St. Jude using crypto to reach younger donors

The first crypto donations to St. Jude Children's Research Hospital came in at a trickle. But in the nine months that followed, the hospital has taken in $1 million in digital currencies.

While this is still a far cry from the $2.1 billion St. Jude raised in 2021, it's a strong start for a project that required an actual physical bitcoin prop to get executives to buy in.

"It was a challenge internally to get the executive team to understand the opportunity. So I bought some actual Bitcoin coins. They're just pieces of lead but it started the conversation," said David Jacques, the Memphis, Tennessee-based chief information officer for ALSAC, the fundraising organization of St. Jude Children's Research Hospital. ALSAC has made cryptocurrency part of a new five-year $11.5 billion campaign to fund research into cures for childhood cancers and other diseases.

St. Jude and ALSAC hope to benefit from a jump in cryptocurrency donations and reach younger donors as digital asset-based philanthropy goes mainstream.

ALSAC works with the Giving Block, a firm based in Washington, D.C., that helps nonprofits accept cryptocurrency donations. Shift4, an Allentown, Pennsylvania-based payment technology company, in early March announced a $54 million deal to acquire the Giving Block to expand its reach in cryptocurrency fundraising; and a $540 million deal to buy the Israeli cross-border e-commerce payments company Finaro. Expected closing dates were not announced, though Shift4 reports the two deals will contribute more than $35 million in adjusted EBITDA in 2023.

Shift4's clients include hotels, travel and public facilities such as stadiums and arenas, and its pending acquisition of the Giving Block will enable it to pair cryptocurrency commerce with philanthropy.

"Crypto donations is a fast-growing business in its own right, we love the use case there," said Jared Isaacman, CEO of Shift4, which plans to use Finaro's technology to add international payments technology and merchant services for its base of 200,000 merchants.

Peter Barta

The Giving Block will provide cross-selling opportunities by combining donations with card acceptance for its existing clients as well as customers of Shift4 and Finaro. "You don't have to believe cryptocurrency will change the world. You just have to believe it will be prevalent," Isaacman said.

St. Jude and ALSAC partnered with the Giving Block to launch its cryptocurrency donation support in July of last year, and Jacques said the addition of Shift4 would allow "co-innovation" as digital assets become a more important part of the hospital's fundraising.

ALSAC presently accepts donations to the cryptocurrency exchange Gemini, which instantly converts the cryptocurrency into U.S. dollars before going into St. Jude research and operational funds.

"Our current objective is to convert to dollars as quickly as possible," Jacques said, adding that ALSAC hopes to expand beyond that fast conversion posture in the future to deepen its brand within the cryptocurrency community.

ALSAC's plans include identifying ways to benefit from hodl, which refers to investors who hold onto cryptocurrency for an extended period of time. ("Hodl" spelled out is "hold on for dear life.") This direct engagement with cryptocurrency investors could lead to further partnerships, Jacques said.

ALSAC and St. Jude have also taken part in recent nonfungible token fundraisers, including an auction for digital pieces of "outer space images." NFTs reside on a blockchain and tokenize something tangible, creating a one-to-one transaction between the buyer and seller. The asset, such as the space imagery in the case of the St. Jude auction, is the currency and the creator earns revenue through the sale. Firms like Visa, Mastercard and Ripple are among the companies strategizing how to use NFTs, with incentive marketing being a primary use case.

St. Jude hopes to expand its NFT strategy beyond receiving proceeds from another party's sale to a more direct role, such as using digital art from its patients as part of an NFT auction. This would involve upgrading technology to support connections to crypto communities, payment processing, and managing its own NFT auctions.

The ultimate goal for ALSAC and St. Jude is to attract new generations of donors such as millennials, who have shown a propensity both for investing in cryptocurrency and for charitable giving.

A 2021 study from Fidelity found 45% of cryptocurrency holders donated more than $1,000 to charity in 2020, compared to 33% of all investors. The same study found 50% of millennials say cryptocurrency is a smart investment, compared with 18% of Generation X and 6% of baby boomers. And 90% of millennials say charitable giving is important to them, compared with 74% of the entire population.

"It's huge to get millennials," Jacques said. "They've been a harder market to reach through traditional channels."

And the overall market for crypto donations is growing exponentially. For example, Vitalik Butherin, a co-founder of Ethereum, recently donated more than $1 billion in Ethereum to India's Covid Relief Fund. Ukraine on Thursday passed a law that allows banks to operate cryptocurrency accounts, in part to accommodate the more than $60 million in cryptocurrency donations that have poured into the country since Russia's invasion. And Fidelity Charitable reports crypto donations reached $331 million in 2021, up more than 1,200% from $28 million in 2020.

The Giving Block reports it processed about $70 million in cryptocurrency donations in 2021, up more than 1,500% from $4 million in 2020. The average cryptocurrency donation was $10,455 in 2021, up 236% from $3,100 in 2020, according to the Giving Block.

"If you’re in the camp that says crypto is hot, then charitable donations are a logical extension of that," said Don Apgar, director of the merchant services practice at Mercator Advisory Group in Indianapolis.