How charity tech disruptor Little Phil ensures donations go "directly to the cause"

Disenchanted by middlemen taking large chunks of micro-philanthropic donations intended for charitable causes, the co-founders of Little Phil - short for Little Philanthropist - set about fixing the problem with the help of technology.

Established in 2017, the Gold Coast-based social enterprise employs the technology through its software to enable donors to track their donations with complete transparency from start to finish, removing the possibility of third-party fundraisers taking a portion of the funds raised.

While continuing to grow its presence in Australia, the not-for-profit disruptor has turned its attention to expanding into the Americas, where it is set to embark on several collaborative projects with leading US non-fungible tokens (NFT’s) trading platform Xillion.

“We started Little Phil with the goal of increasing trust and transparency, which led us to question how we could, with a high degree of confidence, assure someone who raises $500 to fund food in a school for a month that it goes directly to the cause,” Little Phil co-founder and CEO Josh Murchie told Business News Australia.

“Most charities will use a third-party impact assessment auditor if they want to do something like that. But how are you going to, or why would you bother, spending thousands of dollars to send somebody out to a small village in Peru, for example.

“It doesn't make sense, so we ended up landing on using a technology solution, blockchain, which can bring more trust and scalability. We’ve been working in the industry for almost five years now, and we’ve noticed there’s actually a lot more problems outside of this element.”

The inspiration for Little Phil came about from an experience Murchie had while volunteering in Peru.

After going back to complete his Master's in 2017 at Griffith University, the founder discovered that his peers were far more socially conscious than when he was completing his undergraduate.  

While running the entrepreneur club at Griffith, Murchie also became involved in volunteering and, after taking part in a couple of overseas trips, ended up taking out the Australian Student Volunteer of the Year Award.

On one of the overseas trips to Peru where he was teaching English to school kids, he was exposed to the realities of small charitable work – the kids weren’t given lunch two days a week due to the lack of budget.

Describing himself as a ‘problem solver’, Murchie began to question the realities of how charities fund causes, after becoming despondent with some of the percentages kept by third parties.

“I could see that the next generation really wants to get involved in this, and they are very passionate about making a difference. But, I could also see that people just don't trust charities,” he said.

“I started looking more into that industry and saw that there were a bunch of middlemen, usually the guys on the street, and most of the time they're telemarketers and they're not actually the charity but a third-party marketing company.

“They usually take the lion's share, so 60, 70, or 80 per cent or even more, and that's a crappy experience. I don't know anyone that likes being stopped by them or being guilted into giving, and at the end of the day, you don't see where your money goes anyway.”

In Australia, there are currently 60,000 charities registered with the Australian Charities and Not-for-profits Commission (ACNC), but it is loosely estimated that there are another couple of hundred thousand unregistered entities.

Little Phil is not targeting the top one per cent of charities thta secure roughly 90 per cent of the funding, but is instead looking to bring in new revenue streams for smaller charities – which in Murchie’s experience are usually set up by good-hearted people who are trying to solve a problem they genuinely care about.

A possible solution lies in what Murchie outlines as “democratising corporate giving”, which sees companies moving away from the top-down approach of choosing one specific charity partner and instead breaking up the lump sum and empowering each employee to choose the charity they would like to support.

Little Phil’s goal is to empower charities to increase their overall impact while allowing individuals to select causes that mean something to them.

Murchie believes substantial compliance savings can be made by using blockchain technology. The social enterprise has put several safeguards in place to ensure the money will support legitimate charities; it conducts KYC (know-your-customer) and sanctions checks, and the charity has to be registered with the ACNC.

With the ability to donate to 59,000 nonprofits through Little Phil’s an all-in-one impact platform, people are encouraged to share their ‘good moments’ afterwards to increase the network impact.

After recently completing a pilot with Deloitte, Little Phil is finalising deals to roll out its blockchain technology with a couple of similar-sized companies.  

By scaling the entirety of the process of how charities previously operated back to basics, Little Phil is pioneering an innovative new way of funding charitable organisations.

This involves working with emerging technologies, primarily blockchain and distributed ledger technology, as well as cryptocurrencies, non-fungible tokens (NFTs) and decentralised autonomous organisations (DAOs).  

Having got involved in the Web 3.0 space in 2017, Little Phil is now benefitting from the vast amount of knowledge the team has built up over the years, with others in the sector only just beginning to get a handle on the tech.

“From a Web 3.0 perspective, we're doing a few things outside of just allowing cryptocurrency donations, which is the norm, at least in our world now.

“We work around embedding impact into NFTs – for example, we work with a crypto game called ‘LegendsOfCrypto’ (LOCGame). Each character in the game is an NFT, which is sold to individual players, with 10 per cent of whatever is sold coming back to funding charities or causes on Little Phil.

“Another thing with NFTs is you can embed royalties into them, which are enforceable by code and used by charities to attract famous ambassadors.”

This potential revenue stream has led to Little Phil partnering with trading platform Xillion, which will mean working with multiple visual artists, music stars, sporting codes, and other celebrities to launch specific NFT’s aligned with charitable causes.

Little Phil will receive a percentage of every deal in exchange for advice on the project alongside some consulting and sharing of expertise.

Last November, Little Phil partnered with Xillion on its first NFT project with Korean music star DJ Soda, raising an estimated $350,000 in less than two weeks.

“We have been at the forefront of applying blockchain technology to charitable causes, and our partnership with Xillion came about via our ability to show the artists that they represent transparency with where their money was going and direct connectivity with the charities they support,” Murchie said.  

This partnership is designed to provide not-for-profits access to alternative fundraising streams outside of traditional avenues and aid them in diversifying their revenue-raising activities.

It will also provide charities with an ongoing and recurring revenue stream by collecting money associated with each transaction. 

In addition, Little Phil is embarking on several initiatives in South America, which will see its blockchain technologies made accessible to charities in the region.

“The partnership in Paraguay came about during a visit to the country last year where I was invited to demonstrate the platform in front of key stakeholders - this then led to the opportunity to develop projects to support a number of charitable initiatives being implemented using our technology,” Murchie added.

Murchie believes the technology around Web 3.0 is becoming more adopted and understood and thinks the transition is inevitable, akin to people switching from fax machines to email, but sees Australia as slightly behind the curve in terms of adaption.

In terms of the wider adoption, Murchie sees NFTs as being under-utilized and anticipates the technology will be adopted much wider in the near future, especially concerning intellectual property.

Supported by the Queensland government's Ignite Ideas Fund, Little Phil is looking to stay at the forefront of this innovative technology to seek a better solution for businesses and individuals to support the not-for-profit sector.