Crypto Giving: 4 Things Nonprofits Should Know About This Fast-Growing Digital Currency
Cryptocurrency has made its way into the nonprofit sector, presenting charitable organizations with an opportunity to leverage this valuable digital currency to raise more for their missions. Nonprofit trailblazers — like UNICEF, charity: water, and Save the Children — have already implemented an option for donors to give crypto, and it’s suspected that more organizations will follow suit over the course of the next few years.
If you are thinking about adding crypto to your library of donation options, this blog is for you. Let’s dive into four things nonprofits need to know about crypto giving.
1. Crypto’s Value Has Grown Exponentially Over the Years
Crypto was established in 2009 with the introduction of Bitcoin, the most famous crypto of them all. Perhaps a surprise to many, Bitcoin wasn’t worth a penny at its inception. A year later, Bitcoin’s value jumped to $0.09, and its value slowly crept up year after year. It only started to gain global recognition in 2017 when its price dramatically increased from $1,000 to nearly $20,000 in a single year.
Since then, Bitcoin’s value has skyrocketed to its peak at nearly $69,000 in November 2021. However, because of its volatility — driven by a number of factors — the price of Bitcoin has continued to rise and fall in the months that followed. As of publication, the price of Bitcoin was about $38,000. But there’s much potential for the future of crypto, as a panel of analysts predicts that the value of Bitcoin will reach more than six figures in 2025.
2. Crypto Donations Are Larger Than Average
The media coverage of crypto’s explosive growth over the last few years has caused a surge in crypto investments. According to Gemini’s “The State of U.S. Crypto Report,” 14% of Americans own crypto. There is an additional 63% of Americans who are crypto curious — 12% of whom are interested in investing in crypto within the next 12 months. This interest could garner up to 19.3 million total crypto owners in the U.S.
Here are the demographics of the average crypto owner:
- Average age: 38
- Average household income: $111,000
- Location: 52% live in urban or suburban areas and 26% live in small town or rural areas
According to Fidelity Charitable, 45% of crypto owners donated $1,000 or more to charities in 2020 — an accumulation of $28 million. If you think that’s impressive, that number skyrocketed to $331 million in 2021, a nearly 12-fold increase from the previous year.
3. People Are Incentivized to Donate Crypto to Charities
As more and more higher-net-worth individuals invest in crypto and let it appreciate over time, crypto owners are becoming interested in donating some of their digital assets to charitable causes. Because of the value of crypto, you’re probably wondering why someone would choose to let any of it go. The answer is simple: Crypto owners are more inclined to donate crypto for tax-related purposes.
First, the donor’s tax deduction will be equal to the fair market value of the donated cryptocurrency at the time of the donation. Secondly, the nonprofit receives the full value of the donor’s contribution because the donor does not have to pay any capital tax gains.
4. It’s Easier Than Ever to Accept Crypto Donations
The process of accepting crypto donations may seem daunting — given the complexity of its legal status in different countries. However, crypto marketplaces have made it incredibly easy to accept crypto donations from your biggest supporters.
Here is your five-step guide to accepting crypto donations:
- Ask if your current donation platform is capable of accepting cryptocurrency donations.
- Set up an account with a cryptocurrency marketplace.
- Gain approval from the cryptocurrency exchange, which could take anywhere from a week to six months.
- Connect your cryptocurrency exchange account to your donation platform.
- Start collecting cryptocurrency.
Before you even begin accepting crypto donations, it’s recommended that you update your gift acceptance policy to include information about what specific coins you’re accepting, how you will process crypto donations, and that crypto donations are non-refundable. This protects your organization from any unnecessary risks, liabilities, and expenses.
While not everyone will give crypto, it’s yet another donation payment method to offer your supporters to meet them wherever they are. Remember that the more payment methods you offer, the higher your donor conversion rate will be.
Nhu Te is senior content manager at Fundraise Up, the AI-powered online donation platform for enterprise nonprofits. In her work, she focuses on helping nonprofits create more impact through personalized donor relations, digital fundraising and thoughtful use of technology.