Crypto donations are on the rise. The crypto-donation platform the Giving Block reported a 1,558% increase in donations between 2020 and 2021, with $69 million in gifts by the end of 2021.
Charitable giving is critical to accomplish most nonprofit missions. Understanding and tapping into this new donation stream is essential to maximizing donations received.
Donors have begun gravitating towards crypto currency due to the financial benefits:
Crypto investors can avoid capital gains tax on profits through donating their crypto-currency to a 501c3 organization.. Coin Desk, a crypto-news platform, offers a digestible example to illustrate these savings. For example, if an investor bought currency at $500 and it appreciated to $2,000, they can deduct the $1,500 value. But, when converting the investment to fiat, donors must write off 20% of $2,000 paid in taxes from the donation amount. As a result, investors can save at least 20% to 30% on taxes.
Additionally, transaction fee savings exist for both the donor and organization because crypto avoids traditional financial service institutions. 63% of donors use credit cards for donations, incurring between a 2.2% and 7.5% fee. International wire transfers can cost between $30 to $50 in additional charges. Block chain fees are significantly less expensive at less than $15.
Donating crypto-currency also saves time: a crypto transaction can be completed in minutes, while selling stock or other assets takes hours or days.
Many nonprofits are hesitant to accept crypto donations due to the perceived risks. First, the price of crypto is changing constantly, surging and dropping suddenly. Second, there are concerns about the liquidity of crypto currencies depending on market conditions and volume. Third, it is possible to lose the “key” to the crypto funds.
However, accepting crypto donations poses many benefits for organizations as well:
New Donor Segment
By accepting crypto donations, your organization connects to a new donor segment that may otherwise be left out. Crypto-users are primarily younger than traditional charitable givers, helping charities tap into millennial and Gen Z markets, with over 60% under 40. Crypto is also attractive to donors wishing to remain anonymous.
The ease of transferring crypto around the globe also allows organizations to accept donations globally. Crypto is also an attractive option for organizations that can’t get funding due to government restrictions. For example, WikiLeaks, after being blacklisted from major credit card services, currently receives millions in crypto donations. Crypto donors are also more responsive to social media campaigns, with Ukraine receiving over $100M in crypto donations after tweets documented the devastating impact of the Russian invasion.
In response to the rise in popularity of crypto,, large organizations like UNICEF, Red Cross, and Greenpeace have started accepting crypto donations. Tapping into this new donor base is essential to remaining competitive with other organizations.
By not accepting cryptocurrency, nonprofits are leaving donations on the table. Cryptocurrency reaches a whole new generation of donors, mobilizes donations effectively, and taps into the over $2 trillion in market value of cryptocurrency. These new donor segments and giving habits have the potential to disrupt traditional giving and help nonprofits, big and small, grow.
Interested in accepting crypto? Almora Advisors is here to help! Contact us to learn more.