Crypto donations increasingly play an important and enduring role in the nonprofit sector. Today, a sizeable donor demographic supports charity organizations with varying cryptocurrencies, including Bitcoin, Ethereum, USDC, and other digital assets, which can be automatically converted to US Dollars to further nonprofits’ missions. This trend is continuing, and the donation volume has recently spiked. Cryptocurrency offers numerous benefits to nonprofits, including tax efficiency and ease of transaction, plus it makes it possible for the teeming population of crypto users to support philanthropic causes. In today’s podcast, Zach Bronstein from Endaoment and Stephen Halasnik from Financing Solutions discuss how crypto philanthropy and web3 affect the dynamic of nonprofit fundraising.
Crypto Philanthropy and What Web3 Means for Nonprofit Organizations
The wave of innovative technology is virtually affecting our everyday lives, including how we do charitable giving. Today, it has become possible for nonprofit fundraising to be mediated through on-chain infrastructure and web-based philanthropic services for a faster, more transparent giving experience. Crypto philanthropy, an emerging trend in the nonprofit world, is rapidly gaining traction, and many smart nonprofit owners are leveraging this creative technology to maximize fundraising to further their mission.
With this in mind, nonprofit owners should strive to figure out ways to tap from the many opportunities cryptocurrency provides so as to bring in more funds to support their mission.
What Is Cryptocurrency?
Before diving deep into discussing what crypto for philanthropy means, it’s important we, first and foremost, explain the concept of cryptocurrency to aid our understanding of the subject matter.
That said, a Cryptocurrency is a form of digital money that allow individuals to transact and transmit value via the internet. This sort of payment system differs from Paypal or the digital banking app because it isn’t owned or controlled by any central entity.
One of the hallmarks of cryptocurrency is that it’s typically decentralized. What this means is that there’s no centralized authority that can block or deny access to the payment. In other words, instead of supervision and decision-making to reside with an individual, corporation, or group of people, it’s transferred to disperse networks knowns as nodes.
The crypto landscape is growing rapidly and generating a lot of interest across the globe. Today, the global crypto market cap is $1.07 trillion, with Bitcoin and Ethereum being the most popular cryptocurrency.
What Crypto Philanthropy and Web3 Mean
At its core, crypto philanthropy is the act of using cryptocurrency or crypto-related assets for giving, usually in the case of an endowment to a nonprofit or any kind of giving to any cause.
The advancement in technology such as the gradual transition to web3- the internet that’s operating with crypto infrastructure- has significantly impacted philanthropy in no small measure.
For example, it has dramatically affected donors’ demographics and funding models. Web3 allows for decentralization, meaning that users, rather than individuals or corporations, have the power to build and operate the crypto ecosystem, which makes it permissionless and trustless. The availability of crypto philanthropy has awakened a new generation of younger donors and is helping smaller nonprofits compete for donations.
Why Nonprofits Should Embrace Crypto Philanthropy
Despite being an emerging fundraising method, cryptocurrency has proved to be a veritable fundraising tool and nonprofits should factor in crypto philanthropy to augment their traditional revenue generation.
Experience has clearly shown that cryptocurrency currently plays an important role in nonprofit financing. For instance, according to research by Fidelity Charitable, a nonprofit that helps donors maximize their generosity through a donor-advised fund, around 45% of cryptocurrency investors donated to charities in 2020, compared to 33% of general investors. Similarly, research data from The Giving Block shows that crypto donation volume spiked to $69.6 million in 2021 compared to $4.2 million in 2020, a whopping 1,558% increment from 2020.
The data above is an indication that cryptocurrency has a lot in stock for nonprofit organizations. In addition, cryptocurrency is generally considered property, and, as such, donating it is not a taxable event. In other words, cryptocurrency donors don’t have to recognize capital gain.
Further, the ease of transferring cryptos to any part of the world allows many nonprofit organizations to have global donors. Since no central government determines how crypto transactions are made, it becomes easier for people from far and wide to support any cause they’re sympathetic to with no restriction.
Little wonder many international charity organizations are starting to accept crypto donations. For example, UNICEF, in October 2019, launched the CryptoFund. This new financial vehicle allows it to hold and disburse cryptocurrency in order to explore the use of digital currencies in a digitally financed world.
What Are Crypto Philothropy Platforms?
There are numerous platforms that facilitate crypto donation. If you’re searching for a digital ecosystem that can help your nonprofits accept crypto to reach their philanthropic goals, below are some platforms you can consider:
This platform allows you to donate digital assets anytime and also recommends grants to most organizations through its on-chain infrastructure and web-based philanthropic services that give a fast and transparent experience.
In addition, it helps facilitate the movement of dollars from donors to nonprofits with minimal fees and overhead.
The Giving Block
The Giving Block provides an ecosystem for nonprofit organizations to get funding through Bitcoin and other cryptocurrencies from crypto donors.
The Giving Block has helped charity organizations raise millions of dollars in cryptocurrency donations to finance their community projects using a cryptocurrency donation widget and a fundraising platform.
Crypto for Charity
This platform helps affiliated nonprofit organizations get funding by allowing donors to use their tools to make donations. The digital asset donated will be subsequently liquidated, and cash will be sent to the nonprofit.
Crypto for Charity ensures that nonprofits never hold the crypto and risk dealing with fluctuating assets. In other words, they simply send you the cash equivalent of your crypto so that you put it to use enhancing your mission.
Learn More About Our Guest
Zach Bronstein helps to run Endaoment as its COO. Endaoment is a 501c3 nonprofit organization that manages and encourages the charitable giving of digital assets. They have built the first blockchain native Community Foundation, allowing folks to make donations of any crypto to any nonprofit and receive a tax receipt for their donation. In addition, Endaoment offers nonprofits the option of receiving payouts as dollars, so they can immediately be put to use supporting their mission. Prior to running Endaoment, Zach spent 5 years in Finance at Morgan Stanley and worked at a number of different nonprofits in development departments.
Learn About Stephen Halasnik
Stephen Halasnik is the host of the popular Nonprofit MBA Podcast. The Nonprofit MBA podcast’s purpose is to help nonprofit leaders and their teams. Stephen is the Co-founder and Managing Partner of Financing Solutions, a leading provider of loans for nonprofits in the form of a Line of Credit. Stephen is a best-selling Amazon author and is considered a leading authority on building great, purpose-driven businesses.
Stephen lives in New Jersey, and his top life mission is to raise his two sons, Michael and Maxwell, to be good men.