Cryptocurrency fundraising is one of the fastest-growing donation methods today. That’s largely due to its tax advantages and the exponential rise of users investing in crypto. Did you know that hundreds of millions of dollars worth of cryptocurrencies like Bitcoin are donated to charities every year?
Naturally, nonprofits of all sizes are taking notice and want to know more about this giving trend. Read on to learn about the key benefits of cryptocurrency for nonprofits, and to see how this exciting fundraising strategy is worth pursuing for your organization.
What Are The Benefits of Cryptocurrency Donations?
Let’s get one thing out of the way: having prior expertise in crypto and blockchain is not a requirement for accepting cryptocurrency donations.
In fact, most nonprofit fundraising teams know very little (or nothing) about crypto when they get started.
Despite having a lack of knowledge, many nonprofits believe that the opportunity in crypto fundraising is too good to pass up. For others, accepting crypto donations is less a matter of “if,” and more a matter of “when.”
Through our work with thousands of charitable organizations, we’ve identified these most common reasons why nonprofits benefit from fundraising crypto:
1. Crypto Donations Help Diversify Nonprofit Revenue Streams
Has your organization suffered from donor fatigue?
Apathy among donors is a hot topic, but the truth is that experiencing even slightly lower giving levels can negatively impact your nonprofit’s ability to operate and deliver on its key mission goals.
The problem may not be with your year-end appeal’s messaging. Current events like the humanitarian crisis in Ukraine may have inspired your usual donors to give elsewhere before you’ve made your year-end appeal.
In cases like these, having another donation stream like crypto helps your organization become less reliant on one or two main methods of fundraising. You’ll have another donor base to connect with and further opportunities to fundraise, providing options no matter the time of year or what’s happening in the world.
2. Crypto Enables Nonprofits to Future-Proof Their Organizations
The future may be anyone’s guess, but this uncertainty is exactly why nonprofits should take steps today so they can fundraise more confidently in the years ahead. That could mean:
- Readying your nonprofit for fundraising in a recession or economic downturn
- Preparing to adopt the next wave of nonprofit technology to stay ahead of the curve
- Developing a digital-first strategy for times when in-person events are less popular due to high pandemic infection rates.
Accepting crypto donations is one way for your nonprofit to achieve all three of these desirable outcomes.
For some nonprofits, the conversation about cryptocurrency donations is much like the debate over getting a website, social media accounts, or accepting credit card donations.
Kristin Jakub, Director of Communications at CEDARS, a Nebraska-based nonprofit that provides foster care to children and youth, told us that future planning was a key reason for getting started with crypto fundraising.
“A lot of the conversation that’s been happening for the fundraising team is, what can we set up now to help the organization in the future?” Jakub said. “Cryptocurrency donations is one of those things that we’re hoping people will thank us for decades from now.”
3. Crypto Users Are Ideal Nonprofit Donors
Many traditional fundraising strategies like direct mail and in-person galas are often geared toward Baby Boomer and Silent Generation donors. These tactics rake in a sizable annual donation volume, which makes sense because today’s average cash donor is 65 years old.
But as most organizations know, what works to inspire gifts from the 60+ demographic won’t necessarily resonate with younger donors. Crypto users represent a whole new category of donors—and they’re flying under the radar of most nonprofits.
Crypto donors are typically young, affluent and passionate about the causes they support.
With an average age of 38, the majority of crypto users are Millennials, followed by Gen Z and Gen X.
They’re also relatively affluent compared to their peers. And they’ve been found to be more generous, too: according to a report from Fidelity Charitable, crypto donors are more likely than cash donors to give $1,000 or more to charities each year.
Embracing crypto donations is an easy way to engage with a highly-generous and younger donor base you’re not currently reaching through other fundraising methods.
4. Crypto Charitable Giving Is Highly Tax-Efficient
Of course, donors like to know they’re making a difference. But they also consider other factors when making charitable gifts, such as tax deductions.
For nonprofit and donors alike, tax efficiency is perhaps the most immediately-obvious benefit of cryptocurrency donations.
Donating crypto is a very tax-friendly way to give charitably. Crypto is considered a property by the IRS for tax purposes, meaning that crypto donations are treated similar to stock donations.
As a result, crypto donors often aren’t responsible for paying capital gains taxes on their donated cryptocurrency. They can also typically write-off their donations as a charitable contribution.
Because the tax savings for crypto donors often outweigh those for cash donors, a crypto investor that wants to support your cause would likely prefer to donate in crypto.
5. Crypto is Here For Good
Today, mainstream crypto adoption is taking place at a rate similar to the internet in the mid-late 1990s. Sooner or later, cryptocurrencies will be ubiquitous among individual investors and businesses alike.
A study from Deloitte found that nearly 75% of businesses plan to accept either cryptocurrency or stablecoin payments over the next two years.
If your impression is that crypto is temporary or won’t survive market dips, this trend may run counter to your assumptions.
But despite what you may have heard about the crypto market’s dramatic highs and lows, cryptocurrency’s volatility actually creates the greatest philanthropic opportunities for crypto donors.
The long-term positioning is another main reason why nonprofits are taking crypto seriously. By getting started today, your nonprofit can have a headstart on understanding the Crypto Philanthropy space and connecting with the donors in this exciting space.
Why Are Nonprofits Accepting Crypto Donations?
Fundraisers around the globe are embracing cryptocurrency fundraising. No matter your organization’s cause, size, or scope of work, crypto donors can help you achieve your most ambitious fundraising goals.
Get our free PDF download, Crypto Fundraising 101: A Beginner’s Guide for Nonprofits, to find out more about the history of crypto, how it works, why nonprofits are using it, and the key motivations of crypto donors.