Crypto and stock donations are impactful, tax-optimized giving options for donors to support nonprofits and other charitable organizations.
When your nonprofit receives stock or cryptocurrency donations, you generally have two options: hold the assets as an investment or liquidate them for their market value in cash.
With the rise of digital assets in charitable giving, many nonprofits are revising their gift acceptance policies to stay current and keep their donors well-informed. Here are a few considerations for your nonprofit to ponder.
To Hold or Liquidate: What Should Nonprofits Do With Non-Cash Donations?
Your organization’s gift acceptance policy may already specify how to handle stock, crypto and other kinds of non-cash donations that you receive from charitable donors.
If you don’t have one, consider taking the time to develop one this year. Having a gift acceptance policy in writing is considered a best practice for all nonprofits.
Why is it such a must-have? First of all, it can clarify processes for members of your team. Second, having this available on your website or upon request can manage your supporters’ expectations about what kinds of donations they can give.
As you develop or amend your policy, here are some arguments for selling and holding donating non-cash assets like crypto and stock.
Option A: Why Sell or Liquidate Non-Cash Donations?
The primary reason to sell non-cash donations upon receipt is to ensure that your nonprofit can benefit from the full market value of the gift.
Some nonprofits may decide that “liquidation upon receipt” is the general guideline and leave it at that. Others may want to have a few caveats, depending on the specific type of donation or the market conditions.
Option B: The Case for Holding onto Non-Cash Donations
Holding a donation of an asset could be considered an investment in your nonprofit’s future. While risky, taking a gamble on positive market growth could result in a non-cash donation greatly appreciating in value.
A positive return means that your donor’s gift had a greater impact on your mission. But you run the risk of losing out if the market value of the asset in question depreciates.
The Bottom Line: Non-Cash Assets and Your Gift Acceptance Policy
While all charitable donations have some market value, not all donations are created equally. There may be assets your organization does not wish to accept, such as boats or other motorized vehicles, because they are difficult to maintain or a burden to sell.
From a risk management standpoint, each type of asset your nonprofit accepts might need to be addressed individually. For digital assets like cryptocurrencies, Deloitte has laid out several key considerations for nonprofits and their gift acceptance policies.
Diversify Your Nonprofit’s Revenue Streams with Crypto and Stock Donations
If you’re updating your nonprofit gift policy, why not upgrade your fundraising solution too? The Giving Block helps more than 2,000 nonprofits accept cryptocurrency, stock and credit card donations, and offers strategic resources, consulting, integrations and much more.
Disclaimer: This article is for informational purposes only. It is not meant to be, nor should be considered, financial advice. Please consult with a qualified professional advisor for gift acceptance considerations for your nonprofit or charitable organization.
