Pros and Cons for Nonprofits to Consider Before Accepting Cryptocurrency
“Why would someone choose to give over the internet?”
About 30 years ago, nonprofits were asking themselves if they should set up a way to accept gifts from their website. Many nonprofits were really skeptical at the time. I know it’s hard to believe, but the idea of giving online back then was, for many nonprofit leaders, just a fantasy.
And here we are, 30 years later, and we don’t even think about it anymore. Of course, your website accepts gifts online.
The same thing that happened 30 years ago, with nonprofits shifting to accept donations online, is now happening with cryptocurrencies today.
The best guess a few years ago was that only 500 to 1,000 charities in the U.S. had the ability to accept cryptocurrencies. But the potential is huge.
The top 100 cryptocurrencies have a reported market value of nearly $113 billion!
Nothing to sneeze at.
Now, perhaps you think of cryptocurrency as something nefarious or something only a small group of people know about, but you would be wrong. Cryptocurrency is here, it’s a legitimate currency, it’s growing, and nonprofits are starting to wake up to it.
Here’s something that you should also know about these currencies: The people making gifts using cryptocurrencies are typically younger than the traditional donor. This was exactly the case when online giving started in the 1990s.
According to AFP Global, donors of cryptocurrency are typically male and more libertarian leaning — meaning they support causes that give people more freedom and fight oppression. They are people who are building the financial infrastructure of the future. And they are inherently passionate about innovative solutions that disrupt the status quo and put power back into the hands of ordinary individuals.
So, how are nonprofits approaching this? I have one client who is treating cryptocurrency like stock. The nonprofit receives it and sells it immediately as per the stock acceptance policies for the organization. But other organizations are actually holding on to it. For example, UNICEF receives, holds and disburses cryptocurrency with its UNICEF CryptoFund.
This is actually pretty cool because cryptocurrency is fully transparent. In other words, one day when everything is done through cryptocurrency, donors would be able to see exactly how their money is being used to make an impact.
As a nonprofit, here are some pros and cons you should consider.
- Being an early adopter allows you to connect with and engage with tech-savvy major donors, and you may be able to secure large gifts by offering this option.
- Cryptocurrency has value and is another type of asset that will become more and more popular for donors to give gifts.
- You must either have an infrastructure to process cryptocurrency gifts or use a third-party company to accept them for you.
- Donors who give cryptocurrency gifts often prefer that the organization hold it, rather than sell it off – because by holding it, the currency becomes more legitimate to the public.
- There is a risk. The valuation of cryptocurrency continues to be volatile.
- Do your research now. Learn what you can about how cryptocurrencies work and about the characteristics of crypto donors. You don’t need to be an expert, but you do need to have a strong foundational knowledge so you can speak about this to your donors and confidently secure gifts.
- Set up meetings with your organizational leadership, including finance, to discuss cryptocurrency. Learn if you can accept it now and, if not, what obstacles need to be addressed.
As part of the meetings, you’ll want to assess if accepting cryptocurrency is right for you. Many small nonprofits are successfully accepting cryptocurrency already, so size shouldn’t be an issue. But if right now is not right for you, start putting the pieces together to move in that direction.
You should also decide on your protocols for these gifts. Will you treat them like stock, or will you keep the assets?
- Start talking to your donors about cryptocurrency. Get an idea of whether or not they would be interested in making gifts in this way. This can help build a case for leadership and give you some valuable information about what you should be considering.
- Set it up for your organization to accept it. This should be done sooner than later. It’s only going to continue to grow as a means for donors to give, and you don’t want to be left out.
I know you still may be skeptical and wondering if it’s worth putting any energy into this, but, like I said, this was exactly what many nonprofit leaders were saying 30 years ago about online giving.
This is going to be another way for your donors to give, so it’s imperative that, like some organizations already have, you get ready to accept cryptocurrency as a way for your donors to give. This is just another way to be donor-centered.
Jeff Schreifels is the principal owner of Veritus Group — an agency that partners with nonprofits to create, build and manage mid-level fundraising, major gifts and planned giving programs. In his 32-plus year career, Jeff has worked with hundreds of nonprofits, helping to raise more than $400 million in revenue.