Crypto Donations: Should My Nonprofit Accept Crypto?
Crypto Donation Pros and Cons
Should my nonprofit accept crypto donations?
As the use of cryptocurrency, such as bitcoin, grows, more and more nonprofits are accepting bitcoin donations, but what are the upsides and downsides of taking crypto donations? Should all nonprofits get on the crypto donation caravan? Read for our take on cryptocurrency for nonprofits.
Top line: Many nonprofits have started accepting crypto donations and, in turn, have raised more money than ever expected. Most nonprofits still don’t accept these donations but that is quickly changing. Last year some nonprofits raised more than ten percent of their budget in six months all from new donors. Time will tell if this is an outlier, but it seems promising. Due to the volatility and tax consequences of selling Bitcoin and other Crypto, there seems to be a built-in need and incentive for donations to nonprofits the short term at least.
Why should nonprofits consider accepting crypto?: It appears that the trend in crypto donations is to decide to donate a certain amount or a percentage due to capital gains or a tax write off and then look for an organization that accepts crypto. This is not the traditional way of donating to a nonprofit where you start with the organization and then decide what you will donate.
Non-Fungible Tokens/NFTs: One new opportunity for nonprofit crypto donations is a Non-Fungible Token (NFT) which is bought through cryptocurrencies, with dedicated funding for nonprofits. NFTs are often designed to promote a cause and have started a new trend for nonprofits where a dedicated amount of the NFTs sale goes to a nonprofit. The drawback is both in the marketing of the NFT in how much money the nonprofit is going to get as well as in the long-term values of NFTs and whether they will hold value for nonprofits as a revenue source over time.
What are the costs of accepting crypto donations?: Some platforms don’t charge to be listed like crypto.io while others, like Giving Block, have a minimal set up cost about 3 to 5k a year and you are listed on their platform. Many charge a service fee or transaction fee which can quickly add up.
What nonprofits accept crypto donations?: The list of nonprofits who do this is large and steadily increasing. Nonprofits that accept crypto currently include United Way, American Cancer Society, Surf Rider Foundation, Humane Society, and many others big and small.
Drawbacks: To accept crypto, you will need to get agreement from your board and potentially change bylaws to accept the donations. You should also check with your attorney about tax issues and other compliance issues that may arise.
Reputation: Crypto has a better reputation than it used to, but it still is less regulated than other forms of currency and is violate in its value. The process of crypto mining has environmental consequences. All of this is an important discussion to have with your board when weighing the pros and cons.
Nonprofits should not invest in crypto*: Just because a nonprofit accepts crypto donations does not mean they should invest in crypto. The volatility of crypto makes owning crypto as a nonprofit a risky endeavor.
How do you decide if this is right for your nonprofit?: This needs further exploration. It is worth discussing through your board, attorney, fundraising staff, and CFO.
Bottom line: We are not experts in crypto. In fact, we are far from it. So, before making investment decisions for your nonprofit or accepting crypto donations consult a financial professional, your lawyer, and your board.
Want to learn more about crypto donations? Check out these resources:
Have questions about crypto donations for nonprofits? Drop us a note.