something we've got to get across the nonprofits too is for so many of these donors, they're actually only donating in crypto because that's, like you said, 80 or 90% of their net worth. Right. Like, that's all they have. Yeah, I mean, it's certainly something that we're seeing out there. I know that you guys are active with donor advised funds. So maybe just a question here on just what are donor advised funds? How does that engage with your model and a little bit more on

that category? Yeah. So we've seen a lot of growth in that space. And we work with, you know, I would say a couple dozen different donor advised funds to help them accept crypto donations. Donor advised funds in general are a way that you can, you know, set up an account, donate to it, but distribute those donations over time and to different charities. So you get an immediate tax deduction for funding your donor advised fund account because those DAF programs are also charities. So you get immediate tax receipt tax benefit. But you can take, you know, a long time to say, okay, I want to have a quarter of it go

to this nonprofit, a quarter of it go to this nonprofit, or even spread it. out over years, right? There's basically a lot more flexibility when you're doing it that way if you're just not sure what you want to do yet. So it's great for people who just, they want to donate, but they're maybe not quite sure what they want to do yet. So, you know, we can even, I don't know if there's a place to put links, but we can, we can send people to a link if they want to open a donor advised fund account or something like that with our partners over at Renaissance Charitable. And they work with a lot of the traditional kind of tradify companies, like the big banks and things like that to run their donor advised funds. So they can all accept crypto now too.

Oh, awesome. Yeah, we can add that. One of the things that I remember from being at Fidelity when we started to get into the donor advised contribution space was there was a lot of complexity around just getting a valuation of the asset into the donor advised fund. So how does that work for any asset, I guess, just generally going into a death? Yeah. So for crypto in particular, and we're hoping to get this changed eventually because honestly, it's kind of a ridiculous requirement. But any donation right now, over $5,000 requires a qualified. appraisal. And, you know, especially if you're donating like Bitcoin or Eath, that seems crazy, since the pricing is so public and it's so liquid, right? So you need to basically have someone do a qualified appraisal if it's over 5,000 and have someone sign off to say, yes, this donation is really worth X amount. So we have partners for that where we refer people to, but it's a bit of a pain point that I think will go away. And it was probably created from a misunderstanding early on of how liquid these assets are in most cases, right?

It just seems crazy. I mean, you could imagine getting a qualified appraisal if you're donating a Picasso or something like that. But for Bitcoin or Ethereum or any of these top assets that have a liquidity landscape, that qualified appraiser is just making money for doing absolutely nothing. Yeah. I hope it goes away soon, right? But things like that don't usually change quickly in government, right?

It would also be great to have donor advised funds, just have the ability to hold the underlying. You could imagine maximizing impact by actually having crypto within a donor advised fund and having that appreciate over time as opposed to dollars. Yeah. And that's something we're going to start offering next year as well too with some of our donor advised fund programs. But for now, they're primarily liquidating it. And then if you want, you can reinvest in more traditional assets as well. I don't know of any that are allowing you to actually keep it in crypto or invest in crypto in your donor advised fund. But that's definitely something we'll be rolling out next year.

Do you guys kind of have a view on the market based on the assets that people are donating? Like, is there a data that would suggest that certain assets maybe people think are overheated and so they're donating them in cycles? Yeah. So interesting. So for the longest time, Bitcoin was just killing it, right? Like nothing came close. This summer, we started to see ETH really start to catch up because of the NFT boom, at least

primarily for that reason. And of course, ETH has performed well more generally, too. But we've seen an explosion in NFT-related philanthropy, where artists and creators are saying, I want 25% of these auction proceeds to go to No Kid Hungry or whoever their favorite charity is. And that's been really cool to see that play out. And in some cases, even like the recurring royalty payments going to charities to create kind of this perpetual donation stream, which has been really cool. And more recently on our Giving Tuesday campaign, Crypto Giving Tuesday, for the first time, Eith out did Bitcoin in number of donations that day and is catching up to Bitcoin for a year to date.

So we'll see where the year ends, but Eith has done a pretty big catch-up. And more recently, we've seen a big growth in USDC as well. And of course, longer term, we think that stable coins will become more common just as a transactional method more than like a tax-efficient way of donating. That's fascinating. Do you ever think we'll get to a point where people are donating crypto-punks directly and things like that. Yeah, that's definitely coming too. But for right now, we recommend they don't donate the NFTs directly just because it's really, really complicated from like a tax and compliance perspective

because there's some outstanding questions from the IRS of like how you would do tax deductibility for that and the valuation gets pretty tricky, especially if it hasn't been sold before and it's a brand new NFT. So a lot to be worked out there still. So it'll happen, but just not happening very much right now. That's awesome. Talk a little bit about the giving pledge. And I know this is something as part of a larger roster of campaigns that you're doing, but do you see this being kind of the primary campaign that you guys push for years to come? Yeah, the giving pledge is going to be a huge part of this. And it's really something that's year round. You know, you're probably familiar with the traditional giving pledge that, you know, Bill Gates and Warren Buffett started. And it was really like getting billionaires

to sign on and say like, hey, sign this and, you know, promise you're going to give away the majority of your wealth over your lifetime. And we are pretty intentional on designing hours differently and kind of putting our own spin on that for the crypto community. I mean, general theme being the same, right, let's rally together high net worth individuals to take this pledge. But really, this is meant to be a community-wide effort, right? Getting back to that goal of trying to get one percent of all crypto every year donated to charitable causes. So we've really opened that up to the public, getting hundreds of people to take the pledge, not just the, you know, high net worth individuals, but really it's for everyone.

And that's something we'll keep pushing all year round. And it's really become, you know, the industry-wide giving pledge, right? There's nothing else out there like it. And we've made a push even to have companies take the pledge too. And there's traditional equivalence of that too. But I think this is a really good way for people to get involved on a recurring basis, right? You make an annual donation. It's not like, yes, I'll give away 50% of my net worth when I pass away at 95, right, or whatever.

Yeah, you guys are making it really easy. for folks. I think that's an awesome campaign. What's it been like growing your team through this COVID experience? And you guys are growing like crazy and must be an interesting dynamic to be meeting folks over Zoom for the first time. Yeah. So it's funny. A lot of our team we've never met in person. But I imagine a lot of people building companies right now can say the same thing, right? But our team has really taken off. We started this year with, I think, about six people. And we're somewhere between 40 and 50 people right now. So really, really growing quickly, hiring pretty much nonstop. And, you know, like everyone else, trying to find that balance of how do you still create that

great company culture when everything's virtual, right? So thinking through like company-wide meetups or retreats throughout the year. So people still have that in-person connection, at least a couple times a year. But that's certainly a work in progress and something where we're learning as we go, really. Yeah, certainly building culture in a remote first way is something that everyone's challenged with. I think everyone's also challenged with just recruiting. How have you guys seen the recruiting landscape? And are there categories of jobs that you would recommend to people that are in college maybe right now that they start to focus on that are high demand? Yeah, I mean, yeah, recruiting in any industry is tough, but crypto especially, right, especially for engineers. There's such high demand for engineering jobs.

And for us, actually, though, we're a bit lucky in the sense that we're able to hire people without any crypto experience at all. You can get up to speed on the crypto knowledge you would need to fill pretty much any of our roles, almost all of them, I would say. You know, I would say probably 80% of the people on our team did not work in crypto before working at the Giving Block. We hire people more based on their general skill sets of like, you know, just being smart and good problem solvers and hardworking, like, you're more general characteristic traits

and more of like people that want to get into this space, right? It's super rare to find someone with experience of nonprofits plus crypto. That's almost impossible, right? Like getting both are usually getting one or the other or in some cases neither. And that's fine with us too. You can certainly learn the skills on both sides of the market for that. But yeah, for people in college right now, I mean, engineering, right? I'm sure everyone probably says that.

But huge, huge demand for those kinds of jobs. But if you are listening and one who apply, definitely check out our careers page. And we're hiring for pretty much every possible. roll out there. That's awesome. So where can we send people just in general to find out more, learn about the campaigns that are going on and start to donate? Yeah. So the best place to start is just the website, which is the giving block.com or check out our Twitter, which is just at the giving block. And you'll see tons of activity on our social accounts, especially between now and year end. And if you go to our website or Twitter, you'll see links where you can donate. You can

choose from over a thousand different causes. And remember, you got to donate before December. 31st if you want that deduction to count for this tax year. Make it count. All right, Alex, well, this has been great. Thanks so much for joining us today on podcast. You guys are doing awesome work. Awesome. Thanks for having me, Matt. This is great. Thanks for listening to another episode of On the Brink with Castle Island. To find out more about Castle Island, visit castle island.Vc. To listen to all of our podcast episodes, please go to On the Brink dashpodcast.com or just click on the tab in our website. Thanks for listening. You know,