While a lot of excited web3 chatter is coming from new approaches to finance, media and music, the social impact industry is another sector making waves for doing things differently. Endaoment, a fully on-chain public-good 501c3 nonprofit, is one such startup at the forefront of making positive change using smart contracts.

The company is helping bridge the gap between cryptocurrency and philanthropy by enabling donors to make fully transparent and tax-deductible donations to nonprofits with any type of digital currency or asset. In two years, the company has given over $50 million to charities, is working with more than 7,600 organizations and has almost tripled the efficiency rate of non-profit giving, according to the company and Chief Operating Officer Zach Bronstein

“We wanted to create a system where donors who have crypto could approach [Endaoment], make a gift in any form of crypto they have—crypto currency, a nonfungible token (NFT), or perhaps visual assets that have not yet even been invented,” Bronstein said to me recently in an interview. “If we can receive it and we can liquidate it, we’ll take it. We’ll then give the donor a tax receipt for their donation and allow them to say, ‘I want you to send this money from my donor-advised fund to the Natural Resources Defense Council, to Planned Parenthood,’ to whatever 501c3 they want. We support all of the almost 1.5 million different accredited 501c3s in the United States.”

While the U.S. had been the primary focus for Endaoment, a recent strategic union gives them a global reach. “We were very pleased to announce a partnership with a U.S. 501c3 called Global Giving,” Bronstein said. “Essentially what they do is they’re an international grant maker and diligence provider. So they’ll go out there and work with nonprofits in over 150 countries, do the due diligence on them and prove to the IRS that they are 501c3 equivalent if they were in the states.”

The partnership added about 4,000 international organizations to Endaoment’s platform, Bronstein said. Prior to his role at Endaoment, Bronstein worked as a teacher and tutor for nonprofits and was a field finance manager for Morgan Stanley in New York. He learned firsthand how nonprofits can be technology adverse and slow to move money as they are relying on banks and checks to arrive in the mail.

Enter blockchain technology. The speed with which nonprofits are now able to deliver money across the globe and use the tech in other ways to evolve their operations are only limited by their ability to see (or not see) peer-to-peer distributed networks as the future of giving.

“When you move to the blockchain space, funds are delivered essentially immediately,” Bronstein said. “The slowest part of our process is actually making the bank wire, which takes about 24 hours. That was especially important when we were fundraising for humanitarian efforts related to the war in Ukraine. Organizations needed money immediately so they could purchase goods and send them to Ukraine. Already it’s going to take a couple of days or weeks for things to arrive, but if the money is going slowly to [the organizations], we’re only delaying the process of actually getting started. So speed is really important there.”

Along with speed, blockchain also delivers transparency that Bronstein believes will help rebuild trust in the nonprofit arena.

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“Endaoment for me was really my first foray into the web3 space, learning about blockchain technology, and understanding that there’s this indelible publicly accessible ledger that records details of every single transaction,” he said. “It means it can be leveraged to create a new kind of transparent nonprofit that was previously unheard of. Everything a nonprofit is doing—any donation to the nonprofit, any grant coming from the nonprofit—is all done in a transparent way. Anyone with sufficient knowledge of the blockchain or how to use an application like Etherscan can really get any and every detail about our organization, and in that way, essentially conduct a public audit of our system.”

Bronstein said philanthropy is becoming yet another industry through which more people can be introduced to web3, hopefully generating more trust in both nonprofits and web3 as a whole. As for Endaoment’s governance and operations, the firm has committed to doing everything it can on chain.

“We want to make sure the decisions we make that impact on-chain activity are not just donations in and grants out,” Bronstein said. “We’ve been working to move our board of directors—which every nonprofit needs to have—into an on-chain environment. Whenever they are voting to confirm board minutes from a previous meeting or eventually when we hold elections for board members, that will all be done in an on-chain way. Even if we’re not using an on-chain voting mechanism, we’re still posting to the Ethereum blockchain the results of whatever internal decisions we make. In that way, we’re hoping we can attract people that the nonprofit sector has lost in recent years because of concerns of malfeasance and a general lack of trust.”

For Endaoment, part of rebuilding that trust starts with moving money swiftly and transparently through its platform.

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“Since launched in late 2020, we’ve raised over $50 million for charity, which has been awesome to see,” Bronstein said. “One of the key critiques of donor-advised funds that existed prior to Endaoment’s creation was really that throughput is lacking. The average donor-advised fund disperses somewhere around 22 percent of its balance in any given year. Of all dollars that we’ve raised since inception, we’ve granted out over 65 percent of that, and we’ve only been around for two years.”

In terms of its donations, Endaoment accepts all currencies and pretty much any type of digital asset you can think of, especially NFTs. “We currently accept NFTs all the time as donations,” Bronstein said. “Sometimes we’ll auction them off and the proceeds will go into a donor-advised fund or go directly into an organization.”

He continued, “We also work really closely with the folks at Art Blocks and they’ve created a lot of documentation that prompts their artists when they’re creating a generative art mint to hook up the mint to an Endaoment smart contract—whether that’s their personal donor-advised fund or sending money directly to an organization. What we’re seeing is people creating a generative art mint, selecting an org as a charity recipient of that mint, and then just having .002 ETH go there 5,000 times—one for each mint.”

All that’s needed is a recipient's smart contract address and they’re able to receive funds.

“When donations are made, that functionally is interacting with a smart contract and calling a function from that smart contract called “swap and donate,” swapping whatever tokens you’re donating and then donating to that smart contract address,” Bronstein said.

Despite being “fully on-chain,” bank account information needed to wire money to most nonprofits is never listed.

“No matter how on-chain we get or how close to embracing the DAO part of our name, there’s always going to be a need for a compliance layer, because at the end of the day, most nonprofits want to receive their money as bank wires,” Bronstein said. “That means we actually need to have their banking information in order to send along. That information is considered personally identifiable information and cannot be posted on chain.”

Given Endaoment is also a 501c3, their funding needs to come from somewhere, and according to Bronstein, it comes from a combination of donations and platform revenue. “We rely on generous donations from our donors to operate, and in addition, take a small percent of all money that moves through our platform. We take 0.5 percent at the moment of donation—so when it moves into the platform—and 1 percent when it moves out of the platform, or the granting fee. Importantly, we wanted to make sure we recognized the majority of platform revenue on the way out because we think that that incentives us as an organization to move money as quickly as possible out of organization and into the hands of other 501c3s that are out there boots on the ground, getting their hands dirty.”

Correction: This story was corrected June 7, 2023 to refer throughout to Zach Bronstein and in two instances to Endaoment