So it will be important to set gift acceptance policies and handle compliance with IRS regulations and accounting practices. For options 2-4 below, your organization will take custody of the crypto. There are many different ways to accept crypto donations depending on your organization's needs. Still, many of the thousands of cryptocurrencies enjoy high liquidity and can be converted instantly into dollars on exchanges such as Coinbase or Gemini. The value of a unit of cryptocurrency (often called a “coin”) comes from the perceived value – similar to traded securities – and can be quite volatile. This means that transactions could be handled peer-to-peer instead of going through a bank or other financial intermediary, and the transactions are recorded through a distributed ledger called a blockchain.
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Unlike the dollar or other “fiat” money, the currency is generated by code and circulates without a central regulatory body. What is Cryptocurrency?Ĭryptocurrency is a digital asset that functions like currency. In a recent study, Fidelity Charitable found crypto owners to be more charitable than the typical investor, but 46 percent of these donors noted it was difficult to find nonprofits that accept cryptocurrency donations. Accepting cryptocurrency isn’t as difficult as you may think – and it can open up the opportunity to engage new donors for your nonprofit. This means that donors don’t have to recognize capital gains and, if they itemize deductions, could potentially deduct up to the fair market value of the donated asset. Cryptocurrency is considered property and donating it is a nontaxable event.
On the flip side, the IRS incentivizes donations of crypto similarly to gifts of stock.
Yet, cryptocurrency has reached and sustained a valuation of over $2 trillion in 2021, and many people are now sitting on appreciated coins with not many places to use them. On top of all the other fundraising strategies nonprofits have to master, you may be thinking that the additional hassle of figuring out cryptocurrency donations may not be worth it. However, with so many tools available at your disposal, it is simple to get started. It’s a new technology that is constantly evolving, and it’s understandable if you have some apprehension or confusion about how it all works. With so many ways for nonprofits to accept cryptocurrency donations, you don’t need to turn away donors who wish to donate their Bitcoin, Ethereum, or other coins.
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