Myth vs. Fact: Should Crypto Investors Just Donate Cash?

by | Jul 27, 2022

With more than 295 million global users, crypto is fast becoming an essential nonprofit fundraising source. But while crypto investors tend to be pretty savvy about cryptocurrency’s real-world “use cases,” it’s critically important for nonprofits to actively engage with crypto donors and encourage them to donate crypto. New users are also entering the crypto community every day and might be wondering about the benefits of making charitable cryptocurrency donations.

Educating your donor base helps both your organization and the greater crypto community understand why they should donate their crypto over traditional donation methods such as checks or cash. Emphasizing the benefits can also yield generous returns for your organization as you highlight the many reasons that Crypto Philanthropy is becoming one of the fastest-growing fundraising methods for charities. 

Here are a few of the biggest reasons why cryptocurrency investors should donate their crypto instead of cash.

Crypto Donors Enjoy Significant Tax Benefits 

Everyone knows that there are tax incentives to making a cash donation to a nonprofit organization. Did you know that donating crypto has even more tax incentives? 

Because the IRS regards virtual currency as property for tax purposes, crypto donors typically aren’t required to pay a capital gains tax on appreciated crypto assets that are donated to a registered 501(c)(3) charity. Capital gains rates can get as high as 37%, so these savings can add up considerably—giving crypto donors more crypto on hand to donate. Further, these donors can also typically write-off these charitable donations to lower their taxes even further. 

What this means is that crypto users benefit the most by donating their crypto directly, rather than selling it first and then donating the proceeds. While each individual’s financial situation differs, crypto donations are overall one of the most tax-efficient ways to be generous. Ensuring that donors are aware of this is one of the best ways to highlight the benefits of donating crypto rather than cash. 

Note: This tax-related information is not financial or tax advice. Please consult with a professional tax advisor regarding your financial situation and decisions.

Mainstream Crypto Adoption is Happening in the Nonprofit Sector

Crypto users are eager to use their cryptocurrency for social good and tend to be enthusiastic about real-world opportunities for their digital assets. The nonprofit sector is experiencing one of the most exciting forms of mainstream crypto adoption as crypto donations enable users to make a positive impact throughout the world. 

Nearly half of crypto users donate at least $1,000 to charity each year. On Crypto Giving Tuesday in 2021 alone, $2.4 million was donated to over 1,000 participating nonprofits. Not only are nonprofits able to create further impact with crypto donations, they also experience an increase in outreach and gain more advocates for their cause: 

Cryptocurrency offers another innovative way for us to engage champions of our cause. After reading about the growing intersection of blockchain technology and social impact, I began to immerse myself in the cryptocurrency community and have been both surprised and inspired to see its alignment with [our organization] and our history of impact-driven innovation.

James Siegal

Senior Fellow and Former CEO, KABOOM

There’s A Wide Variety of Crypto Fundraising Opportunities 

There are many different ways that crypto users can get involved in supporting their favorite causes. Crypto donations open up an entire world of fundraising opportunities: 

  • Nonprofits have the ability to accept many different kinds of cryptocurrencies, not just Bitcoin. This means organizations have access to the crypto community as a whole and won’t end up turning away certain crypto users. 
  • NFT (non-fungible token) charity auctions and other methods of NFT fundraising are an excellent way for nonprofits to expand their reach within the crypto community. NFT creators or investors can sell their NFTs and then donate the proceeds. 
  • When nonprofits accept crypto donations, they have two options: transfer the crypto into cash, or keep it for the long term (HODL). This provides an opportunity to select which decision is best for your nonprofit. 

Download The Giving Block’s NFT Fundraising Report to learn more about all the ways your organization can incorporate NFTs into your fundraising strategy. 

Crypto Investors Shouldn’t Donate Just Cash

There are many reasons why crypto investors should donate their cryptocurrency instead of cash. However, not every crypto user is aware of the benefits of making a crypto donation. 

Highlighting the benefits—and the many opportunities for your organization to enhance its fundraising strategies—helps you connect with crypto donors and establish your nonprofit at the forefront of Crypto Philanthropy. 

Want to learn more about the benefits of cryptocurrency donations? Sign up for The Giving Block’s next webinar for nonprofits and get the latest information on why accepting cryptocurrency is now more important than ever.

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