How Nonprofits are Taking Advantage Of Cryptocurrency Giving
Cryptocurrencies are a form of virtual, decentralized currency. From well-publicized coins like Bitcoin, Ethereum, and meme-driven Dogecoin to smaller players like Uniswap and Curve, cryptocurrencies (crypto, for short) are the way of the future.
Charities like UNICEF, The Red Cross, and United Way are already accepting cryptocurrency donations—and your nonprofit can too. Here are five ways nonprofits are taking advantage of cryptocurrency giving.
1. They Can Hold Onto Donations
Crypto is an appreciable asset. If a nonprofit receives a donation in Bitcoin, they don’t have to cash it in right away. Instead, they can hold onto it and watch as the value grows over time.
Of course, there are risks associated with holding crypto, too—as they say, what goes up must come down. Just as a crypto donation could suddenly skyrocket in value, so too could it plummet. There are no guarantees.
Nonprofits that plan to hold onto cryptocurrencies as an investment should stick to accepting more stable coins like Bitcoin and Ethereum, and keep an eye on market trends.
2. They Have Access to a New Demographic
The majority of crypto holders are from younger demographics. Historically, younger populations have been less likely to donate to nonprofits due to student loans, lower wages, and other financial issues.
With convenient access to crypto, that story can change.
When your nonprofit accepts cryptocurrency, you open yourself up to an audience that was previously under-targeted: the 18-34 age range.
A Demographic Full of Millionaires, We Might Add
In the early days of crypto, values fluctuated wildly. Thanks to these massive jumps and dips, the cryptocurrency market has made some people very rich.
Not every crypto investor has the privilege of adding millionaire or billionaire to their resume. But plenty of them do, and now that the market has settled somewhat, there are wealthy people looking to donate their earnings to a good cause.
If your nonprofit doesn’t accept crypto, you’ll be missing out.
3. There’s a Tax Incentive
While many new crypto-owners are budding altruists, others might simply be looking for a tax write-off.
When you donate money to a registered charity, you can use that donation as a deduction on your personal taxes. The bigger the donation, the bigger the write-off.
If a donor has to cash out their crypto before they donate, they risk paying capital gains tax on it. That means less of a tax write-off for the donor—and therefore less money for your nonprofit.
But when they donate cryptocurrency directly, there’s no capital gains tax.
Plus, because the IRS treats crypto like stocks, your 501(c)(3) charity won’t pay capital gains taxes when you sell later on. It’s a win-win.
As cryptocurrencies enter the mainstream, these rules may change. But for now, it’s wise to take advantage of crypto donations.
4. There’s Added Transparency
Cryptocurrency works thanks to a technology called blockchain. While all the technical details about blockchain aren’t important right now, one fact is: it makes transaction records for major cryptocurrencies publicly available.
A quick Google search lets you see transaction IDs associated with all the latest Bitcoin purchases. Crypto is easy to track; its origins and destinations are hard to obscure.
As a nonprofit, transparency in funding is likely a crucial part of your operation. Crypto can help with this.
5. Anyone Can Receive Cryptocurrency
Anyone can donate crypto, and anyone can receive it. This convenience works for you in two ways.
First, if you have access to the internet, you can accept and access cryptocurrency donations from around the world.
This also applies to the population your nonprofit aims to help. When you’re trying to send funds to a remote location, wire transfers aren’t always feasible, cash is cumbersome, and bank fees cut into your fundraising efforts. Crypto bypasses it all.
With cryptocurrency, you can provide funding to anyone, anywhere in the world, at a moment’s notice.
Ready to Accept Crypto? Puzzle Pieces Can Help
By now, you’re likely thinking about adding a “Cryptocurrency” section to your website. The benefits are many, and the drawbacks are few. With that said, we recognize that it’s not always as easy as adding another button to your Donations page. And that’s where we step in.
At Puzzle Pieces Marketing, we’re nonprofit marketing pros, and we’re up to speed on all things crypto—including how nonprofits can (and should) use it to make a difference.
Give us a ring, and we’ll show you how!