The news media has featured huge donations to charity since the days of Carnegie and Rockefeller. Even today, for example, we see frequent headlines about the generosity of Mackenzie Scott and the $12 billion she has given away in the last two years.
So, it wouldn’t be a shock if you happened to miss a rather significant story in the world of major gifts. Back in February, Food Bank for New York City shared the following update:
What makes this story unique is that the artist, Dmitri Cherniak, sold his digital artwork as a non-fungible token (NFT) for $3.2 million in cryptocurrency. He then donated the proceeds to the food bank.
And they’re not the only ones. Yes, NFTs and cryptocurrencies have arrived in nonprofit fundraising. Savvy organizations would be wise to capitalize on this.
Now, wait just a second before you stop reading.
I can feel your eyes glazing over at the mere mention of crypto. But I’m not here to dive deep into blockchain technology or sell you on the idea of signing up for Coinbase (although I did appreciate their bouncing QR code ad during the Super Bowl). If you want a quick primer on all of this, here’s a good one.
I’m here to share a few tips and tactics on how nonprofits can tap into the wealth found in cryptocurrency and spark the generosity of those donors.
First, it’s critical that you avoid thinking of crypto as a “currency.” It’s more like a stock or donor-advised fund (DAF) whose value can fluctuate over time. And speaking of value, there’s an estimated $2 trillion sitting in cryptocurrency assets right now.
So how can nonprofits tap into that? Like any other avenue for charity, it mostly boils down to two factors: availability and communication. To put it simply, you need to provide a way for donors to give you cryptocurrency, and you need to get in front of them to talk about it.
Here are some things nonprofits should consider:
According to the IRS, cryptocurrency is considered a capital asset for federal tax purposes. That means, those who invest in crypto need to pay taxes on any gains when April 15 rolls around, just as you would on your home or your stocks.
But—and this is critical—donating crypto to charity can reduce those taxes. This provides a great incentive for cryptocurrency investors to give to your nonprofit.
There are a lot of great platforms for cryptocurrency, and there are also a lot of great platforms for donation forms. The problem is that there aren’t many good platforms that incorporate cryptocurrency into donation forms.
If you’re looking for solutions to help your organization accept crypto donations, here are a couple of options we’d recommend:
So how do you talk about cryptocurrency to your donors? Well, the most important part is that you do talk about it. Just like monthly giving, DAFs, planned giving, etc., the more you talk about it, the more likely donors will be receptive to it.
Here’s an example, again from Food Bank for New York City:
But there’s one added wrinkle here.
We always say that nonprofits must meet donors where they are. In the case of crypto donors, instead of sending out a direct mail package or an email, it makes more sense to engage with communities on social networks like Reddit and Twitter.
Children International is a good example here:
A huge thank you to the @elongateog community for their continuous support. Their partnership & gifts of over $425,000 in #cryptocurrency have made a huge difference in the lives of children & families across our global communities. #cryptoforgood 💜 pic.twitter.com/W3Eq00EhmY— Children International (@children) December 22, 2021
This is what scares away most mainstream folks. Cryptocurrencies tend to fluctuate wildly in value.
Take Bitcoin, for example. In the last year alone, the value of one Bitcoin has ranged from $29,790 on July 20, 2021, to $67,554 on Nov. 8, then back down to $45,524 on March 31, 2022. Others, like Ethereum and XRP, have seen similar variance.
Again, it’s important to think of crypto as a stock investment. That brings us to the next point.
Once you receive cryptocurrency donations, you’ll need to decide what to do with them.
Nonprofits will need to ask themselves whether to hold on to these donations and wait for them to peak before selling, or offload them immediately and cash out.
This is strictly a decision that makes the most sense for your organization. You’ll likely want to discuss with a financial advisor.
Many nonprofits have expressed interest in dipping a toe into the cryptocurrency waters, but they don’t know where to begin. I hope this list was helpful, and if you need a little more guidance, don’t hesitate to contact us.
If you’d like to dive a little deeper into this subject, I recommend listening to RKD Group’s recent podcast episode with Pat Duffy, co-founder of The Giving Block. It’s a great, insightful discussion.