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Cryptocurrency Fundraising: Nonprofit Guide To Accepting Crypto Donations

by | Aug 13, 2021

Cryptocurrency is among the most underutilized revenue stream generators for nonprofits. Though many struggle to understand how and why nonprofits should start accepting crypto donations, it’s not that complicated once you grasp the basics.

Setting up your nonprofit’s cryptocurrency donation platform is easier than you might expect. When done properly, it’s safe, compliant, and efficient for fundraising teams and their supporters. And much like digging a well for clean water, the benefits are long term and quick to outweigh the early setup costs.

Read on to learn the basics and discover the best practices we’ve developed through our work elevating the fundraising game for over 1,000 nonprofits by helping them accept crypto donations.

What we’ll cover:

What is Cryptocurrency Fundraising and How Does it Work?

Cryptocurrency fundraising is the practice of cultivating donors who give in the form of a virtual currency like Bitcoin or Ethereum. In order to accept cryptocurrency gifts, nonprofits need a digital platform where they can direct donors.

The problem is that almost all nonprofits today use donation widgets and forms that accept cash but not cryptocurrencies. For many, setting up a crypto donation platform seems like a big step and it likely requires getting several approvals.

But beyond integrating a crypto donation form, nonprofits have much to gain by taking time to understand how it works, the benefits for donors and nonprofits, current trends in the cryptocurrency landscape, proven fundraising methods, and other ways to start heading in the right direction.

Unfamiliar with cryptocurrency? Explore our resources, guides, and how-to articles for nonprofits.

Crypto Fundraising is Here for Good

Nonprofits looking to accept cryptocurrency as a new revenue source are in great company. Major global and national players in the charitable sector, including Save the Children, Direct Relief, American Cancer Society, World Vision, No Kid Hungry and United Way, have established crypto and bitcoin donations as a key part of their long-term fundraising strategy. The move toward crypto adoption among nonprofits comes at a pivotal time in philanthropy.

Several areas of traditional fundraising seem to be trending in a concerning direction. Giving USA’s Annual Report on Philanthropy for the Year 2020 found that corporate giving, which includes cash, in-kind contributions, grants, and gifts made by corporate foundations, has declined by an estimated 6% in 2020, totaling about $16.8B. Meanwhile, organizations focused on health and arts, culture, and humanities have faced overall losses in contributions in the last year. Across the board, hardships caused by the COVID-19 pandemic also posed numerous fundraising challenges, with in-person events such as walks and charity galas made impossible and many nonprofits seeing their reliable donors giving less (or nothing) in 2020.

Though we’re yet to fully grasp the ripple effects of COVID-19 in the world of philanthropy, many worried fundraisers are finding hope in accepting cryptocurrency donations, noting its emergence as a force for funding social good.

What’s Driving Crypto’s Popularity?

As of 2021, it is estimated that more than 106M users globally hold at least one form of cryptocurrency, such as Bitcoin, Ethereum, or one of thousands of other cryptocurrencies. With the user base nearly doubling each year, total cryptocurrency users are on pace to reach more than 200M by 2022.

A recent report prepared by Crypto.com found that crypto adoption is likely driven by “huge growth of DeFi [aka decentralized finance] last summer, PayPal’s opening up crypto services, and massive institutional adoption and facilitation of cryptocurrencies.” In other words, crypto users are increasing as more and more businesses (and now entire countries, such as El Salvador) accept cryptocurrencies as a legitimate form of payment. Many investors also believe that bitcoin will continue to increase in value and popularity at a rate many times faster than gold in the coming years, further driving up demand.

The adoption of crypto by nonprofits and charities will further push cryptocurrency into the mainstream. The Pineapple Fund, which gave away bitcoin grants to 50 nonprofits valued somewhere between $55-86M, thrust crypto philanthropy into the headlines in 2018. Today we can see its continued influence throughout the crypto community, from individual investors to blockchain companies, who see charitable giving as a way to highlight crypto’s potential to make positive change in the world.

Who Owns and Donates Bitcoin?

Cryptocurrency investors tend to be young and tech-savvy. A study found that 94% of crypto buyers are between the ages of 18 and 40, the majority of whom are millennials. As a generation raised on the internet and mobile phones, millennials and their Gen Z peers are quick to adopt new digital and virtual technologies, and tend to view crypto as a more reliable investment than traditional stocks.

The strong returns on bitcoin, ether, and others have brought new wealth to many young investors. They see donating a portion of their crypto gains as a way to support causes they care about while also reducing their tax burdens. (Don’t worry, we’ll talk more about this later!)

Year on year, we have seen crypto donations continue to increase. Currently, about $300M is donated in the form of cryptocurrency each year. In the first half of 2021, The Giving Block’s donors and charities have more than doubled the entire previous year’s worth of cryptocurrency donations!

We’re doing our part to help make crypto the most charitable industry in the world, in part by launching the Crypto Giving Pledge, which encourages annual charitable giving by high net worth individuals who invest in crypto. We also support social giving initiatives like #BitcoinTuesday, the #GivingTuesday community campaign for crypto.

The momentum is now virtually unstoppable and it’s the perfect time for your nonprofit to seize the opportunity to find new donors ready to give crypto to your cause.

Which Nonprofits Accept Donations in Bitcoin and Other Crypto?

Charities of all kinds accept cryptocurrency: big, small, global, local, old, and new. Chances are, if you are reading this, you had a phone call with your Executive Director recently asking you to “find younger donors” and “diversify the organization’s sources of revenue.” Many organizations struggle to use social media to reach new potential donors, while others make repeated asks of their young alumni networks that are notoriously difficult to convert from prospects to active donors. Nonprofits are increasingly turning to crypto as a viable alternative to traditional pathways of outreach.

The Giving Block empowers nonprofit clients from around the world to take gifts in Bitcoin (BTC), Ethereum (ETH), Dai (DAI), Dogecoin (DOGE), Litecoin (LTC), Zcash (ZCASH), and more, with new cryptocurrencies being supported by the platform all the time.

Here are a few types of US 501(c)3 nonprofit organizations and international charities we work with:

  • Addiction & Recovery
  • Animals
  • Arts & Culture
  • Children & Youth
  • Community Foundations
  • Community Service
  • Developmental Disabilities
  • Disaster Response
  • Donor-advised funds
  • Education & Training
  • Environment
  • First Responders & Veterans
  • Fiscal Sponsor Organizations
  • Health & Medicine
  • Higher Education
  • Homelessness
  • Human Rights
  • Hunger
  • Immigration & Refugees
  • International Development
  • LGBTQ
  • Legal Support
  • Racial Justice
  • Religion & Faith-Based
  • Technology
  • Water & Hygiene
  • Women & Girls
  • And many more…

Browse our complete roster of nonprofit clients that are already accepting crypto.

How Are Cryptocurrency Donations Processed and Received?

Every cryptocurrency transaction is permanently recorded on an open source, public blockchain ledger that is immutable (i.e nearly impossible to tamper with). A donation of digital currencies, like any exchange of crypto, occurs when the donated amount is transferred from the donor’s digital wallet to the charity’s wallet. This process relies on blockchain technology to provide a secure, quick transaction for both parties.

For most nonprofits, their gift acceptance policies probably requires immediate liquidation into cash, which we are able to automate. We are also able to accommodate organizations who wish to HODL (i.e. hold onto) their cryptocurrency donations long term. Secure custody and liquidity of crypto assets are provided by our exchange partner, Gemini, one of the most regulatory compliant and secure cryptocurrency exchange in the world—an ideal solution for highly regulated tax exempt organizations such as 501(c)3 nonprofits and charities.

How Much is a Crypto Gift Worth in Cash?

As with all types of investments, the value of cryptocurrency is subject to market fluctuations if you aren’t immediately converting it. While thousands of crypto currencies exist, Bitcoin is the most popular and currently holds the majority of the cryptocurrency market share.

Using The Giving Block, most nonprofits will immediately and automatically auto-convert the crypto donations they receive into a government-backed currency like the U.S. Dollar at the time of donation. From the nonprofit or charity’s perspective, they no longer need to worry about market fluctuations, as the value of their cryptocurrency is what it was worth upon receipt of the donation.

Your donors may see their gift as an altruistic and possibly one of the most tax efficient ways to offset their capital gains taxes levied from their crypto investments and trades, which can often total 30%+ of their appreciated cryptocurrency.

With such obvious upsides for charities and donors, it’s essential to choose a platform that makes cryptocurrency giving as simple as possible. But be advised: time is of the essence. By delaying your nonprofit’s ability to accept cryptocurrency, you risk conveying to an entire pool of donors that you are not interested in their support. Instead of giving to your organization, these donors will find another cause that is equipped to accept crypto. Avoid missed opportunities like these by getting your whole team on board and starting as soon as possible.

Methods of Accepting a Donation in Crypto

Whether you represent a large, well-established nonprofit or a small local charity, setting up your crypto giving platform and taking your first crypto gift is a matter of following a few simple steps.

We guide your nonprofit through all the compliance steps to ensure that your institutional-grade cryptocurrency account is set up correctly. From there, we generate a widget that you can embed on your giving pages, as well as a custom profile page on our donation platform that often generates over 80% of our clients cryptocurrency donation revenue!

Once those are up and running, you are ready to receive donations in cryptocurrency and start publicizing your brand-new crypto giving option! From that point on, anyone can donate directly to your cause. Hooray!

Apart from direct donations of cryptocurrency, some donors opt to give crypto in one of several new and innovative ways. Rest assured, we’ll always be there to provide help and support if your donors express an interest one of the following giving methods:

1. NFTs

NFTs, or “non-fungible tokens,” are a type of data stored on a blockchain, often in the form of music or visual art. Creators who take an interest in giving to charity can sell an NFT via an auction, then donate the proceeds to a charity. Both the popularity and value of NFTs have soared to new heights. Christie’s recently became the first major auction house to get involved, selling a work by the artist Beeple for a record $69.3M.

For a deeper dive, read our article on NFTs and Nonprofits.

2. DeFi

Decentralized finance platforms like 1inch have begun to integrate donation features. DeFi’s embrace of charitable giving options is yet another way that the crypto community is demonstrating its interest in social good.

3. Charity Coins and Tokens

Charity tokens and coins are another format used by the crypto community to support nonprofits. Special charity coins are minted and sold to consumers who purchase them, knowing that some or all of the proceeds will fund a nonprofit.

Crypto Fundraising: Taxes and Reporting

Nonprofits accepting crypto will want to familiarize themselves with general tax guidelines for crypto gifts.

In the US, cryptocurrencies are classified as property assets by the IRS, so donations of crypto can be considered charitable write-offs for donors and tax-free for the nonprofit. Many other tax departments classify cryptocurrencies identically or similarly.

Crypto investors seeking ways to reduce their tax burdens often discover charitable giving as the perfect solution, one that benefits them and the cause they care about.

How Does My Nonprofit Get Started Accepting Cryptocurrency Donations?

In our experience, nonprofits have an easier time venturing into the world of crypto when they have a little guidance.

The Giving Block supports nonprofits and charities every step of the way. We help nonprofits open a crypto wallet that is specifically for charitable purposes. We also auto-convert gifts to US Dollars, and generate gift receipts for donors to use for tax return purposes.

Our customer support team is ready to assist our 1,000+ nonprofit clients day and night, in order to answer their important questions quickly. After charities sign up, we continue to provide support and visibility to nonprofits through our blog and via social media campaigns geared to drive new donors your way.

Have questions about how your nonprofit can accept bitcoin and other cryptocurrencies? Book a demo with us, and we’ll walk you through our product and show how your nonprofit can begin diversifying its revenue streams today.

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