Each year, Giving Tuesday gets a lot of attention—and rightfully so. In fact, it’s gotten so popular that some have labeled it the biggest giving day for the social sector all year. But did you know that it’s actually the second biggest giving day of the year?
While not as well branded as Giving Tuesday, the largest giving day for the social sector is actually December 31, the final day of the year-end giving season.
Given the level of activity we’ve seen this year, we think it’s a pretty safe bet that December 31 will be the single best day for crypto donations in 2021. Here’s why.
The Value in Year-End Giving
Going all-in on Giving Tuesday is a bold strategy, and it will surely net high fundraising totals and new donors while increasing visibility for your fundraising campaign. But the most successful nonprofits look at Giving Tuesday as the kickoff to the year-end giving season.
The holiday and year-end giving season puts people in a generous mood, primes them to be receptive to appeals, and offers a last-minute chance to make tax-deductible donations. According to recent research, this feeling of generosity is reflected by actual giving trends:
- Giving Tuesday brings in 4.3% of all year-end giving revenue
- December 31 brings in 15.5% of all year-end giving revenue
- The last week of the year nets 37% of all online year-end giving revenue
These are trends The Giving Block saw mirrored in our own #CryptoGivingTuesday data:
- $2.4 million total donated, a 538% increase from 2020
- $12,600 average donation size, a 20% increase from the average crypto donation in 2021
- 1,017 participating nonprofits, an 839% increase from Crypto Giving Tuesday 2020
The best part about these statistics is that they only reflect the beginning of the year-end giving season. If the trends for December 31 and the last week of the year hold, it stands to reason that year-end giving totals for crypto donations will far outweigh what we saw on Crypto Giving Tuesday.
On one hand, this presents a massive opportunity for nonprofits who want to start accepting crypto donations quickly before the year is out. On the other hand, it’s an equally big opportunity for donors who want to make a crypto donation, create a lasting impact, and secure some much-needed tax relief.
Crypto Growth in 2021
The crypto market can be volatile—everyone knows that and assumes that risk when they get involved. However, although there’s been a recent dip in the market, the majority of cryptocurrencies have skyrocketed in 2021.
For example, we’ve been tracking gains for the following cryptocurrencies across areas like DeFi and the Metaverse. For each crypto listed here, the first value is from January 1, 2021, and the second value represents the highest growth peak of the year:
- Terra (LUNA): $0.65 to $75.24
- Amp (AMP): $0.0066 to $0.12
- The Sandbox (SAND): $0.0370 to $7.49
- Enjin Coin (ENJ): $0.14 to $4.85
- Ankr (ANKR): $0.0090 to $0.23
Bitcoin (BTC) and Ethereum (ETH) also saw gains this year. BTC grew from $29,413.29 to $69,000 at its peak, while ETH leaped to $4,867.81 from $730.97.
Every cryptocurrency here, as well as 50 other options, can be donated to nonprofits during the year-end giving season through The Giving Block. (If donating your crypto is a part of your end-of-year plans, make sure to explore all the options and give in a way that best suits you.)
Because crypto is booming, many investors are riding the wave to profit on their initial investments. At the same time, they also stand to incur capital gains taxes on these profits.
Taxes and Year-End Giving
Anytime you dispose of crypto, you have to pay to capital gains tax on the profit you make. There are four major areas this applies to:
- Selling crypto for fiat currency
- Exchanging one cryptocurrency for another
- Purchasing goods or services with crypto (including NFTs)
- Gifting crypto over the $15,000 threshold
A capital gain is the difference in value from when you acquired your crypto to the time when you dispose of it. Your profit, not the full value of the crypto, is what gets taxed with either short-term or long-term capital gains tax rates.
Let’s use LUNA from the previous section as an example here. You purchased 5,000 LUNA tokens on January 1, 2021, at a value of $0.65 for $3,250. When LUNA peaked at $75.24, you decided to liquidate your holding for $376,200, with a profit margin of $372,950.
Now, you’re subject to a short-term capital gains tax on that $372,950. Assuming you make $90,000 annually, your gains will be taxed at 24% and you’ll owe the IRS $89,508.
(Looking for more tax information? Explore our resources on crypto taxes.)
Reduce Your Capital Gains Taxes by Donating Crypto
If you had donated your LUNA directly to a nonprofit first, you could have offset that capital gains tax after later liquidating. Crypto donations aren’t subject to capital gains tax.
In fact, you can write off the fair market value of the crypto asset on your taxes after making a crypto donation. This amount varies depending on how long you’ve held your crypto before donating.
If you’ve held your crypto for one year or less, you can deduct the lesser of your basis in your crypto or its fair market value up to 50% of your annual gross income. If you have held your cryptocurrency for over a year you can deduct its fair market value up to 50% of your annual gross income.
The choice is yours: hand over money to the IRS or make a crypto donation directly to a nonprofit that will use your gift as a force for good. To us, it’s pretty clear which option makes more sense for your taxes and more directly helps people in need.
When it comes to making a crypto donation during the year-end giving season, there are many options available to you.
Make Direct Crypto Donations
You can make a year-end crypto donation to any nonprofit that’s partnered with The Giving Block directly through our site. Browse through an interactive hub that showcases your options, lets you search for names or filter by category, and once you’ve found your favorite organization you can click into their profile to learn more.
You can read each nonprofit’s mission statement, discover the impact your crypto donation will make, and get important information for saving money on taxes. And you can complete your donation in a few quick clicks.
Support Impact Index Funds
If you want to make an impact with your crypto donation, but you don’t know what nonprofit you want to support, The Giving Block has set up several Impact Index Funds. In total, there are 15 funds that each group multiple nonprofits around similar focus or mission:
- Technology & Science
- Arts & Culture
- Children & Youth
- Poverty & Housing
- Mental Health
- Military, Veterans, & First Responders
- Health & Medicine
- Liberty & Freedom
- Food & Water
- Economic Development
- Disasters & Conflict
- Civil & Human Rights
Your year-end crypto donation made to any of these Impact Index Funds will be split equally among all the nonprofits in that category. Not only does it help you with tax benefits, it’s also a great option to ensure organizations both large and small get their equitable, fair share.
Contribute to a Donor-Advised Fund
When you contribute crypto to a Donor-Advised Fund (DAF), you’ll get an immediate tax benefit. The Giving Block has partnered with RenPSG to allow you to easily move crypto assets into new or existing DAFs. To date, there are 11 DAFs who will accept crypto donations from this partnership.
Year-End Giving Is Just Getting Started
Crypto growth in 2021 has been off the charts, and many predict this market will continue to remain bullish despite some bearish downturns. If you’re interested in reducing your taxes with crypto donations, it’s not too late.
The year-end giving timeline expires at midnight on December 31, 2021. As long as you make a crypto donation before then, you’re in good shape to help offset the capital gains made from your crypto investments this year.
More importantly, though, you can use your year-end crypto donation as a force for good in the world. From building clean water wells to providing equitable access to education, there are countless nonprofits you can support through The Giving Block.