Cryptocurrency Fundraising: The Definitive Nonprofit Guide To Accepting Crypto Donations

by | Aug 13, 2021

What are cryptocurrency donations, and how do nonprofits accept them? The buzz around this giving trend is unmistakable, so let’s shed some light on this exciting and novel fundraising opportunity.

If you’re totally unfamiliar with crypto, you’ll be forgiven for wondering if your organization even needs to offer a crypto giving option to donors. But consider this: the whole concept of crypto philanthropy is just barely over a decade old, and it’s already on pace to become a $10B revenue stream for the nonprofit sector by 2032.

For many charitable organizations, crypto donations are the gateway to attract new donors and increase major giving. This “future-proofing” is a big reason why thousands of nonprofits, including about half of the leading U.S. charities, now have crypto fundraising programs.

Can your nonprofit afford to ignore crypto any longer? Use our complete guide to help you decide. You’ll discover how to accept crypto donations, decipher key considerations, and learn why crypto can be a game-changer for charitable organizations of all sizes.

What Are Cryptocurrency Donations?

Crypto donations are a relatively new form of non-cash asset giving. Similar to gifts of appreciated stock, which many nonprofits already accept, crypto donations offer donors a tax-efficient way to support their favorite charitable causes.

Because of the way crypto donations are treated by the IRS, donors may be able to give 20% more to their favorite causes by directly donating crypto instead of selling crypto first, then donating the cash proceeds. (Not to worry, we’ll get into the specifics later in this article.)

Fundraisers should consider that by not accepting crypto donations, your nonprofit may be leaving significant donation revenue on the table.

For a lively discussion of crypto fundraising, listen to The Giving Block co-founder Pat Duffy speak with Adam O’Brien of GoodUnited:

So how do cryptocurrency donations differ from stock donations?

Cryptocurrencies aren’t just assets to invest in; many cryptocurrencies have unique use cases within the larger blockchain ecosystem. And unlike traditional stocks, the culture surrounding cryptocurrencies tends to feel more creative, innovative, and youthful.

You’ve likely heard of Bitcoin, but you may also be familiar with other leading cryptocurrencies such as Ethereum, dollar-pegged stablecoins like USDC and USDT, or even “meme coins” like Dogecoin. (There are many, many types of cryptocurrencies that can be donated to charity.)

But make no mistake: donations of appreciated cryptocurrencies are just as impactful as donations of stock shares. With the growth of crypto usage around the world, more nonprofits have begun investing in crypto fundraising programs to tap into this new wave of philanthropy.

For extra credit: Browse our explainer on cryptocurrency and how it works.

What’s Fueling The Rise of Crypto Philanthropy?

Some nonprofits were quite early to crypto. For example, Save the Children started taking Bitcoin donations in 2013, to aid in recovery efforts after Typhoon Haiyan struck Southeast Asia.

As global crypto adoption has grown, so has the popularity of donating and accepting cryptocurrency. Today, thousands of charitable organizations take crypto.

What has fueled the crypto giving trend? Crypto philanthropy has taken off due to several factors, such as the following:

1. Market volatility. The ups and downs of the crypto market create wealth opportunities for crypto investors. In turn, these crypto holders can donate large amounts of appreciated crypto to their favorite causes.

2. Financial literacy education. Crypto users tend to be younger than the average donor, and may be less likely to work with financial advisors. But as time goes on, these investors continue to learn about the tax advantages of donating crypto.

3. Nonprofit adoption. With more nonprofits in the space than ever before, crypto philanthropy enjoys a widespread visibility. No matter what cause a donor feels passionate about, there’s a good chance they can find an organization that will take their crypto.

4. NFT fundraising. Since 2021, we’ve processed millions of dollars worth of crypto donations from non-fungible token (aka “NFT”) creators. These charitable donations have come via charity auctions, a percentage sale of royalties, and other innovative ways of raising money (and awareness) for important causes.

5. Crypto corporate giving. As the blockchain and crypto industry grows, many companies and projects have devoted themselves to corporate social responsibility, supporting disaster relief projects, food banks, women’s education, and more.

What do these trends suggest about the future of crypto philanthropy? We forecast that crypto donations will hit or exceed $10 Billion by 2032. That’s an estimate based on factors like the growth of Bitcoin’s price and the historical growth of crypto philanthropy.

Stay up on the latest trends: Get your copy of The 2023 Annual Report on Crypto Philanthropy.

Cover image of Crypto Fundraising 101 Guide for Nonprofits.

The Crypto Fundraising 101 Guide for Nonprofits

Discover what’s fueling the rise of cryptocurrency fundraising and how your nonprofit can build a successful crypto fundraising program.

  • Reasons to accept crypto
  • Crypto user demographics
  • Key factors to consider
  • Best practices for nonprofits

The Top Benefits of Accepting Crypto Donations

Crypto-friendly nonprofits are taking advantage of one of the fastest-growing fundraising opportunities for nonprofits. From major giving to new donors, crypto philanthropy’s benefits are numerous.

Here are a few of the best reasons to accept crypto donations:

1. Offer a tax-efficient way to support your cause.

Most donors are familiar with the phrase “tax-deductible donations.” You give, you write-off, you repeat next year. But the average donor (or fundraiser) may not fully understand the power that comes from donating non-cash assets like cryptocurrency.

Donations of appreciated cryptocurrency are not subject to capital gains tax, and they can also be written-off as charitable contributions. For donors, the result isn’t just a more favorable tax break than donating cash can offer. The amount saved (often 20% or more) becomes more to give, which is the perfect win-win scenario for everyone involved.

2. Increase major gifts to your organization.

Crypto donors tend to be more affluent than the average citizen, boasting an average income of $110,000. Fortunately, their generosity reflects their wealth. The average size of a crypto donation is between $6,000-10,000. That’s many times larger than the average online card donation, which is around $204.

In short, crypto philanthropy unlocks major giving opportunities for the nonprofit sector. What organization wouldn’t want a piece of the pie?

3. Acquire a crop of generous new donors.

Is your nonprofit seeking new donors? Here’s a whole community of individuals eager to make a difference—and already doing so. To date, there are roughly 420 million crypto users worldwide, up from about 300 million total a year ago.

Rapidly growing headcount aside, they’re also known to be a generous bunch. A Fidelity Charitable study found that these crypto users are more likely to donate over $1,000 to charity than their cash-giving counterparts.

4. Engage a younger donor demographic.

Crypto users tend to be young, about 38 years old on average. Compare that to the rising average age of today’s donors (now 65, according to Blackbaud). The difference is about 27 years!

From this vantage point, it’s obvious why nonprofits are eager to connect with crypto users: they have decades of charitable giving ahead of them. If your organization struggles to solicit donations from Millennials and Gen Z, perhaps it’s time to offer a more exciting (and tax-efficient) way for them to support your cause.

5. Tap into fundraising trends like NFT charity auctions.

In recent years, crypto philanthropy has become an increasingly creative and diverse giving landscape. What began with individuals making one-off Bitcoin donations to select charities has exploded into a phenomenon ripe with possibilities. We’re not just talking about donors giving different crypto assets, either.

Today, NFT creators eagerly partner with nonprofits to launch charity auctions, or donate a portion of their sales royalties on a recurring basis. With the rise of crypto collectives called DAOs, we’ve seen community-based giving initiatives take off as well. Finally, blockchain and crypto companies have shown their philanthropic spirit with a variety of CSR initiatives. The possibilities are endless.

6. Future-proof and recession-proof your nonprofit.

Crypto donations have been a lifeline for nonprofits dealing with COVID-19 fundraising shortfalls, industry-wide donor fatigue, and lingering economic uncertainty.

But for many organizations, crypto has transformed from an urgent solution into a long-term strategy to acquire new donors and stake a claim to the future success of their missions.

What can we set up now to help the organization in the future? Cryptocurrency donations is one of those things that we’re hoping people will thank us for decades from now.

Kristen Jakub

Director of Communications, CEDARS

Who Donates Crypto (and Why)?

Due to their uniquely desirable traits, crypto donors were seemingly “created in a lab” for nonprofits, in the view of our co-founder, Pat Duffy.

For decades, charitable giving trends have been documented and studied. But until recently, crypto donors have not been put under the microscope. This limited view of crypto donors has historically prevented many fundraisers from taking this donor class seriously.

When comparing crypto donors vs. traditional donors, it’s useful to look at their demographics and giving motivations.

Key differences: traditional cash donors vs. crypto donors

 Cash donorsCrypto donors
Average age6538
Average gift size$204 (online)$6,000-10,000
Average income$70,784 (household)$110,000
Tax considerationsCharitable deductions from cash donations.Charitable deductions from crypto donations, plus no capital gains on appreciated crypto that’s donated.

Sources: Blackbaud, Census.gov, Cheddar.

The tax benefits of donating cryptocurrency

For taxpayers in the US and several other countries, donating crypto is much more tax-efficient than donating cash.

In the US, the IRS treats cryptocurrency as a property, which means that if you buy crypto and it appreciates in value, it will be subject to the capital gains tax when you decide to sell or dispose of it.

However, by donating appreciated crypto held for at least one year to a charitable organization, that portion will not be subject to capital gains tax.

As a result, donating crypto can help donors greatly reduce their taxes:

  • Federal capital gains taxes can be as high as 20%
  • State capital gains taxes can be as high as 13%
  • A net investment income tax of 3.8% applies to some taxpayers, too

In addition to these capital gains tax savings, crypto donations may also be written off as charitable contributions on your tax returns.

By comparison, if you had sold your crypto first, then donated the after-tax cash remainder to charity, there would be much less to give (and more that you’d owe to Uncle Sam.)

In the end, crypto philanthropy is beneficial to donors and nonprofits. When it comes to donating crypto, more to save means more to give.

Donation Donation Form | The Giving Block

Now let’s sum everything up:

Crypto donors share the tax incentives that motivate stock and other non-cash asset donors. However, they are younger than the traditional stock donor, and more likely to respond to innovative digital fundraising methods such as NFT fundraising. Plus, crypto donors have decades of giving ahead of them, whereas the average nonprofit donor is in their mid-sixties.

In other words, crypto donors are the perfect target audience for nonprofits eager to increase major gifts and acquire new donors for long-term stewardship.

Your questions, answered: Demystify this unique demographic with our informative guide, Getting to Know Cryptocurrency Donors.

How Do Nonprofits Accept Crypto Donations?

Now you know the top reasons to accept cryptocurrency donations, what’s fueling crypto philanthropy’s rise, and the key motivations and benefits for donors. So how does your nonprofit get started?

1. Find a crypto donation platform you trust.

First and foremost, your nonprofit needs a crypto fundraising solution to process crypto donations. At a minimum, your crypto donation form should allow your donors to give multiple cryptocurrencies and send them a donation receipt after they give.

2. Launch a crypto fundraising strategy.

When you’re ready to accept crypto donations, you’ll need a communications plan to inform your current donor base. Next, you’ll want to take steps to steward crypto donors who have never given to your organization before.

3. Be willing to learn and experiment.

When your organization embraces crypto, NFTs and the wider web3 community, you’ll discover new avenues of digital fundraising you never knew were possible. It’s all part of the exciting future of (crypto) philanthropy!

1. Find a crypto donation platform you trust.

First and foremost, your nonprofit needs a crypto fundraising solution to process crypto donations. At a minimum, your crypto donation form should allow your donors to give multiple cryptocurrencies and send them a donation receipt after they give.

2. Launch a crypto fundraising strategy.

When you’re ready to accept crypto donations, you’ll need a communications plan to inform your current donor base. Next, you’ll want to take steps to steward crypto donors who have never given to your organization before.

3. Be willing to learn and experiment.

When your organization embraces crypto, NFTs and the wider web3 community, you’ll discover new avenues of digital fundraising you never knew were possible. It’s all part of the exciting future of (crypto) philanthropy!

Looking for more insights? Discover the rise of crypto philanthropy in our Crypto Fundraising 101 guide for nonprofits:

Sample images from Crypto Fundraising 101 guide for nonprofits prepared by The Giving Block

Fundraise More Crypto With The Giving Block

As the trusted solution for thousands of nonprofits, The Giving Block has processed more than $125 Million in crypto donations since 2018.

The Giving Block’s tools and services help nonprofits maximize the impact of their crypto fundraising efforts.

Our platform’s key features include:

  • A customizable donation form that embeds into your website’s crypto giving page
  • Automated features likes donor receipts, tax forms, and selling of crypto for cash
  • Fundraising dashboard for tracking cryptocurrency donations you receive
  • Integrations with 5,000 tools like CRMs, fundraising and productivity tools
  • Donor-friendly giving marketplace with peer-to-peer fundraising capabilities

Whether your organization is new to non-cash asset fundraising or wants to double down on a dedicated crypto strategy, we offer a plan to help you achieve your goals.

 

The Giving Block team was instrumental in getting us set up to accept cryptocurrency, and connected us to a whole new community of generous donors, and looping us in on crypto-centric giving events.

Whitney Broadwell

Direct Marketing, International Medical Corps

Ready to learn more? We’re here to help. Our team coined the term “Crypto Philanthropy” and has guided thousands of charitable organizations through the ins and outs of crypto donations.

To book a demo of the #1 platform for accepting cryptocurrency donations, contact our team today.

Frequently Asked Questions

Where can I find more about the tax benefits of donating crypto?

Donating crypto is a highly tax-efficient way to give. For more information, you can explore our tax resources for donors or visit the IRS’ website.

Do crypto donors prefer to give anonymously?

You may have heard that privacy and autonomy are core values of the crypto/web3 community. While some crypto donors wish to be anonymous or pseudonymous, this is not the case for everyone. While The Giving Block offers an option for anonymous giving, nonprofits may choose to enable or disable this feature. In order to receive a tax acknowledgement, donors will need to enter a working email address when donating crypto via The Giving Block.

Is my nonprofit organization allowed to accept crypto donations?

Thousands of nonprofits of all sizes accept crypto donations. In order to accept crypto donations, your nonprofit may simply need to specify the guidelines for doing so in its gift acceptance policy, then create an account with a crypto fundraising platform like The Giving Block. As with any new investment or account, it’s good practice to check in with your organization’s leadership and/or board before proceeding regarding any additional considerations.

Which nonprofits accept donations?

Nonprofit and charitable organizations of all sizes accept cryptocurrency donations. Thousands of organizations fundraise crypto with The Giving Block. See the complete list.

Does my nonprofit have to hold any cryptocurrency it accepts?

Nonprofits using The Giving Block can automatically sell their crypto for its fair market value in cash. They may also hold crypto donations. Your organization’s gift acceptance policy may state whether your nonprofit can or cannot hold crypto donations upon receipt. 

How does donating crypto affect the environment?

While energy usage varies widely between different blockchains, they all require some amount of energy to operate. The Giving Block is the first nonprofit fundraising platform that matches 2x carbon reductions for all cryptocurrency donations made via its platform. Learn more about EcoGift, our sustainable approach to crypto philanthropy.

Download the Crypto Fundraising 101 Guide for Nonprofits
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