Digital Giving and Cryptocurrency

Hello and welcome to the Philanthropy Impact Podcast. Listen on for insights into philanthropy, impact investing and sustainability.

Um good afternoon, everyone. Um, today we are discussing digital giving. Um, you're stuck with me today. Uh Zophia is off with COVID, so she's watching but not participating. So Zofia, I hope you get better soon. My name is John Pepin. I'm Chief Executive of Philanthropy Impact. This is episode eighty-two of the Walk in My Shoes series. If you can find them all on YouTube by searching Philanthropy Impact.

The session is 30 minutes long, and we're just going to effect skim the subject. And we would like to do a more in-depth one later this year or early next year. Please use the live chat to introduce yourself, to ask questions of the panel, to make comments. We will try and uh follow those, but as I say, 30 minutes goes very fast.

So I'd like to introduce the chair for this afternoon, uh uh Darcy Gillies, who is the uh founder and CEO of MANCH and one of our board members. And uh Darcy, shall I leave it to you to introduce the speakers or Okay, over to you then. Thank you, John. Uh welcome everyone. Um it's been a long time since I I've been on Walk in My Shoes, either as a panelist or as a chair.

uh fantastic to be back here. I particularly love these sessions because they are 30 minutes, which means uh we get a lot of uh depth and and coverage on a particular topic. And um and all of this is delivered in snapshot bite size. Actionable insights from experts in the sector. Today we're going to speak about digital giving. And we have uh three different perspectives from uh very different practitioners in the field. Um we have With us today uh Hugo uh McDonough.

um who will talk with us about um maybe I'll pass on to you Hugo first. Uh why don't you introduce yourself and also just share some uh share some top line insights on what you see. Um in the digital giving space. Over to you. Sure. So yeah, my name's Hugan McDonough and I'm the CEO and co-founder of a company here in the UK called Perpetual Altruism.

Um I've been in crypto now since about twenty twelve, discovered it um having first read the Bitcoin white paper back then with uh alongside my elder brother George and

After that, got very interested in the technology and what it can do. And um then Ethereum came out. That was my next sort of aha moment. And then more recently, other things like the polka dot network and other things, but we won't go too into detail there. But basically what we do is um We use NFT technology predominantly as a way to create a new form of sort of perpetual passive giving and income streams for charity.

We did that with a project called Cryptograph back in 2020, which is still operating. And we're now creating a new platform called my nft.com, which should make it possible for people to um do that, but at a much larger scale and not just on a sort of one off product uh project basis. For me, this technology is extremely disruptive on all possible avenues.

And where I find it very interesting of its of its interaction with the philanthropic sector is this idea at least initially of being able to create a perpetually passive sort of income instrument. You know, with a cryptograph, this specific token we created, you can't destroy it. Um you can program in a royalty that is

enshrined and encoded on the chain. So every time this thing is transferred, it raises new revenue for uh uh for the charity. And eventually as well, um, with this kind of system, you could, you could create a a a place where, you know, um

people who give and and philanthropists can can can can gift aid these things when they transfer them and they can create whole new economies outside of that. So An NFT is a programmable digital deed, and I think it's very powerful, and I think it's got massive implications for the giving sector.

Thank you, Hugo. I will come back to you. Uh I think uh the audience would very much appreciate uh uh a little bit more insight on um the different uh terms you've used, uh crypto, blockchain, NFT, maybe a little bit of simpler explanations that everyone is on the same page. And then also uh I'd we'd love to hear from you in terms of, you know, what would be like the practical enablers to take some to scale up some of these technologies and make them practically relevant.

But before we move into that, I'll uh pass on to our next panelist, uh Greg Davies. uh everything to do with data and behavior. Uh maybe Greg, I'll pass on to you to introduce yourself and your key insights on digiting.

Thanks, Dr. I so hello, I'm Greg Davis. I specialize in applied behavioral finance and I co-run a fintech, Oxford Risk. We build software to help people make better financial decisions. And I think crucially for this discussion, when we say better financial decisions, We don't just mean things that are going to improve your risk return trade-off. We mean financial decisions that are going to also align better to your values, to what you want to achieve and doing good with your wealth.

So it's it's really about how you can unlock the ability to of people to align their financial systems more closely to to to what they want to to get from life. And you know, as such, we're in the digital world. Um, we're building technology increasingly, um technology that enables people to take control of their finances in a more effective way. And and at the same time we're also measuring preference.

We we use psychometric tools to help people to understand their financial personality, their preferences for for ESG, for for different causes that they might want to steal money towards, either philanthropically or in investing. And you bring these things together, the digital and and the preference measurement. And I think what it really allows, the great thing about the digital giving thing is it starts to allow hyper-personalization. You start to be able to talk to people as individuals.

at a massive scale. And nobody ever makes an investment or a donation or anything. Really, you're committing your money until they're emotionally comfortable with that. And one of the things that makes people comfortable is the fact that the message and the narrative is personalized to who they are and what their preferences are.

So by trying to by moving into digital giving and combining that with profiling, we can really unlock a great deal more comfort that people have with giving and we can make sure that the decisions they make are much more aligned to what they want to achieve in their life.

Thank you, Greg. More questions for later. Passing on to our next panelist, Edward Thomas from Oxfam. Thank you. Um hi everyone. I'm uh Edward Thomas from Oxfam. I work in the partnerships team. Oxfam's connection with uh digital giving and the blockchain.

um perhaps as a venerable uh charity, not um, you know, managing a little bit of our our risk profile, not currently accepting uh bitcoins uh with uh through Oxra and Great Britain, but we are working on to projects using the blockchain uh in some of the countries we work in. Uh in Vanuatu, for example, we're using the blockchain, which is a uh you go will tell us more later, but a uh digital distributed ledger to help make uh cash payments to victims of um a hurricane.

much more efficient. We're reducing the delivery time of cash distributions by ninety-six percent and distribution costs by seventy-five percent, which kind of really shows a a real um useful application for this sort of technology. And in in Cambodia we've got a pilot scheme for uh rice farmers which is helping um rice farmers get uh better prices for their products with their um suppliers, um, using smart contracting base uh smart contracting

The reason I kind of mentioned up front that we're not accepting current currently accepting Bitcoin um in at OGB is because you know we do work in a sort of regulatory environment. So we've got to be quite careful around money laundering concerns and ethical considerations. Um as well as, you know, with in Bitcoin in particular, there are concerns around the energy use for um for these for these transactions. Now and

Up front, we you know, we're not seeing the donor demand for uh giving via Bitcoin just yet. But as you can see from this project, so I've mentioned, we've got it's clearly the digitization of money is is coming. Thank you, Edward. Um maybe I'll start with my initial questions to you, Edward. So if you can shed a little bit more light on the subject in terms of obviously Oxfam is a is a global organization and uh

How how what are like the practical enablers for you as an organization to accept digital currencies? And um and also do you have any pushback from any of your donors? uh when you start distributing um or when you start implementing digital projects. So um it's certainly on the digital project side on the implementation, they're looking for us to uh innovate and looking for us to, you know, re reduce those burdens um to make sure that, you know.

looking at these tools to improve the way we deliver our work and I think we, you know, we'll always look to do that. Uh I think raising um funding within the UK, we you know, we do want to make sure we're compliant with the charity commission rules on uh anti anti laundering and we're the source of funding. We have um uh processes in place to make sure that we don't raise money, for example, from uh sectors connected with pornography, uh the arms sector, tobacco and things like that.

So, you know, cryptocurrencies by their uh definition are uh you know uh cryptic around where the monies come from. So we have to ensure that there are, you know, uh processes in place. And I think you know, for every charity looking to um accept this sort of uh these sorts of digital currencies, it's an additional process on top of the existing processes that they might have in place for to accept. uh, you know, cash or uh any other form of currency.

Uh and so they've got to weigh up the investment in those resources to make sure that there are processes and governance in place for what happens when you accept these uh currencies, let alone what happens when you when you um when you do have them, how long you hold them for as well.

you know, others will I'm sure speak about the the volatility of these uh cryptocurrencies in in recent months means that, you know, for our planning purposes, somebody may have said to us, Well, we want to give you, you know, fifty thousand pounds worth of uh Bitcoin. Um, it's this much in Bitcoin. Um, by the time we disperse that funding, uh, at the moment that's uh, you know, Bitcoin's fifty percent down on the beginning of the year. So

You know, that's a real risk to the impact we want to deliver. So, you know, these are all considerations that we need that charities. And donors need to figure out when we're uh thinking about using these these currencies. None of them are insurmountable, um, but it is an an additional uh additional piece of work that you want to ensure gets done before you start. Um working in this manner. Thank you.

So considerations around risk And governance are key. before start accepting currencies. Um I'll I'll move us uh back to Hugo. If you can send cryptocurrency NFT and then more or more specifically, how can charities or non profits um uh really um use NFTs and other digital assets as a source for um revenue.

Yeah, I mean it's a it's a good question and Ed definitely alludes to a lot of the potential hurdles that that come with, you know, innovative new technology that doesn't have all the frameworks around it that more traditional stuff has. Um in our case specifically for cryptograph, we implementing KYC and AML for anyone over a certain amount of transactional amount.

corresponds with the regulatory environment. And we as a company actually received all of that income. And then we would pass it out using a charitable trust to various charities. So that was one way of trying to fit something that would work with the status quo. And there are lots of different people and companies that are that are that are that are that are looking at things like that. There's one great a business out in the US called the Giving Block run by a

a really cool guy called Alex Wilson, who've tried to make it super easy for on the the back end side for charities to integrate with them and they've got a little widget and you can just sort of donate using your Ethereum or your Bitcoin. But obviously there's a lot of heavier lifting that happens on the back end with the charity to make that possible, and the giving block are sort of trying to help with that.

So there are lots of companies and people looking at trying to make it easier for um uh charities to be able to get into this space and access to to being able to to receive donations in these assets and then also being able to to spend the

the the the capital, whether it has to be converted into fiat or directly used as as crypto to to to get the good or service to to the to to the person in need. Um I think that um we're definitely entering a period where Are now looking at it in a much more serious fashion, and they're trying to build frameworks that will allow bigger institutions to be able to engage with the space.

Um I know that the mica proposals in the EU at the moment should come out over the next two years and uh the FCA are looking very closely at it and the Crypto Asset Task Force in the UK are going to release something I think. next year. So yeah, it's all sort of all, all, all coming. I think opportunity wise,

There there really are many. Um, the perpetual sort of passive idea that that that we created at Cryptograph, I think, is very interesting. You know, you can Charities have have have ambassadors, those ambassadors have personalities that they can monetize, they could create something like an artwork or experience.

That could be tokenized as an NFT, that could then be sold into an open market with all of the proceeds going to the charity and indeed further recurring revenue from future transactions. And you can do other really interesting things there, for example, you know.

For charities, you have to every fundraise, every event, it's it's a new it's a new expenditure, it's a new capital outlay, it's a new thing that you have to do to create the the funds that you want to raise. With uh an NFT, for example, once it's been initially created. depending on what the value structure of it was, three or four years later, you could attach new value to it. So you could say, actually the person who created it, now they're

Doing a special dinner or a live talk, and you get access to it if you own this NFT. Three or four years after it has been initially created, you can now create new secondary market value. And because of it's the way it's coded on the chain, that value goes back to the to the initial charity that commissioned it, let's say. So it's it's an entirely sort of new way to engage. And I think Greg alluded to the idea of personalization, which is very, very true here as well.

With NFTs, you can create a lot of sort of authenticity with your community and you can have direct interactions with this sort of digital bridge that allows for value exchange to become much more sort of personal. I think is interesting because it means that charities can maximize an initial capital outlay for future fundraising without having to do it every single time and lose costs in that process. Thank you, Hugo. Uh appreciate it. Uh Greg Sorry.

Coming back to you know sort of the initial question we started with, which is uh obviously understanding preferences. I think there is also a generational trend probably you're able to draw from the data you have. Um, and then also sort of trade-offs, if you can talk about, uh shed some light on trade-offs between generations or between asset considerations and and how digital um currencies influence any of those decisions.

Yeah. So I mean I think one of the the big advantages of digital philanthropy is the data that you get almost automatically as as a byproduct. I mean Edward's has talked, I think the the efficiency of it and the sp rapidity with which you can get money to where it needs to be, absolutely. Um, but the the data that you're collecting as well just really helps you to sharpen up the messages at an individual level. Now there are, of course, um differences with regard to to age profiles here.

And so, you know, it doesn't come as a surprise to anyone that the, you know, the younger generation who've grown up as digital natives are often more comfortable having this engagement with uh new fields uh through uh digital areas. I mean, pretty much anyone now, you know, across all age groups, the the level of digitization has increased massively.

But it is true, I think it's not it's not an anti-digital thing. It's the fact that uh younger people are more uh willing to embrace the combination of novelty and and and digital. So what we do see is um uh in in in in philanthropy, the digital approaches can be more effective with with younger age groups. But more interestingly than that, actually, there is a this one of the trade-offs that you mentioned there.

is if you're trying to get people into let's say impact investing or esg investing to put their money somewhere that's not philanthropy it's drawing on the same pool of assets So if I as a wealth manager or a financial advisor am trying to get someone to put money into ESG, you're taking money from your investable wealth, which is the same pool where you would take your philanthropy from. And one of the things we found is that there's a very strong attitudinal dimension.

yw yw yw yw yw yw yw yw yw yw yw yw yw yw yw yw yw yw yw yw uh on the whole, are more comfortable with philanthropic giving than they are with muddling up their investment portfolio with with ESG, etc.

So we have to be s quite careful with certain portions of the population. And in encouraging people to invest in ESG assets, invest in impact in sustainable assets that you're not simultaneously undermining uh their willing, they're undermining or cannibalizing the money that they would otherwise use to give to philanthropy. But if you do this right, if we we personalize it well, you give people clear recommendations and guidelines as to what they should do and how much they should do.

A lot of people simply do not do as much good with their wealth as they want to, not because they're not nice people, not because they're not altruistic. but because we lack institutional social norms and guidelines about what is appropriate. And very often if people don't go, I don't know what an an appropriate amount for me to give or donate on a on an annual basis is.

then that decision makes them feel uncomfortable and they will pull away from that decision. And as a result, they'll give less than they might want. So the more that we can start to give people individual personalised guidelines about

Your wealth is, you know, your wealth is so big. Here's what you're engaged in. Here is an appropriate amount for you to give. And here are the parts that are most uh linked to your preferences. You're you're basically What effectively you're doing is you're unlocking comfort.

with making those transactions because otherwise where there where there's discomfort, people go, you know what, I'll think about it next year or the year after that. And that just can be done much more powerfully in a digital medium than uh face to face.

Thank you, Greg. I think you make a very good point about I l I love the phrase particularly about you know unblocking comfort. Um, because it is about uh people feeling, but especially giving is such a personal choice. It is uh and it m especially when it's individual giving rather than institutional giving. Um that uh one is you know sort of having that knowledge. And I think especially in the digital space, the next aspect is clarity on how um

how that this money is not at risk, et cetera, because generally people giving have very low thresholds um of risk as well. So I think balancing that is is going to be crucial in in the time to come. Um we're starting to get some questions from the audience. Um Thomas, uh Edward, sorry. Uh uh, if you can please take the qu uh question from Richard on um gift aid, thank you.

Uh yes, absolutely correct. Um currently uh cryptocurrency donations are not eligible for gift aid. Um the reason being cryptocurrencies are not yet recognised as legal tender, so technically they aren't money. um they would need to be, I think as one of the other attendees has commented, need to be converted into uh, you know, cash sterling uh for that uh donation to be recognized with uh full gift aid. And again

you know, that is a that is a big driver of um income for charities. Gift aid is a a phenomenal mechanism here in the UK. So it is a, you know, for cryptocurrencies not to get the b that benefit will be uh a driver of uh the behaviour of donors to to not necessarily give you certainly mainstream donors to not necessarily choose that uh donation path because they'll be missing out

on 40% of the benefit to the charity. But something I'm sure that the sector will and the uh charity commission will be looking at as um as uh we go on. Super. Thank you. Uh we have a few more minutes left. Um Uh Edward, if I can put you on the spot and maybe ask for you to share maybe um some more highlights or insights in terms of you know how um you mentioned earlier your programs uh with Cambodia and the other humanitarian efforts. How

How easy or how difficult it was? Um and was uh the digital really an enabler? And if it was, then what benefits did it really um uh provide to the beneficiaries in the end? So um, you know, particularly for uh the distribution of uh cash in the humanitarian context, um, the the use of that technology. certainly drove up um you know the user preference. So you know one of the things that we see in humanitarian emergencies is the if you can get cash to uh people in need quickly.

um then they'll have much better choice to spend it on the things they need. So us using this technology enabled to reduce those, uh the time it took for them to get what they needed. um but also put the power of those choices in their hands. And so you could track the the transactions and it meant you know you could empower those beneficiaries with that with that cash.

So, you know, I think that was a a huge driver in in the impact that we're looking to see because, you know, the the in a humanitarian context, you know, we often think of you know bags of rice or big bags of products stamped with big agency logos. a lot of these places the markets get back up and running quite quickly and so we can get the cash quickly to them. We don't have to fly things.

over by plane or goods by by plane, we can use these technologies to uh reduce those times it takes to to get them the cash and also um use use the cash to empower them to make their own choices and what they need in in those emergencies. Thank you.

Um, and then Greg, um uh also sorry, putting you on the spot. We do have time left. So it's good to just go sort of underneath the yeah underneath the topics you've mentioned. Uh are you seeing any sort of behavioral trends? when it comes to adoption of uh digital uh giving in particular or even in investing. Uh um across generations.

Is it true that uh it's generally the Gen Z that are more pro-giving digitally and are less risk-averse, et cetera? So what kind of trends do you see from a generational lens in this giving space? I mean I th I I think that is true, uh you know, for the reasons that we outlined earlier, but I think one of the other benefits that we've got is that The digital environment often enables connectivity between donors and recipients.

in a much more direct way. You know, one of the other uh hats that I wear is I I chair um Sound of Music, which is the UK's National Agency for New Music and New Composers. that takes the whole notion of of patrons. You know, it used to be that composers would go and work with a wealthy person and there's this patronage. But now we have this ability to create these networks of patrons.

that at scale are creating these links between individual donors and the causes that they're giving to that fosters a much closer emotional connection. And that sort of thing, I think, allows us to start stepping outside of the generational issue, because if I'm fostering connections in the right way, it no longer is the case that just the younger people wanna do it and the older people don't, et cetera.

Thank you, Greg. Sean, over to you. Did you have one quick question to Hugo before I come in or do you want to just move on? Um, well, I did have a question for you guys. Uh which is what is one thing uh charities can do now to get prepared for the digital revolution? Um I think uh learning is is a big one. I think um looking at uh uh interacting with startups, young startups that are trying to build legitimate frameworks for this to work is I think a very good way to learn. Um

companies like the giving block companies like ourselves. Um and Understanding, you know, the whole space is very technology first. It really is. I mean, it's programmable money, it's programmable rights, it's customizable deeds. I mean, this is what this technology is unlocking. So having someone in your in your company or in your team that

has under understands this technology, has read the Bitcoin white paper, has read the Ethereum white paper, understands the concept of a smart contract, will put you one step ahead of many others when it comes to understanding the real implications of what this technology can unlock. So I think it's yeah, it's about getting yourselves educated earlier, I would say is is the best thing here, because it is complex space.

Thank you. Over to you, John. Thank you. It's fascinating because we're going through a process of reimagining Flat 3 impact looking over the next 10 years. And um uh so we'll be picking up a lot of what's uh been discussed here. So um uh Darcy, Edward, Greg, uh Higo, that was brilliant. I'm gonna uh uh Zofia, I know you control the uh

turning off, but I think I'm going to go over a few minutes um because this is so fascinating. Um so can we have final uh words of wisdom? So about 30 seconds or so from each of you. Um and uh If you look in the chat, there's some really interesting solutions to the gift aid thing that are being presented like by Pippa and there's issues around institutional change, etc. So um let's start with Edward.

Oh great. Thanks, John. So uh words of wisdom. You know, I think that the digitalisation of money is coming and it's uh if anything, it's accelerating, you know, despite you know volatilities in in prices. Um one thing that we all need to do is, you know, there is the work, uh, as I alluded to kind of earlier in the conversation to make sure that we're ready to uh implement these tools uh effectively for

not only our donors, but for the people we want to kind of have impact with. And so, you know, that is sometimes quite hard, boring work, you know, regulatory stuff, making sure that we're managing risk correctly, but the opportunities are massive. So it's all worth of us doing doing the work. Great. Thank you very much. Greg, you're next. And I really like your phrase unlocking comfort. Can I steal it? Yes, with pleasure. Very second.

Rwy'n meddwl, mae'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd. The marrying up of um, you know, cutting edge behavioural science with data analytics and digital, the intersection of those three things for me.

is uh somewhere where we're only just starting to unlock the benefits. And it is, you know, the the benefits are in turn unlocking that comfort. Um it's all of this is about helping people to do what they actually want to do anyway. ond gwneud hynny'n gwneud hynny'n gwneud hynny'n gwneud hynny'n gwneud hynny'n gwneud hynny'n gwneud hynny'n gwneud hynny'n gwneud hynny'n gwneud hynny Thank you.

Uh Hugo, I have six million questions for you. Um, and um uh including what quantum computing is going to do in this whole area. Uh can you I'll give you 45 seconds to try and figure that out.

On the quantum computing question or whatever. Well, yeah, I mean uh uh it's an interesting one. Uh specifically, the power of compute usually scales with the power of of encryption. So the minute that we have a quantum computer that could Let's say decrypt a public key, find a private key from a public key, you can add a layer of encryption using that same technology to make it. they usually scale together so I think it's something that's possible to solve.

As an aside, I think I'm very much on Edward's thinking here. The technology is extremely powerful. It makes peer-to-peer transactions very very very real. It allows people to be more individual with how they give, what they give. And it unlocks because it's programmable money, it's programmable right.

programmable deeds. I've said that before, but with that comes a whole new way as to how uh charities and and philanthropic institutions can get creative with with with how they they they raise and how they give. So Yeah, I mean get get exploring. It's it's it's a very exciting technology.

Thank you, Hugo. I find it quite uh fascinating because we're talking about all this stuff, but many charities have a lot of trouble with data management and business intelligence, so they still have a few steps to take. Darcy, your final words of wisdom. Thank you. Um three takeaways for me from this session. One is uh how important learning is to help us really unlock the full opportunities.

um the importance of technology in enabling um and making it easy and comfortable for all uh stakeholders. And finally, the importance of policy and regulatory environment. uh to also make uh adoption of of these solutions uh practically relevant to society. So terrific. Thank you very much, all that was So thank you.