As international organizations spearheaded crypto’s adoption to the nonprofit fundraising world, smaller, more local charities are likely to follow.
With more nonprofits of varying sizes taking advantage of crypto philanthropy, some questions are asked more than others. Here are answers to the three most common questions about crypto philanthropy.
Question #1: Why Should My Nonprofit Consider Crypto Donations?
While there are a number of reasons nonprofits are beginning to accept crypto donations, one benefit trumps the rest — tax incentives. Cryptocurrency offers a more tax-efficient way for donors to give, which results in larger donations compared to cash or checks.
Here’s an example of how that works: when a crypto investor donates a portion of their gains to a nonprofit that doesn’t accept crypto, that donor has to convert their Bitcoin to U.S. dollars before donating. When that donor converts to U.S. dollars, it’s now on the crypto donor to pay capital gains tax. This results in less money going to the charity than if they had accepted the Bitcoin donation and then converted it to the U.S. dollar.
Another reason why nonprofits accept crypto donations is that it opens them up to a younger donor demographic who will hopefully become long-term, legacy donors. Today, more than half of the U.S. population are millennials or younger, and in the next 25 years, we are expecting one of the greatest transfers in wealth in U.S. history.
In the meantime, though, nonprofits that accept crypto are meeting millennials and Gen Z where they currently are — in the digital age.
Question #2: Why Are Millennials And Gen Z Donating Cryptocurrency?
The millennial and Gen Z crypto donor base is enthusiastic and keen to give back to their communities. Since crypto donors can effortlessly give cryptocurrencies instead of cash, it makes it even easier for these younger donors to support their favorite causes. According to our own data, the average crypto donation is $10,000.
And it gets better.
Did you know that millennials are more likely than their elder counterparts to see crypto as more than a fad, and that the average crypto user is 38 years old? These users tend to be affluent, with an average income of $110,000 — and they are keen to give.
Question #3: What Are Things To Keep In Mind Before Accepting Crypto Donations?
Once your nonprofit has decided that they want to accept crypto, numerous avenues can be taken and certain things should be kept in mind.
What currencies can your donation platform accept?Is your operations team capable of managing cryptocurrency wallets and scaling its technical solution during peak fundraising season?Can it generate tax receipts for your crypto donors?Is your donation system secure and regulatorily compliant?Does it seem safe to the crypto, NFT and Web3 community?Does it offer your organization the ability to hold and sell donated crypto?Is your support team knowledgeable about cryptocurrency?
Once your nonprofit identifies its goals and capacity, it may opt to use a full-service and turnkey solution for crypto fundraising, or something more limited in scope. Regardless of which solution your nonprofit chooses, accepting cryptocurrency is a great way to bring your nonprofit into the future.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
