For my fellow Gen Xers - remember when some people thought the internet was just a phase? I have heard the same rumblings about crypto, but Crypto Philanthropy is here to stay. Next-Gen and savvy older donors are beginning to embrace donating digital assets, myself included.
According to Canada Helps 2022 Giving Report, younger Canadians make the majority of cryptocurrency donations. In 2021, 4.5% of Generation Z and 6.1% of Millennials had made donations of cryptocurrency. Think Advisor reported that the $331 million in crypto donations Fidelity Charitable saw last year were made by a mix of old and young donors.
This article will cover blockchain basics, the benefits of accepting cryptocurrency, how to start accepting crypto donations and how to promote your crypto campaigns.
Watch our YouTube video on Crypto Fundraising:
Cryptocurrency and Blockchain Basics
Cryptocurrency is a digital currency that transfers funds through a decentralized network using blockchain technology. The demand for crypto has been on the rise in this new era of the internet, with a market value reaching over two trillion dollars in 2021.
Blockchain is a type of computer database that stores user data. All these "blocks" are connected or "chained" together - hence the name, creating a chronological sequence of information that gets more complex as other blocks are added to the chain.
Crypto stores transactional information on the blockchain, like a ledger. Unlike other currencies, however, it is not controlled by a central authority like a bank or the government. It is regulated by its decentralized network of users who can view this ledger of information, and its value is determined by market demand. Some popular coins are Bitcoin and Ethereum, but thousands are in circulation.
Though the technology may seem complicated, crypto has many benefits for nonprofits.
Benefits of Crypto Philanthropy
Donations made with cryptocurrencies to registered nonprofits are tax-deductible. Unfortunately, unlike other asset donations in Canada, cryptocurrency donations are subject to capital gains tax. However, this may change in the future. Crypto is a relatively new technology, and the CRA may need some time to catch up.
Secondly, the blockchain offers security for nonprofits and donors. It is nearly impossible to counterfeit or double-spend. Each block has its specific timestamp that secures it within the sequence and a unique "hash code," which is a set of numbers and letters representing the data within the block.
Another benefit is its decentralized structure. Because crypto uses a decentralized network of computers, transactions can happen quickly, internationally, anonymously, anytime, anywhere, without the red tape of a central authority or the restraints of a third party.
Crypto also offers you transparent transactions. Every transaction is logged and shared with all other users and "blockchain explorers" on websites like blockchain.com. Though some users may be anonymous, a record of every transaction is available for anyone to view, allowing nonprofits and donors to track and be transparent with their donations.
Lastly, using crypto can be very efficient. Especially if money is required to exchange multiple hands or cross borders before reaching the people in need. Without crypto, this may have some associated fees or extra expenses that diminish the value of the original donation.
Accepting Crypto Donations
The first way is to use a cryptoprocessor specific to nonprofits. Platforms like The Giving Block will set up a wallet for your nonprofit and help you accept, hold, and convert crypto donations. Though transaction and service fees may be associated, they will also help you by sending out tax receipts and creating marketing campaigns for crypto donations.
Another way is to use a crypto exchange like CoinBase. These platforms will immediately convert your crypto into cash and work internationally. However, they are not geared towards nonprofits specifically, so you will need to handle the tax receipts and collect donor information.
The last way is to open your crypto wallet, such as Coinbase Wallet. This may sound daunting, but it will give you more control over your crypto finances. You can manage how you buy and sell more directly and choose to accept smaller coins that other platforms may not support.
Promoting Your Crypto Campaign
Raise awareness about your crypto donation option by adding a QR code to your website or marketing materials. Donors can scan the code with their mobile wallet to donate.
Reach out to your existing donors and let them know that you are now accepting crypto donations. This is a great way to get the word out to your most loyal and high-value supporters.
Use social media to spread the word about your new donation option, letting your followers know they can now donate cryptocurrency.
Put up a sign! Prominently display that you accept Bitcoin, Ethereum, Litecoin, etc.
Be creative! There are endless possibilities for promoting your charity's new crypto donation option. Brainstorm with your team and develop a campaign that best fits your organization's style and mission.
As cryptocurrency becomes increasingly popular every year, it will soon become a valuable tool in your fundraising toolbox. Cryptocurrency and blockchain can make it easier for your nonprofit to raise funds, which will ultimately help you accomplish your mission. Researching and learning about cryptocurrency may help you implement crypto fundraising within your organization.
As always, please feel free to reach out to us at The Cause if you have any questions on how your charity can take advantage of crypto donations.