4/06/2021 | Segovia merger and relationship with GiveDirectly

Segovia is a financial technology company co-founded in 2014 by two members of GiveDirectly’s board, which today is owned and operated by Crown Agents Bank (CAB).  GiveDirectly uses CAB to issue payments via mobile money networks. A summary of the current relationship between the two organizations can be found on our FAQ page.

On July 2, 2019, Crown Agents Bank (CAB) acquired part of Segovia and its payment tech, forming CAB Tech HoldCo (CTHL). The remaining part of Segovia formed a separate company, Taptap Send (TTS). As part of the acquisition, GiveDirectly’s 2014 shares in Segovia were exchanged for non-voting shares in CTHL and TTS. Our publicly available financial statements contain more information on shareholdings.

GiveDirectly continues to use the technology which facilitates payments through CAB. There has not been an increase in the charges levied to GiveDirectly since the acquisition.

For each program, GiveDirectly evaluates multiple payment platform options. Leaders at GiveDirectly not affiliated with CAB / Segovia conduct the procurement process, and any new contracts with Segovia are approved by independent board members. Recently, GiveDirectly has sent cash transfers using other providers in Liberia, Togo, the Bahamas, and the United States.

Financial declarations about the relationship between GiveDirectly and CAB / Segovia can be found in GiveDirectly’s annual financial statements.

Two previously published blog posts about the GiveDirectly relationship with Segovia have been moved below.

Additional reading on merger:

  1. Crown Agents Bank acquires Segovia to strengthen its frontier markets payment platform – Crown Agents Bank
  2. Payment Fintech Segovia Acquired by Crown Agents Bank – Crowdfunding Insider
  3. Crown Agents Bank bags Segovia’s payment gateway business – Fintech Futures
  4. UK-based Crown Agents Bank’s parent to acquire US tech company Segovia – S&P Global
  5. Crown Agents Bank completes acquisition of Segovia – Crown Agents Bank

10/13/2016 | Update regarding GiveDirectly’s use of Segovia

GiveDirectly’s Board has voted to award Segovia a commercial contract to provide the technological platform needed to deliver $40 million this year to poor households in East Africa. GiveDirectly began with the most basic of technologies: one person with a laptop processing a few hundred payments each month. The scale of the operation has grown enormously from there; this year we are on course to double cash commitments from last year, and are operating at a scale similar to that of a typical government program in East Africa. At first we dealt with this growth by creating a host of spreadsheets and scripts to manage the approval and payments processes; not surprisingly this became too chaotic and insecure at larger scales.

Two of our founders then launched Segovia, with the team’s support, to address this problem both for GiveDirectly and the broader sector. We agreed at the time to a pro bono arrangement with Segovia, granting GiveDirectly free use of the platform and based on the expectation that we would be able to use it more or less “out of the box,” with limited support required. With experience, however, it has become clear that – given the complexity of our operational model – using Segovia will require significant effort from their team to configure the platform and provide support, at least for the foreseeable future. Given this, we have transitioned to a paid model. Consistent with the shared legacy of the two organizations, GiveDirectly receives and will continue to receive preferential pricing in perpetuity.

GiveDirectly also retains an equity stake in Segovia with an overlap across the two organizations’ Boards. Consequently, only GiveDirectly’s independent Directors voted on this decision, based on a recommendation prepared by independent members of the management team. This process is consistent with our conflict of interest policy and with general good practice in handling such decisions. We reviewed the process with our external counsel prior to conducting it.

Our current agreement runs through February 2017, after which we will have the opportunity to revisit the decision. We’ll continue to report openly and transparently on our arrangements with Segovia, as with everything we do.

07/09/2014 | GiveDirectly and Segovia

By Rohit Wanchoo

Recently, three members of our board – Michael Faye, Chris Hughes, and Paul Niehaus — announced plans to start a separate, fee-for-service for-profit venture called Segovia to develop technology for managing field logistics, with a focus on programs that transfer cash to the poor.

This is potentially an exciting effort to reduce poverty: developing countries spend huge sums on their social programs, but these are often plagued by leakage and high administrative costs that could be reduced with better technology. At the same time, the overlap in directors that will result raises questions about how the two organizations will relate to each other. GiveDirectly’s board — and I in particular as an independent director — spent several months consulting with legal counsel, certified accountants, and other stakeholders to understand these questions as they pertained to our fiduciary responsibilities, and wanted to share the answers we reached.

How are the organizations’ roles related?
GiveDirectly’s tax-exempt purpose is to reduce poverty by providing financial assistance to the extreme poor. Segovia’s current focus, on the other hand, is to create technology that enables institutional customers — including governments, multilaterals, and NGOs — to manage field logistics. Segovia will provide this technology to GiveDirectly freely for philanthropic work, while charging other customers. One analogy might be to a firm that uses spreadsheets to manage its operations (GiveDirectly) and another that creates spreadsheet software (Segovia).

How will the roles of current GiveDirectly staff change?
Overall there will be little change: Faye and Hughes will continue to serve on GiveDirectly’s board as currently, and Niehaus will continue to serve as president of GiveDirectly while also joining Segovia’s board. One employee will split time between the organizations, providing administrative support to both boards. One GiveDirectly employee will serve as designated liaison in order to describe what GiveDirectly needs from the technology Segovia will donate.

Is Segovia acquiring anything of value from GiveDirectly, and if so, what compensation is required?
We retained Morrison, Brown, Argiz & Farra as auditors to assess this question. Their review found that Segovia should compensate GiveDirectly for the fair market costs of recruiting the one employee mentioned above who will split time. No other assets (code, contact lists, etc.) are being transferred. Segovia’s founders are also making GiveDirectly a minority owner of the firm to ensure that it participates in any financial upside subsequently created.

How will potential conflicts of interest between the organizations be managed?
While we generally expect GiveDirectly to benefit tremendously from the creation of Segovia, we recognize that conflicts of interest between the two organizations may potentially arise at times. In such cases, the directors with dual roles (Faye, Hughes, and Niehaus) are required to recuse themselves from GiveDirectly board votes. In addition, we will shortly announce an expansion of GiveDirectly’s board which will increase the number of independent directors participating in such votes. Finally, on the recommendation of counsel, GiveDirectly’s board drafted and approved a Memorandum of Understanding codifying the relative roles of the organizations as described above as principles by which potential conflicts should be governed.

Culturally, we have always sought to break with mainstream practices while at the same communicating clearly about what we are doing and why. Our goal is that this development will be no different. If you have questions about anything related to GiveDirectly and Segovia, please don’t hesitate to contact us.

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