Cryptocurrencies like Bitcoin have become household names. These virtual and decentralized currencies offer their users a range of benefits from convenience to security. The nonprofit world is taking notice.
In fact, the use of e-currency to provide targeted disaster relief has been evidenced in world conflict and natural disasters occurring from Syria to Texas. These digital cryptocurrencies help provide relief across the world without the concern of hidden fees and troublesome tax considerations.
These are just a sampling of the many reasons that crypto donations to nonprofit organizations are gaining in popularity. Explore these reasons, then understand how nonprofits can make crypto donations easier with the right strategies and tools.
Why Crypto Donations are Gaining Popularity
At its height, Bitcoin was trading at a value of $57,000. This growth came during the COVID-19 pandemic, as users and investors increasingly saw the importance of a decentralized currency system that can be used to support virtually every industry, every country, and every citizen therein without the need for banks and the associated accessibility issues.
Even major financial institutions like MasterCard have recognized the value of these digital assets and are incorporating them into their organizations. Among the nonprofit sector, the success stories from donating crypto have led to an explosion in popularity. When considering how to give, donors view cryptocurrency as providing the following benefits:
More Direct Aid
The Syrian civil war prompted the largest refugee and migration crisis since World War II. In its wake, the people of Syria were forced to flee all over the world without assets or the means to access them through traditional banking.
Bitnation, an organization dedicated to using blockchain technology to voluntarily record world information, saw the needs of the Syrian people and the means to help them through Bitcoin. Their efforts included setting refugees up directly with emergency blockchain IDs as well as Bitcoin Visa debit cards they could use all over the world.
This demonstrates the power of cryptocurrency to put aid directly into the hands of those who need it most, no matter where they are. Nonprofit donors recognize this.
Bigger Tax Write-Offs
The benefits of cryptocurrency donations are mutual, as well. For donors, giving with crypto can often mean larger tax write-offs and deductions than would be possible through cash donations. Because cryptocurrency is seen as an asset rather than an actual currency by most legal definitions, donors don’t have to pay capital gains tax when giving crypto to a 501(c)(3).
As a result, donors can write off the full appreciated asset value of the cryptocurrency that they give, resulting in a greater tax deduction when the time comes. This often makes donating with crypto a smart move for any small business trying to manage its tax obligations while making a difference. It can be used as either a deduction or a tax write-off depending on the nature of the donation, each of which can be used to lower your taxes.
Global Convenience and Transparency
Finally, donating with cryptocurrency is just easier if you’re moving finances around internationally. Not only do donors not have to deal with any kind of currency transfer but they can also track their donations across nonprofit organizations to find out exactly where their money is going.
This is the idea behind GiveTrack, an organization that makes it possible for donors to see the good they do with unprecedented transparency. No matter where you are in the world, blockchain technology allows for the immutable record of financial transactions. This adds accountability and convenience to the act of donating.
How Nonprofits Can Make Crypto Donations Easy
With all the benefits of cryptocurrency donations laid out, nonprofits can do themselves and others a world of good by accepting cryptocurrency. However, for many in the nonprofit sector, this may seem like a daunting prospect. After all, you may not know much about crypto and might be afraid of the technical complexity needed to manage these donations.
The good news is, nonprofits can make crypto donations not only possible but easy. After all, regulations on cryptocurrencies these days are still limited, while the software and service platforms you need to support crypto donations are becoming more accessible all the time.
Here’s how you can easily accommodate cryptocurrency donations:
Accommodate Tax and Asset Regulations
The first step to the successful acceptance of cryptocurrency donations begins with a legal and financial plan. Nonprofit accountants should already have the communication, auditing, and technological skills needed for successful financial management. From there, developing a cryptocurrency strategy that accommodates local tax and asset regulations can be as simple as brushing up on current cryptocurrency regulations.
Use a Simple User Interface for Crypto Donations
With legal accommodations addressed, you can then be on the lookout for cryptocurrency trading systems, wallets, and transaction management that will make accepting crypto a breeze. The range of modern services that allow you to do this all with a simple, user-friendly interface is impressive.
Here are just a few of your options:
- BitPay
- CoinBase Commerce
- GoCoin
- PayPal
- TripleA
Explore these services, and determine which might be best to offer your donors.
Give Donors a Point of Contact
Finally, it should be a priority of your cryptocurrency acceptance strategy to provide donor support. If a donor runs into an issue, they need someone they can call to address the problem. Maintain someone on staff that has enough awareness of cryptocurrency donation platforms and the means to troubleshoot and address issues.
Securing an Accessible Flow of Finances for Nonprofits
Because cryptocurrency transactions increasingly appear to be the future of not only global commerce but nonprofit aid, accepting these currencies as donations now can be highly beneficial for both donors and communities in need.
By accommodating regulations, using a simple user interface, and giving donors a point of contact should they experience issues, you can create a new and easy avenue for financial liquidity. This can help you address global issues and make a greater difference in the world.
