From Founder to Philanthropist

How I Give is a Founders Pledge podcast about entrepreneurship, philanthropy and social change. We talk to founders, philanthropists and social innovators about what drives them, how they are rethinking social impact, and how we can do philanthropy better.

Episode 6

Tackling poverty amid COVID-19 with Michael Faye, Founder of GiveDirectly & Taptap Send

Michael is a co-founder of GiveDirectly, a Founders Pledge-recommended high-impact organisation and the first and largest nonprofit to allow donors to send money directly to the world’s most vulnerable. Since 2009, GiveDirectly has raised over $450 million for delivery to the extreme poor and those affected by disasters. Michael also co-founded Taptap Send in 2018, a company providing a new way for immigrants to send money from Europe to mobile wallets in emerging markets.

In this conversation, Michael shares his story, first-hand observations of the impact of COVID-19 on his organisations, and insights into how founders and philanthropists can help tackle some of the world's greatest challenges.

This interview was recorded at the Treasury Summit in July 2020.

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Post-show readings:

• See the incredible impact GiveDirectly is having by reading stories from its COVID-19 relief recipients in Kenya.
• Learn more about GiveDirectly's work and how you can contribute.
• Read our summary of research by GiveWell about how cash transfers can help alleviate poverty.
• Take a look at our blog about how COVID-19 is affecting people in low- and middle-income countries.

Contact us: podcasts@founderspledge.com



Transcript

[00:00:00] Philip Kasumu: Welcome to How I Give, a Founders Pledge podcast about entrepreneurship, philanthropy and social change. My name is Phillip Kasumu and I head up Growth across Europe for Founders Pledge. On this podcast, we talk to founders, philanthropists and social innovators about what drives them, how they're rethinking social impact and how we can do philanthropy better.

So today's guest is Michael Faye, who is a FinTech founder, philanthropist and more. His company Taptap Send, founded in 2018, is a new way for immigrants to send money from Europe to mobile wallets in emerging markets. He's also the founder of GiveDirectly, a recommend charity by Founders Pledge, the first and largest nonprofit that lets donor send money directly to the world's most vulnerable.

Since 2009, GiveDirectly has raised over $450 million for delivery to the extreme poor and those affected by disasters. In this conversation, Michael shares his story by getting into FinTech, first-hand [00:01:00] observations of the impact of COVID-19 on his organisations, and his insights on the role that founders can play in tackling some of the world's greatest challenges.
This interview was originally recorded at the Treasury Summit back in July, but before we get into this incredible conversation with Michael, here's a few words from our founder.

David Goldberg: Hey everybody. Thanks for tuning into the How I Give podcast. I'm David Goldberg and I'm the founder and CEO of Founders Pledge, a nonprofit on a mission to help entrepreneurs do immense good.

We are a global community of more than 1,400 entrepreneurs finding and finding solutions to the world's most pressing challenges, just like the one we face today. Since COVID-19 brought the world to a standstill, Founders pledge has mobilised quickly and decisively. We've partnered with charities, frontline responders and research institutes at the forefront of fighting this pandemic and directed millions of dollars from our members to high-impact interventions that are working to stop the spread of the virus, mitigate the social and economic costs, and prepare us for future pandemics. It's been so inspiring to see our members [00:02:00] take action when we need them most. The Founders Pledge model is simple, on joining, every member commits a portion of their personal exit proceeds to charitable causes. We offer the simplest path to impact for successful entrepreneurs, providing end-to-end giving infrastructure, pioneering research, and a world-class network of experts all at zero cost. If you're an entrepreneur of a series B or C+ funded startup, and you'd like to be a part of this incredible community of entrepreneurs, we'd really love to hear from you. You can email us at podcasts@founderspledge.com. Again, that's podcasts@founderspledge.com.

Thanks, and I hope you enjoy listening.

Philip Kasumu: Hello everyone. So my name is Phillip Kasumu, I'm sure you guys just watched our founder, David Goldberg's presentation just now from Founders Pledge. So I head up Europe for Founders Pledge. I head up on the Growth side. And today I have the pleasure of speaking with Michael Faye from GiveDirectly and Taptap Send.

So, Michael, it's [00:03:00] great to have this conversation with you, but for those who don't know who you are, how would you like to introduce yourself?

Michael Faye: Oh gosh, uh, boy, there's so much to say. So I've spent the last decade or so of my life trying to put resources more efficiently into the hands of the poor. The first organisation I founded, GiveDirectly, we founded about 10 years ago and I've been president of GiveDirectly. And then we have founded two for-profit organisations, one called Segovia, which is a B2B payments platform for the emerging markets, and Taptap Send, which is a remittance company focused on bringing fairly priced remittances to the emerging markets.

Philip Kasumu: Awesome. Yes. You've had such an incredible career and journey so far within the FinTech space specifically. So I'd love to kick off and kind of talk about, I guess, GiveDirectly following on from, you know, David's [00:04:00] presentation. So where did the idea for GiveDirectly come from, and giving money directly to the most vulnerable people?

Michael Faye: Yes. So way back when I did a PhD in economics, and it was at an interesting time. So it was the early 2000s to date myself, and a bunch of folks, Esther Duflo, Michael Crane, Abhijit Banerjee and many others were bringing some of the more rigorous evaluation techniques that we had used in medicine, and even in tech, frankly, to the field of development economics. They recently won a Nobel Prize for that work.

I think what we learned is that what we thought worked often did not work as well as we had hoped. Very traditional interventions like training programs, microfinance, did not always meet the promise that we had hoped for. And then this very simple, almost [00:05:00] naive intervention of simply giving people money to make them less poor worked remarkably well. And you know, that got us thinking and we said, oh, this is great. We should give some of our small stipend this way. And as it turned out at the time, lots of people were doing cash, but it was just not a way that a donor like me could give and we called many orgs and they just couldn't do it.

So, you know, got on the plane and started to give out money in Kenya. And then little by little, it's grown. And this year, in the first half of the year, we have raised almost about a little bit less than $200 million that we'll be able to give out to recipients across the countries that we're working in.

Philip Kasumu: Oh, that's incredible. And again, for those who don't know, GiveDirectly is actually one of our top recommended charities. So the work that you guys have been doing, we've been monitoring it and it’s truly is awesome. But I guess when it comes to philanthropy [00:06:00] and giving, what have been some of the biggest misconceptions that you find people have, especially with regards to cash transfers? 'Cause you know, philanthropy and charities don't necessarily give, I think you're very unique and probably the first mover within that space, to be giving just direct cash as opposed to a solution or a medication or a product or providing a service. So I guess what's the biggest misconception people have when it comes to giving?

Michael Faye: Yeah. Yeah. I think there's so many misconceptions in the philanthropic space and you all do this, so, you know, but it is extraordinarily hard to get good information about charities. And there are historic reasons, like the way the IRS asks you to report things with this concept of overhead, which is essentially quite meaningless because management can dictate what goes in that bucket. So it's been hard. So I think one of the things that we have pushed [00:07:00] is the idea that you should know two things about what you're doing. You should know what the impact is. And you should know that from some rigorous evaluation, probably a randomised trial, you should also know the cost of delivery. So how much does it actually cost you to deliver? Not in this IRS accounting sense, but in a real sense. So if I get $100, how much winds up in the hands of a recipient? And then you can make a decision for yourself about what you want to do.

Now, what makes cash so interesting is two things. One is when you tell people that you're simply giving cash, they ask lots of questions, lots of good questions. How do you know it's given to the right people? How do you know people don't steal it? And so on and so forth. These are great questions. I've been encouraging people to ask them about every organisation.

And the second thing about cash is it challenges us not only to ask what is best, [00:08:00] but it challenges us to ask who gets to define what's best. So if there are two families making the impossible choice of whether they'll feed their newborn, send their secondary, so send their daughter to secondary school, or invest in their husband's business, but they don't get to pick three. They get to pick one of those things. That's an impossible choice for anyone to make. And someone may pick education, someone may pick hunger and someone may invest. Now, I just ask you in the broad group, which of those is the best. And I think there's one view where we'll run it through a model and make some decision. There's another view where we'll have some personal bias and then there's a bit of the cash philosophy, which says that's not my decision to make. That's an impossible decision and I'm going to let the family make it themselves and respect them as individual decision-makers who have their own preferences.

[00:09:00] Philip Kasumu: That's yeah, sorry, no, you cut out there. That's a very difficult decision to make right? Almost impossible.

Michael Faye: Yeah.

Philip Kasumu: And I guess in the context of COVID-19, what has been the direct impact of direct cash transfers in the context of COVID-19, you know, what have you guys seen at GiveDirectly through this pandemic?

Michael Faye: Yeah well COVID has just increased the focus on cash transfers in what's really an unprecedented way. And it's not just GiveDirectly, right, GiveDirectly will give out about $200 million so far, which is meaningfully more than we did last year for the full year. But it's not just GiveDirectly, it's global. More countries are going to cash programming. You've got about 150 countries doing a cash response to COVID. And right now, about [00:10:00] 15% of the world's population is getting a cash response to COVID. So it's a tremendous number of people, which poses a bit of the question of why? And I think there are a few pieces. One is just an operational piece, which is much of what we've traditionally done, giving food, other things, are complicated by the reality of COVID, but one of the beauties of cash and the way we do it is it can be done remotely so we can enroll people remotely through tech, and then we can pay them through digital finance. And that's exactly what we're doing. So there's a very practical reason why people are going to cash, but I think there's also a universality of COVID.

We all know people affected, we all know people affected economically. And when we are forced to put ourselves in that position and ask, how would I like to be helped? We stop "othering" the person that is affected, it's not the other [00:11:00] person that's affected, that's poor. And we started asking, what would we like? Would we like someone to drop off some canned goods and some old dolls and old toys, or would we rather the money to make the decision about whether we're going to pay rent or buy food or do something or pay for our medicine? And I think the universality has pushed people to think more about that, which is why you've seen more of this interest.

Philip Kasumu: Yeah, no, so I was going to say, and obviously the work that GiveDirectly have done during this pandemic has not only been in Africa, but it's also been to affected communities within the US, and so I guess the next question is, do you think that during this period, we've kind of strengthened the case for kind of UBI, universal basic income?

Michael Faye: Oh yeah. There's a lot of questions baked into that question. I'll do my best. This has been a [00:12:00] journey, like from Milton Friedman and Martin Luther King, to where we are today, there have been many people that have contributed, and you kind of, first the ideas were introduced 30-plus years ago, if not more, then you had the building of the evidence base, then you had the popularization and philanthropy through GiveDirectly and others. Then Andrew Yang takes it to the presidential stage. Then COVID happens. And you have this bipartisan support for a federal cash transfer program, essentially. So I think a lot of people have contributed and it's not just the universality of COVID.

The UBI piece is interesting because the way it often gets talked about is that UBI and cash transfers are the same. The reality is it's different. Universal basic income is a very specific form of cash transfer. We won't have time to go into all the differences and whether, or not...

Philip Kasumu: Of course, of course.

Michael Faye: But [00:13:00] I do think it has certainly strengthened support for going to a more cash-based social programming.

Philip Kasumu: No, absolutely. And I guess, during this whole pandemic as well, what have been some of the challenges that you've personally experienced? And you know, running, I guess, two companies as well, right, have you seen a significant decline or have you seen like a spike of people sending, you know, with Taptap Send, which is the remittance platform, what have you seen take place during this process?

Michael Faye: I've been busy across the companies. I think folks often forget that nonprofits have cost. You'll see 100% of your money goes, well, that's impossible. And they also expect you to scale instantly. And that has been the biggest stress. Which is we [00:14:00] have, I forget exactly how much we've given out thus far this year, but it's probably it's well over $100 million, that's more than four times what we did in the first six months of last year. So we've essentially had to scale our organisation 4x.

Philip Kasumu: And this is GiveDirectly?

Michael Faye: GiveDirectly, while remote and shifting to remote, and the team has done just an amazing job. And not only did we scale 4x, we went from a model that was based on meeting people in their homes and enrolling them in their homes to one that's now essentially completely remote.
So if you ask the biggest challenge, it's how do you scale 4x while going fully remote and disrupting your entire traditional supply chain along the way?

Philip Kasumu: I mean, yeah. But you guys have done an incredible job and, you know, as I mentioned earlier, you know, GiveDirectly have been one of our top responders [00:15:00] for the COVID-19 pandemic. And it's definitely what we've been directing a lot of our donors to commit to who have shown, expressed a lot of interest in kind of helping the situation today. So I guess you guys are doing the right things. What role do you see donors playing in transforming the sector? Whether that be founders or entrepreneurs, but what role do you kind of see donors playing in transforming philanthropy and the way people think about it?

Michael Faye: I think philanthropy has a tremendous role to play. And even if you use the GiveDirectly journey, and again, there were many people that have contributed, but I certainly think that we were able to take risks to do evaluations, to do things that people couldn't have done necessarily at a government level and put it on the map for people and help, not only, we built the evidence base, we helped build public [00:16:00] support and we've made it a lot easier for government and organisations that can't necessarily take those risks to shift. And when you think about what the value of a dollar donated to GiveDirectly is, I'd say, at a minimum, you're going to change someone's life because that dollar is going to get passed through to them. And at best, you're going to wind up changing the sector by pushing it towards a less paternalistic place, a more efficient place. And one that really puts the recipient at the center of what we're doing and not the donor.

Philip Kasumu: Right. No, that's spot on. And I guess, you know, speaking about transforming the sector, speaking about open banking, I'm sure you you're familiar with open banking and the PSD2 regulations. What role do you see the charity sector taking advantage of these new legislations and the open banking movement? If any?

[00:17:00] Michael Faye: I think you'll see the biggest impact and the first impact on the private sector companies like the remittance companies and other places where PSD2 will help with risk and things. I think that on the tech side, the charity sector is often catching up and there are some structural reasons for that.

So I think it can lower price and things, but again, I'm not sure that's the biggest constraint right now for us. And to give you a sense, we are having our best year of efficiency. So what that means is that for every dollar donated right now during COVID, I think we're getting about 98 cents of that to the recipient. And so we're essentially running an entire organisation at a lower cost than a lot of remittance products.

Philip Kasumu: Yeah. And I guess finally, other than, you know, cash transfers and open banking, what other role do you see FinTech [00:18:00] playing within the charity sector? Are there any products, any services that you would like to see or invest in or where else are we missing the trick when it comes to FinTech and charity?

Michael Faye: Yeah. I mean, I'll be, I'm deliberately provocative here, I think.

I think we should separate charity from businesses. I think there are many great FinTech businesses to be built in the emerging market, but if you can build it as a business, I would build it as a business. Giving people money is not a good business. So GiveDirectly could never have been a business nor should it be.

But I think there are lots of savings products, there are borrowing constraints. There's so many various challenges right now of people accessing digital finance. But I would probably do a lot of those [00:19:00] as social enterprises.

Philip Kasumu: Awesome. And my last question, I know we're running out of time, how are you managing your time? You're running two companies right now, both probably in very high demand, especially during this period. So how are you prioritising your time? How are you putting processes in place? Like, are there any kind of, I guess, life hacks or hacks you can share with everyone in terms of time management?

Michael Faye: Sure. I'll give you the sad life hack is I think most people have a work, life, sleep, and I think I have work, work, sleep, but I think if I had to summarise, I'd say write your plan down every day. And be as specific as possible. And then the teams know that my other biggest life hack is I go to bed embarrassingly early on Sundays so I can start Monday at about 5:00 AM or, or even earlier sometimes, and get going on the week.

Philip Kasumu: Awesome. Michael, it's been great to chat with you. I think [00:20:00] that's all we have time for right now. But for those who want to be involved with GiveDirectly, of course, would you like to share any like information in terms of how they can get in touch or if they want to learn more?

Michael Faye: Yeah, please. It's just GiveDirectly.org. And then if folks have individual questions, it's just michael.faye@givedirectly.org.

Philip Kasumu: And guys, if you're interested in learning more about Founders Pledge, you can contact me, philip@founderspledge.com. I'd love to have a chat with you about what we do here and how you could help us, you know, get more money to GiveDirectly and other amazing charities.

Michael Faye: Thanks so much, thanks for all the work that you all have done.

Philip Kasumu: Awesome, thank you.

Michael Faye: Alright, take care.

Philip Kasumu: Another massive thank you to Treasury Summit for hosting an incredible virtual conference. Thanks again to Michael and his team for making this interview happen. If you enjoyed this episode, please share it with your network and leave us a review on the Apple podcasting app or anywhere [00:21:00] you listen to your favourite podcasts.

Until next time. Be inspired. Give better. And let's drive change.