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The latest episode of "From Niche to Necessity: Tax & Accounting for Web3 and Digital Assets" features an incredible conversation with Robbie Heeger, President and CEO of Endaoment. For anyone interested in how blockchain technology can revolutionize nonprofit and philanthropic efforts, this episode is an absolute must-listen.
Here are three key takeaways from our conversation with Robbie:
- Innovative Philanthropy: Robbie explains how Endaoment is transforming the way we give to charity through blockchain technology, making it transparent, accountable, and efficient. Imagine a world where your charitable donations are publicly trackable and verifiable!
- Donor Advised Funds (DAFs): We delve into the benefits of DAFs, a powerful yet often underutilized tax-saving instrument. Learn how contributing digital assets like Bitcoin or Ethereum to a DAF can yield significant tax advantages and maximize your philanthropic impact.
- Future of Crypto Philanthropy: Explore the exciting potential of on-chain financial services and envision a future where a crypto-native community foundation ranks among the top nonprofits globally. The future of giving is digital, and the possibilities are limitless.
Don't miss out on this fascinating discussion! 🎧 Listen now and stay ahead of the curve in the Web3 revolution.
Visit https://cryptocfos.com/ to kickstart your career in Web3 Tax & Accounting.
Visit https://endaoment.org/ to learn more about DAFs and Endaoment.
Visit https://cryptocfos.com/ to kickstart your career in Web3 Tax & Accounting.
Visit https://endaoment.org/ to learn more about DAFs and Endaoment.
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What is From Niche to Necessity: Tax & Accounting for Web3 and Digital Assets?
"From Niche to Necessity: Tax & Accounting for Web3 and Digital Assets" is your source for expert insights on the rapidly evolving world of crypto and digital assets. Hosted by Taylor Zork, CPA, and presented by CryptoCFOs, this interview-based podcast delves into the complexities of tax and accounting for Web3 and digital assets. Tune in as Taylor sits down with top finance professionals, and CEOs of Web3 organizations to explore the latest developments and best practices in this exciting field. Whether you're a seasoned finance professional or simply curious about the future of digital assets, this podcast will keep you informed and engaged. Subscribe now to stay ahead of the curve and unlock the potential of Web3 and digital assets in tax and accounting!
Hello and welcome to Niche to necessity, your go to podcast for everything tax
and accounting in the realm of web three and digital assets. I am Taylor Zork
and every episode we sit down with the top finance professionals and
CEO's from the world of web three to dissect the latest developments,
solutions and practices and best practices in this rapidly
evolving field. Our mission is to demystify the complexities of digital assets
and blockchain for tax and accounting professionals. Whether you're deep in the trenches of
web three finance or just starting to explore the impact of digital assets,
this podcast is designed to keep you informed and ahead of the curve.
Today we have the pleasure of speaking with Robbie Heger, president and
CEO of Endowment on Philanthropy in web three and donor
advice funds. So Robbie Heger is a self
taught software engineer who founded Endowment, a revolutionary
nonprofit organization that is the first community foundation of its kind
to be entirely powered by blockchain technology. A veteran of consumer
technology applications, Kieger began his career working for
Apple's media products division looking for more impact focused
manifestation of software technology. He left Apple in 2018 to
begin exploring on chain applications. He soon discovered that the tried
and true methods of donating complex assets in the traditional finance
world were not readily available for the newer asset classes of digital collectibles
and cryptocurrency. What blossomed from that original need to
give digital assets is endowment.org, the first
on chain DAP provider. So donor advised funds
built for the next 50 years of philanthropy and wealth management,
endowment staff accepts nearly any asset with a liquid market,
traditional or goal or digital, and marries their
expertise and complex donations with a delightful modern user
interface built for the rising generations of
families, individuals and corporations looking to give back.
Welcome, Robbie, and thanks for joining us. Well, thanks so much for
having me, Taylor. We're big fans of crypto CFO's and
love how deep you guys get into the weeds. So looking forward to the conversation
today. Yeah, super excited to give the folks some value and
the awareness of a product that I think will help a lot of people.
If you could just real quickly give us a little bit of background on how
you originally got into digital assets, what attracted you to the space, and
just some more clarity on that? Yeah, I
mean, you mentioned it in the intro, but
I was working on media products back
in the
20 teens and
my, my passion for
rights management, publishing, the media industry
was the original hook that got me into crypto. This
idea of digital scarcity, of digital rights management
actually being enforceable on the Internet,
a lot of the precursors to the NFT boom
that occurred in the early 2020s, um,
was what got me on this journey. Now it is
not where I have wound up. Um, ive. Ive sort of
changed, uh, industries in. In coming
to crypto. But the original hook
was, you know, I had this roommate who was working for
Ripple, and, uh, he was a recruiter,
and he. He would come home with his work, and, you
know, this was just another company that he had gotten placed at. And,
you know, he came home with his work and he was like, I don't totally
understand this, and can you guys read about it and kind of tell me
what you think? And that that led
me down the rabbit hole. That was like 2013, 2014.
And. And, you know, I started off as a
speculator, you know, as just an investor, as somebody who
took, you know, one to 3% of their net worth and put it
in crypto as. As kind of like a hedge against
the traditional finance system, as a long
on programmable money, and
forgot about it for about four or five years and really
just fell down the theoretical side, like, really was a
lurker in the media meets on chain
application space. And then
the ICO cycle hit, and
the 2017 to 2018 cycle played out.
And that really
turned my attention to
this industry as a space that really needed more
robust financial services that people were running into the brick wall
of paying the tax Mandeh and I
myself was, you know, had taken some gains and wanted to
do what I had been doing at Apple, which was giving some of my restricted
stock to a donor advice fund, right? Like,
I was very lucky to have a brother who was a CPA who was like,
you should do this, right? This is the tax savvy move. I was like,
okay, let's open a daft. So we had the Heger brothers fund
at a daft provider in the San Francisco Bay Area, at a community foundation in
the Bay Area. And all of a sudden,
I had random down market coins
that I had huge gains on because I had been
participating in the ICO craze,
and I wanted to give some of it away because it really feels like found
money. I think people who have
been in the crypto market for long enough have this feeling of, like, I
took some small amount of money and I put it on to
this coin, and I put those coins onto a flash drive, and I put that
flash drive in a safety deposit box, or am I safe at home? And
then I woke up three years later, and all of a sudden, it's a significant
game that I have tax obligation on. And
how do I both take some of those winnings, take some of those
profits, but also how do I acknowledge the privilege that it
was to be early, and how do I try and
evangelize for this technology while also mitigating my tax
obligation? And that was really the
seed that sprouted
into endowment. So I had these coins, I wanted to give some of
them away. And I think it was chain link that I was looking
to give away. And it was like during the chain link bull
cycle. And of
course, my current, at the time, DAF provider didn't accept
chain link. They didn't accept BTC or ETH. At the
time, Schwab and Fidelity were barely accepting BTC.
And so that was the spark. That
was the thing that said, not only do we need to be able to give
these new assets away because it helps
people manage their tax obligations,
but also we need this as a
critical use case for this infrastructure to say
that there's an opportunity to build robust Internet native
philanthropic infrastructure alongside all of the speculative,
profit driven financial infrastructure that we are building to
upgrade the financial system across the world. And
I think that's a really powerful use case for people to get to latch
onto as they are trying to explain to their
friends, to their family, to their communities, to their government,
to their legislators about what the value of this
technology is. Endowment winds up serving this, this really
lovely use case and storytelling
narrative for the broader industry. And we're really proud to
be able to do that. I love that. And I love that
it fits nicely into what we're trying to do in our community, which is
to educate accounting and tax professionals, because what you guys
are doing is directly a benefit to tax practitioners
that may know how to leverage dafs in the traditional
world, but may not know how to do that, or may not know the steps,
may not even know that that was possible or an option for their clients in
the crypto tech space. So just taking a quick step
back before we get too far ahead of ourselves, just so that
the audience members who may not be familiar with dafs, can you just give a
little bit more context on that and just how they
may be, how they're currently used as a philanthropic tool
for tax savings, and how you kind of envision them working with crypto
as well. Yeah, dafts are really cool. And nobody
knows about dafs either. We'll go to conferences and we'll be
like, do you know what a DAF is? And universally, nobody knows what a DAF
is. And of course, financial
advisors, wealth advisors, tax professionals, they know what dafs are because it's their
job. But in the same way that people know what a
401k is or know what an IRA is or know what a health savings account
or even any number of 529
is, a lot of people know what some of these tax mitigating accounts are.
But for some reason, like, the DAF is kind of like the
forgotten stepchild, and, like,
it's so cool and it's so powerful. And we think
so many people who don't have dafts right now should have dafs. So
if you've never heard of a DAF before, listen up. So,
effectively, a DAF is like a charitable checking account. It's
not exactly a checking account. It's not your money. You give
into a DAF, and the money is gone forever. Right? You give into a DAF,
and it's like you're giving to a nonprofit, but you're
holding those DAF assets. What you gave to that DAF
at that nonprofit gets held in the donor advice
fund. And now you have what are called advisory privileges.
Right? So if you're the donor, it's a donor advised fund. Right?
So very semantic, right? So you give to a DAF,
you are now the donor advisor. You get to advise on
how that money is invested until you advise
on how that money is granted. And you can do one of two
things with money in a daft. You can grow it or you can
give it away. And when you grow it, you
make choices about what you want to allocate it to. And the
DAF provider provides you with those choices. So they say, here's a
library of choices of different investments that you can make with the
assets that you've already donated. And when
it's time to grant, you create what are called grant recommendations. And those
are distribution requests. Effectively where you're saying, hey,
distribute $1,000 of my donor advise fund.
It's not really your donor advise fund, but distribute
$1,000 of the donor advise fund that I am the advisor
of is a more accurate way to say it, and
give it to UNICEF. Right? And the
nonprofit's job, the donor advice fund provider, their job is
to say, okay, did you get anything for making this grant recommendation?
And you say, no, I didn't get anything. I didn't go to a gala. I
didn't get tickets. I didn't get some material
benefit from this grant recommendation. And they say, okay, great.
They turn to the organization. They say, hey, organization, are you giving
anything to the donor in exchange for this and the organization says, no,
no, we're not. This is going to this cause and this cause only.
And we are in good standing with the IR's. And once those two
things are solved for, the donor advice fund provider will
send a check or stable coins, in our case, to the
nonprofit. And the nonprofit receives the money and they've
now fundraised for the program. So what does this mean
substantially for an individual? Well, it means that you can now
separate the how much should I donate question
from the where should I give whatever amount I
donate in the tax year 2023.
Right. You can now have a holding cell,
effectively, for your charitable assets. So if you have a big
year, one year, right. If you make a ton of money
one year, that's generally when people use dafs, is
they say, I have more money to give in order to mitigate my tax
obligation, then I. I meaningfully know what to do with when it comes to
grant making. And so what they do is they put
a big donation into ADAF, and then they take their time, they grow
it over time. They give a little bit out each year. They
find some organizations that they want to get involved with. They get involved with them,
and then they make some gifts to that organization. Right. The DAF is
this more flexible way of
giving that allows you to make a financial wealth
management planning decision every year about what you want to
give and separates that from, okay. Now, you
also need to decide what causes you're going to support with that
gift. And that's really powerful. It kind of makes
you like your own. It's almost like a family foundation
in a box kind of thing, but with less paperwork and less overhead. And
the nonprofit, the DAF provider, that's endowment in our
case. We are the DAF provider. We're a 501 C three
nonprofit, and we go
off and do all the diligence work, all the reporting work, all the bookkeeping,
all of the investment management, and all the things that you
would normally have to hire people for if you were to open a family foundation.
You don't have to do that with a donor advice fund. And so that's why
DAFs are like the most popular giving vehicle in the US
by year over year growth. And it's like a $250
billion philanthropic
market. So there's a quarter of a
trillion dollars locked up in donor advise funds.
And historically, the largest donor advice fund providers have
been offshoots of major brokerages. So people like
Fidelity, Schwab, Vanguard, Merrill Lynch,
E Trade, if you can name the brokerage, they have a
charitable arm, and that is serving as a DAF
provider. We said, like, well,
we're from the Internet, and we don't really do the
Fidelity Schwab Vanguard thing anymore,
and we want something new that's kind of for people from the
Internet. And so that was the idea behind starting
our own community foundation that is an expert in
taking digital assets, but also is backwards compatible
and does all the same things that you would expect from your normal DAF
provider. And that's. And that's really what a DAF
is in a nutshell. It's like this way for you to each
year, you know, if you are itemizing your tax deductions, you should
be. You should have a DAF that you give to.
That's what we say, at least. It's, like, best practice, although we don't give
tax advice. And, you know, I'm sure there's plenty of disclaimers here,
but, like, if you're somebody who is itemizing
your tax deductions and thinking about tax mitigation and wealth management
every year, ADAP is just another tool in your tool belt
to help make sure that you're not paying more than you should be
to Uncle Sam. Yeah. We want to be paying only what
we're obligated to play, and we don't want to pay more than that.
I think that one clarification that I just want to understand for
my own purposes is when you contribute to a DAP,
and you mentioned, obviously, in this realm, you could have
that DAP invested in bitcoin or ethereum or whatever,
is that tax benefit on the amount you donate
at that time or when you distribute it from the DAF to those.
Charitable organizations, very importantly,
it is only at the moment of donation. Okay,
so the way to think of. Yeah. Of donation to the
deaf. Right? So when you give to a DAF, you're giving to a
nonprofit, that gift is irrevocable. You can
never have that money back. And that is the moment where you get the
tax deduction. Everything that happens after that
moment of contribution to the DAF happens tax free. So if
you put $1,000 into a
DAF and you turn around and you put that into.
Let's take the traditional finance scenario for a minute, and you put it
into spy, right? Which is what is the
sort of, like, medium growth option at most staff providers, is
like a ETF that tracks with the market
effectively. Right. And that
$1,000 grows to $1,500 over the next
five years. Right. You do not get a new
deduction for that $500 gain that has now, that
is now dedicated to going to philanthropy. That growth just
happens tax free. So no tax is owed
on that growth because that growth actually happened while the
asset was being held by a nonprofit, by a tax exempt
nonprofit. But you, the donor, are only ever getting
the deduction at the moment that you make the first gift. Right.
The grant recommendation is not a new donation. You
are recommending a grant from one nonprofit to another
nonprofit. That makes sense. So, basically,
like, it's. It's 1231, and this might not be, this may be too close to
the deadline, but you're like, I don't know who I want to give to, but
I know I want to give. So I'm going to give to adapt so that
I can get the tax benefit and deal with where I want that money to
go when I have the time to do that. And then if you
donated $100,000 and that goes to a million, well, now you've just had
more of an impact. And, you know, your money, your
philanthropic gesture goes for a. That's exactly right.
And it's funny that you should mention 1231, because
we in the crypto space, think
of time and blocks. And
I got an email from my previous donor advice fund provider
in early December that was like, all gifts need to be made by
December 21. So most community foundations will say,
you've got till ten days before. In order to guarantee that it gets in
by the end of the year. We'll take crypto gifts up until the last block
in 2024. Yeah. And what is so
exciting about getting to rebuild this infrastructure from scratch is
we're doing end to end donations, right? So
donation instigation through to liquidation and deposit at the
donor advise fund in one atomic transaction. So if you can get
that transaction into a block, you've got a timestamp
that shows that this donation happened
within this taxable year. And, like, that's how it should be, right?
Like, that's how financial systems infrastructure should work,
is that if it's, you know, it's kind of like if you postmark something by
election day, like it gets counted in the election, right? If you post market
transaction, if you get at that transaction mind,
into a block before the end of the year, that should be a
valid charitable deduction. And that's exactly how we operate. And so I
think there are big things that we do differently because
we're a smart contract protocol based DAF
provider, and then there are little things that we do differently. And sometimes it's the
little things that showcase just how
big of a step forward we're taking in infrastructure
capacity by moving
the DAF into an on chain environment. And
so I just love that example. So sorry for the tangent, but no.
I love that this is why we're here, right? We're here to get into that
stuff. So speaking of, kind of like diving into the details a little bit
more, can you kind of walk us through what it looks like to set up,
adapt just so that those folks that are maybe, maybe thinking about doing it on
1230 or 1231 understand maybe what that process looks
like and maybe if they need to start a couple days beforehand to just get
ahead of it. The good news is
you could theoretically start this on the 31st and get your gift
done. Opening a daf is three clicks away.
I encourage anybody who's listening to this podcast right now
to just open up a browser, open up a new tab, go
to app dot endowment.org, and you
can open a fund in three clicks. It is
super easy. And again, like one of the little things that we do that
it just kind of feels like, duh. But honestly, like,
you still have to fax in paperwork at a lot of community foundations these
days. You still have to go through additional KYC. That's not required
legally, but that like brokerage is required because they have
other compliance concerns because dafts aren't their main product. So
they'll still make you give your social and then go run a background check on
you. And you have to wait a couple days and then you got to talk
to somebody and then you'll get your daf. No, none of that. At
endowment come, you sign up, you connect with an email address,
social media login, Google account, Apple
account, any ethereum enabled
wallet we accept as logins. And you provide some
basic contact info, a name for your DAF and a description, click a
button and we actually deploy that contract on
base automatically for you for free, no
minimums. Wow, awesome. And so, like within
seconds, you have a donor advice fund deployed on chain
that is ready to service inbound assets
as donations. Very cool.
So along this kind of, kind of following that, you
know the discussion through that. You know what, when you do create a
dev, what is the, what does it
look like? It sounds like it's a smart contract that is
holding the funds that are then distributed somehow in some
way. Can you talk about
from a security standpoint if it is smart contracts? Do
you guys have audits on those smart contracts? What does the security
of this look like? Endowments v
two protocol has undergone two different independent security audits.
Awesome. Our v one underwent a single security
audit. We no longer use the v one contracts anymore.
We use a series of multi signature wallets
and hardware wallets behind those multi signature
wallets to manage the entire endowment protocol.
The endowment protocol is a suite of smart contracts.
It's basically one smart contract for every donor advice fund
and one smart contract for every individual
nonprofit. So, effectively, what we're building is an
ecosystem of smart contract addresses that are
serving as, like, our fund management system
for donor advice funds and their recipients.
It's really cool because that means all of our
activity, any financial monetary movement of
capital, whether on chain or off chain, is
represented through some on chain transaction. So we create
either a receipt token if you're moving into off
chain investments for DAF assets, or we are actually holding the
underlying digital asset in a 46 26
vault. That is a pool that each
DAF gets a receipt token for their share of the pool of invested
assets that are owned by endowment, the nonprofit. And so we're
basically using smart contracts as a generalized on chain
custodian and having endowment bring its tax
status as the administrator of that protocol. So you'll often
hear about protocols, have the nonprofit Swiss
foundation, that is the administrator of the protocol. They keep the lights on, they
keep the thing running. They've got some people who are making sure
that all of the contracts are up to date, that they're
finding bugs, fixing bugs, doing redeployments
as necessary, increasing function functionality, so on and so forth.
That happens at the swiss foundation. And then you have the labs
entity, and the labs entity is the one building new versions of the
protocol, right? The one doing all of the sort of like,
venture backed activities, the sales, the marketing, all of the different things
that you would expect a software company to do.
And they have that two entity architecture. We at endowment have the same thing. We
have a labs entity. It's called Endowment Tech. And they build the
protocol and license it to the
foundation entity, to the nonprofit entity. But in our case,
instead of a swiss foundation, we have a us 501
nonprofit public charity and public benefit corporation
based out of California. So we have added compliance
hurdles to go through, as you can imagine, by not housing our
nonprofit entity offshore. So we. We
go through extra lengths to make sure that we're meeting all the compliance
requirements of being a public charity and 501
in the US. That means we have
more intense requirements around proof of reserves
and financial audits. We just finished our first independent third
party financial audit under California state law for the
California state attorney general it turns out the math does
really, the chain does really good mathematic, and it does it right
every single time. We were super, super proud of the results of that audit,
and we have some great blog posts about it if you want to read about
more of that. But we also have a constellation of
custodians, depending on what it is we're holding.
We very publicly talk about taking in anything with a liquid
market. If you can sell it, we'll take it
as a donation, basically.
And in order to do that, we have to have a
wide range of different custodial options, whether that's unchained or
Anchorage or Coinbase custody, or
even being. There are basically
no other community foundations out there in the world that have
comfort with multi signature wallets, with the
ability to self custody assets with decentralized exchanges, and
liquidating on decentralized exchanges with NFTs and
NFT custody, or participating. Participating in NFT
auctions at different NFT houses around the world.
That's required us to build this network
of different custodians. So we use USDC
as our base token for the entire protocol. We chose
USDC because they're the gold standard in us based compliance when it
comes to stablecoin issuance. We can audit their accounts.
We know that they have reserves, they have great resiliency when it comes to
DPEG risks, really strong custodians.
But on top of that, we have our own Mercury bank accounts that are part
of sweeper FDIC insurance pools that give
us up to $5 million in coverage of deposits. We have
our own insurance requirements, both DNO and then
we are constantly working on tech and cyber insurance, crime
insurance, all those different kinds of things that are commonplace at
community foundations around the country, but are not nearly as complicated
because they're nothing holding as complex of assets. And so because
we've built this specialty and complex asset custodianship,
we've had to build a partner network that enables us
to go out and say, we can custody those things as a tax exempt
501. And so whether
it's buying stocks and bonds and equities for our
traditional investment portfolios for DAF assets at
Fidelity, or it's all the way up to us self
custodying rocket pool Ethan and
offering that as a DAF asset option,
we're really trying to build this
muscle of how good can we get at
complex asset custodianship? And we're even working into things
like LP interests and venture funds, S Corp and C
Corp interests, property, real estate
houses, cars, boats. There's no reason why
somebody should get turned away for wanting to give something away.
What that requires is a community foundation that is very comfortable
with securing and custodying complex
assets. And historically, that's been reserved for the really, really
large providers. But because we've gotten all this experience with
crypto, it's really taught us how to do this across the entire
spectrum. Happy to dive more into any of
those different risk areas. We also have a great risk
framework published on our docs site. If you go to docs dot
endowment.org and you click on governance, you can read our Risk
framework, our controls
and different policies and procedures,
our code of conduct, all of the extra layers of
security that we have to put on top of the fact that we have this
audited smart contract protocol that
involves a lot of people. You got to have the internal controls as well.
There's many, many different areas to risk and compliance. But
the 501 is our Faberge egg. There's nothing to
the protocol if we can't give a tax exemption. And so we have to protect
that tax exemption at all costs, basically. And that
means being compliance first from day zero. And
so we've really taken it to heart and tried to
build an expertise in that kind of custodial security
as an administrator of a protocol that necessarily
must be a custodian in order to provide the tax benefit.
I love that. And it sounds like you guys are doing a really good job
of drawing tech from different aspects of the industry as well, because it sounds like
the way that you're describing the way that these donations work from the
crypto side, it sounds a little bit like a liquidity pool where you're giving people
receipt tokens for their share of that pool or for the share of the assets
that they put in as a way to on chain
identify how much, if that pool already distributed, how much of
that you're owed. Very cool, right? Like
there's this feeling of, you know, you go to.
To a community foundation, or you go to a, you know,
a commercial daft provider like Schwab or fidelity or vanguard
or National Philanthropic Trust or Silicon Valley Community foundation, or, you
know, there are all these major, major providers, and they're great.
You know, like, we stand on the shoulders of giants, right? But, like, their
infrastructure is limited in that they don't have that natively
transparent capacity. You're trusting
that they're holding this underlying asset and that they've
credited this much of that underlying asset to your account.
And what we have basically is like, qualified custodian best
practices like, what does it mean
to be a financial institution in the US? It's
like you're segregating accounts,
you're keeping good records, you're doing full reporting and disclosures to
the government. You're doing. All these little things add up to being a
qualified custodian. And our point
of view is the chain helps qualified custodians do their job
more transparently, more easily, and with
less trust required from their clients of their
capacity to operate in a trustworthy manner.
It's that verify, don't trust us state.
And so for us to have, if you have the knowledge, if you have
the. The curiosity, if you have the depth, the technical depth to
go in and look at the contracts, you can see every
dollar that you've donated and how it's attributed and how it's allocated,
and that the underlying resource is sitting there waiting
for you to claw it back and give it to a nonprofit. And that's
also big in the world of philanthropy, where people make a ton of
pledges but don't actually follow through on those pledges. And
it's like, hey, we've got the receipts.
If you give on endowment, you gave, and we
can, hey, come
look at the chain kind of thing. And I think
that's part of what it means to try and have
crypto cross the chasm. Right? That's what it means to
try and communicate what the value of this
technology is in a way that doesn't require any understanding of the underlying
technical mechanics of it, is to say that, like, this helps
people be held accountable for the actions that they say they're
taking and to
not allow them to take advantage of,
you know, the heartstrings of the community by saying, I
pledge x dollars and never giving them, because people. Don'T always fall off on
that. They're like, oh, great, that person is pledging it. But that doesn't mean that
that actually went through. So that's very interesting. It's,
again, speaking to the ethos of the tax and accounting professional, where it's trust but
verify. I can say I trust you, but I still want to
verify under the hood that everything is on the up and up. And what you're
saying it is. So. Well, one thing, just to throw in
another example here, which is one of my favorite
partnerships that we did from last year was directly with
Etherscan, and we've now integrated
the entire endowment contract suite into Etherscan
and constantly update it. So if we have public labels
for contract addresses, we continually update those in Etherscan.
And that means when you go to Etherscan, a third party, right? A third
party, publicly auditable blockchain explorer, and you
look at an endowment transaction, you can actually follow the
money yourself in plain English to see
how we are moving it into the hands of the nonprofit.
I think, like, the
prior status quo is
comparatively way less sick.
Like, the prior status quo is pull up the organization's
990, which is their tax filing, and look at
their aggregate grant making reporting. So they bundle everything. They
don't show you individual transaction level donation
events. They just bundle everything. They say, this is how much we gave to this.
This is how much we gave to that. This is how much we gave to
this other. Right. But you can't see this daft.
Gave this much to this, and then it moved out to that, or
that, then went and put it and invested it and then moved it out to
their bank account, right. No, there's not that same level of transparency. And so
for us to be, like, really pioneering
this idea of transparent philanthropy that's still
anonymized by leveraging the blockchain and
a mix of, like, hashed identities with, you
know, labeled contract addresses, it
means that anybody can come in, like, see for
themselves that this philanthropic activity is happening in
a way that otherwise, you have to trust the community foundation, or you have to
trust the government reporting, or they're reporting with the government. And,
like, we all know that that's pretty slippery. So
I think there's something really powerful in
and real in moving philanthropic activity on chain,
because it gives less wiggle room for people to abuse the
system. I love that. And so, speaking
to this, where do you see the
intersection of crypto assets and philanthropy happening
heading? Do you see it? What innovations or trends might
we expect to see in the future? And, I mean, obviously, this is an innovation,
what you guys are doing, but where do you see this headache in the next
five to ten years? I think in the next five
to ten years, youll see
a crypto native community foundation become a
top ten nonprofit in the United States.
Theres just so much capital formation thats going to happen around the tokenization
of everything that I really struggle to see
how the
current top five big five community
foundations that sit close to or inside of the
top ten of nonprofits by size
in the United States isn't joined by a crypto
native version of a similar kind. And
obviously, we hope that's us, right? That would
be sweet. That means we're doing multi billions of dollars in
grant making entirely on chain, every year.
And that would be just massive, right? That would be huge.
But I also think that in the same way
that we went from offline to online, and
the consumer's expectation also went from offline to
online, we're going to also see a transition from
online financial services to on chain financial services, and the
consumer expectation will follow.
And in that regard, I think theres this opportunity
to say not only will crypto based
philanthropy, digital asset based philanthropy start to push up
into significant percentage of
total giving market share right now, its single digits or
basis points of total philanthropic
giving, but seeing it push up into
competing with traditional asset giving. But we're also
going to see, I hope
that we will see a large migration of people moving away
from more opaque institutions to institutions
that are built on community governance and inherent
transparency from day zero. And that will be the
disruptive force that drives the transition from online
to on chain over the next
five years. A lot can happen. And
yeah, I'm really excited about it. I think it's just
so important that as we make these upgrades to our financial
infrastructure, that we also not leave
the communities and the organizations that are often
left behind in new technology behind
when we have the power to do something about it now.
And I think in some ways that
feels like, just on a very personal note,
like my fate or
destiny, and to some degree also
endowments. Fate or destiny or reason for
existence. That's awesome. It's continuing discussion
on forward looking what are endowment strategic goals for the next
few years? And are there any new features or expansions
planned within the platform? Oh, yeah. I mean,
one of the things that's super unique when it comes to endowment versus other
DAF providers is that we're one of very few DAF
providers with a full time venture backed engineering
team working on the underlying technology
that's powering the DAF provider. Most DAF
providers are either entirely nonprofits
and don't have the labs entity
or they are.
Their engineering team is part of a larger brokerages
engineering team and the DAF is the last thing they work
on. So not only do I
like there are things that we have planned, but then there are also the things
that we don't even have planned yet that we can't even dream of yet
because the market isn't
mature enough yet for those ideas to blossom. Kind of like
Uber. Before there was Uber, nobody dreamt of Uber.
One of the things that I love about what we've done, we have. One of
those examples is the universal impact pool. So people oftentimes rag
on dafts for people coming dropping money off at
a DAF and never to be seen again. The money sits there and it never
actually makes it to a nonprofit. And donor advice fund
providers generally don't have any capacity to do anything about that.
We said, that seems silly. How can we use the new
on chain technology to create a better
end of life scenario for idle dafs, for dafs that have been
forgotten? What we do is we say if a DAF goes
idle for two or more years, that we
start shaving off of that DAF and putting it into the universal impact
pool. The universal impact pool is a donor advice fund
in and of itself. It's actually a community fund. It's got a mission and a
sort of stated grant making purpose. So it's kind of like a field of interest
fund. And we have it
programmatically give grants every quarter
based on quadratic matching. So we look at all of the
activity because we have on chain events for every single gift and every
single grant. We look at every on chain event that happens over the
course of a quarter and use that as a voting, as
a voting round for a quadratic match.
We literally partnered with Gitcoin to use the same algorithm that
powers gitcoin, GG 20 and GG
into the future, get coin grants into the future and said,
okay, let's have that power and ecosystem wide
matching mechanism for all the gifts that are happening on
endowment. And that does two things. One is it incentivizes nonprofits
to do their fundraising on endowment, because the more people who give on endowment,
the bigger the match will be from the universal impact pool. And
secondly, it incentivizes
staff holders to be active philanthropists to say,
hey, don't get pruned into the universal impact pool.
Or better yet, give into the universal impact pool on your own
volition, rather than having us
trim it for you. And hopefully that will inspire you to do more giving.
Because what we know is that when people are more active with their daft, they're
more likely to top it back up. This idea
that there is you only want people to put things into your DAF
and you don't want them to put it out is part of why
dafts get a bad rap. And so what we're saying is like,
the problem isn't actually the legislation or the regulation around
dafs. It's not that you need some minimum payout period. It's that you
need DAF providers who are
incentivized to get paid when money goes out the door.
And so the problems with the model, not with the
regulatory environment, and we're really trying to
build from the ground up in a way that tries to address
some of those criticisms. So really, our focus for the rest of the
year is to, is to really make sure people in your
audience and beyond know that endowment is
a crypto native death. But you don't have to know anything about crypto to use
endowment. We are, we like to call ourselves boomer
proof, and anything your old
daf does, endowment does. And really
what we think is that anybody who cares about
the experience that they have when they go to make a grant should consider using
endowment because it's really one of the best user
experiences in the industry. We'll continue to polish
that, continue to work on it, then. I think the other thing that's big and
down the line is we really want to decentralize our governance of our board of
directors. There's no 501 in the country right now
using a token based electorate body to
elect its board of directors. And it seems only
natural that we would decentralize our governance in that way and
have a decentralized accountability mechanism and continue to decentralize
the operation of the protocol itself. So
there's lots of progressive decentralization to come. But
even before that progressive decentralization, our focus is on making sure that we
have a large, sustainable, durable,
thriving, independent community foundation that is
providing a real service to a real group of
clients, and then the decentralization
will follow. So that's sort of what's ahead for
us. I love it, and I love the ethos of kind of
this dow managing things
and having that be decentralized. It's so
important in these types of ventures because you can really have
that much more impact by making it not only
transparent but also decentralized. And I think that it's something that's much needed
in this space, and it can also provide a really nice tax benefit as well.
So I'd love to kind of close things out. I know. I want to respect
your time, just with any final thoughts that you might
have and anything youd like to share with our audience about the power
of blockchain and enhancing charitable giving.
Preston well, so everybody whos listening to this podcast either has clients who have
crypto or have crypto themselves.
And what I want everybody to know is
that you should never worry about whether or
not you could ever donate some of that crypto to
charity. We will find the liquid market for it,
even if it's like pre launch tokens or venture capital
interests. We are interested in the most creative, most complex
donations that people can come up with. And really we see our niche as
complex donations with our bread and butter being in crypto.
So if you can dream of a gift that you want to make, we want
to hear about it. And if somebody approaches you with a gift that they want
to make, or if they have a perfect DAP asset, keep
in mind this conversation and remember that you should never say no to a
donation. The other thing I'll say is,
we're really looking forward to bringing wealth
managers and tax advisors into a
collaborative experience with endowment DAff holders. So
endowment will also be unique to your audience
insofar as we have new, powerful collaboration
tools where you can queue up the perfect donation, the right
donation at the right time every time for your clients
by getting to collaborate with them in the DAF provider
themselves. And so you queue up the right transaction, they go in one click,
approve it. And I think a lot of times when we talk to CPAs
and FAS and RAs and family offices, it's
like there's this email thread that happens where they talk about what they want to
give and then hopefully the translation doesn't get lost. And then they give
something and it's like, oh man, they gave the wrong thing, right? We are eliminating
that. So you should never say no to a gift. And better yet,
you should queue up the gifts that you want to give based on what
you already know about your client's tax situation. And
endowment is really the only place where you can do both of those things. And
so we hope we'll see you and your clients with us this giving season,
or even before then. If you have a DAP that is already funded at another
provider migrating, super easy. But
overarchingly, we're really existing just to be the
best possible partner for people in your audience to do complex
donations. I love that. And so for listeners that are
interested in establishing a DAP or exploring more about endowment, what's the best
place? Or where can they find additional information for that?
The easiest place is our website, of course, endowment.org dot. You can follow us
on Twitter endowment e n d a
o m e n t d o t o r g so
endowment.org spelled out. Follow us on Warpcast or
Farcaster. Whatever forecaster client you use at
endowment, you can join the channel
philanthropy. If you're a Warpcast person that's hosted by
yours truly. And you can always, of course, join our
discord or check out our docs. Discord gg
endowment that's endaoment
and docs dot
endowment.org dot. So plenty of
resources you should be able to find us. We're also deeply working on our SEO,
so even if you're not trying to find us, you should find us.
So yeah. And feel free to reach out to me. I'm
obbyheger on twitter. He on
warpcast. Or you can email me robbyndowment.org
dot awesome. Well, Robbie, I want to thank you so much. This has been an
amazing conversation. I think there's a ton of value in here and I'd encourage anyone
who's been listening to check that out and to start to
advise your clients on dapps and the benefits they can get out
of them. And if they're in crypto, this is the place to be in down.
So oh, I have one Easter egg. Can I get one Easter egg
before we close? We just launched an educational
website as well. It's very tongue in cheek. It's called
daft Squatch XYz. So d a
f, squatch s q u a T c h
xyz. If you're looking to educate yourself or your clients
about dafs, this is a free resource that we made. It's got a little bit
of endowment mentions, but it's mostly endowment agnostic. And it's a great
way to learn in a fun way about what a daf is.
I love that. And you know what? You know, being partners of the crypto CFO's
community as well, we should definitely set up some, some CPE content as well for
those, for sure the counts to get actual credits for this, this stuff
and be able to put that towards their
biannually credit threshold. So thanks again,
Robbie. We really appreciate your time and we'll chat again soon. Thank you.