Accepting crypto donations in the charitable sector
More and more charities are accepting cryptocurrency donations every day, including prominent international charities such as Care, Malala Fund, Save the Children, and Médecins Sans Frontières Australia.
There are many reasons why charities may look to accept cryptocurrency donations. The first, and most obvious reason, is the low transaction costs associated with accepting crypto donations. Large giving platforms often come with a large commission or fee, which eats away at the donation, reducing the amount that actually goes to the charity. Global Giving, for example has 8-15% in fees, while GoFundMe charges 2.9% plus 30 cents per transaction. These amounts may seem like a drop in the bucket, but can really add up over time, ultimately impacting the ability of charities to deliver their services.
Accepting crypto as a donation can also open you up to a broader market and help you diversify your revenue. Crypto can be sent from virtually anywhere in the world almost instantly, whereas many donation platforms require a credit card or traditional bank account, which many individuals may not have. It can also help you stand out as an innovative, forward-thinking organization, as you would be one of few charities to accept cryptocurrency donations, albeit this number is growing.
Finally, accepting crypto donations ensures openness and transparency, as the process is publicly verifiable. While this could be a turn off for some organizations, good charities know that transparency is vital in today’s world. By adopting crypto donations, you are communicating to the world that you are open and transparent, which can help build donor confidence in your organization.
So, what’s the catch?
Despite the benefits highlighted above, very few charities accept crypto to date, as many see it as inaccessible, don’t understand it, or recognize the stigmas associated with crypto such as it being “the currency of criminals.” As such, many charities will opt to steer clear of crypto for the foreseeable future, despite these stigmas being easily disputable.
Another major challenge is related to taxes. The response of tax authorities has varied based on jurisdiction, and it will be important for your organization to research the tax implications of accepting crypto, so you can plan appropriately. For example, it is possible that you would not be able to issue a charitable tax receipt for crypto donations, which could be a turn off for some potential donors. However, it is important for you to explore the specific regulations of the country that your charity operates in to determine the impacts.
Although there are some challenges with accepting crypto donations, the benefits far outweigh them. As crypto is more widely adopted, more and more charities will begin accepting crypto donations as they recognize the great benefits it has for their organizations. So, how exactly do you get started if you wish to accept crypto donations?
Getting set up to accept crypto donations
It goes without saying that it will be important to have a discussion with your Board prior to proceeding with accepting crypto donations, as it intersects with the governance and finances of your organization. Furthermore, it is recommended that you update your donations policies and fundraising strategies to ensure this new approach is reflected.
Beyond that, the biggest logistical piece you will need to put in place is setting up a way to receive crypto donations. One way to do this, is by setting up a wallet for your organization. A wallet is the location where your currency will be sent, and where you will store it. I recommend setting up a cold (hardware) wallet such as a Ledger Nano S, but there are many different types of wallets you can use. For more information on wallets, please check out our previous blog post on storing crypto.
Alternatively, you could set up an account with a cryptocurrency payment processor, such as BitPay, Coinbase Commerce, or Coingate, to name a few. This method is much simpler than setting up your own wallet, and allows for the immediate transfer of crypto assets to fiat currency. However, these platforms typically don’t allow for many different types of crypto, and will come with a transaction fee. That being said, if you’re new to crypto, this is a quick and easy way to set your organization up to receive crypto donations.
Whether you feel you are ready to accept crypto donations at your charity, or your hesitant, it’s important to stay apprised of this developing trend. Over the past several years, crypto adoption has increased exponentially, and there is no reason to stop anytime soon. That being said, I highly recommend you consider accepting crypto donations, and becoming an innovator in the charitable sector.
Do you think that the charitable sector should embrace crypto donations? Tweet us at @Crypto_Altruism to let us know what you think, we’d love to hear from you!
