Charity Donations Go Further With Cryptocurrency
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The number of nonprofits accepting cryptocurrency donations is on the rise for a few good reasons…
When someone mentions cryptocurrency, it’s all too common for images of greedy tech-companies and overnight millionaires to come to mind. However, cryptocurrencies are not just some form of elite collector’s item meant to increase personal wealth. While it is true that many companies and individuals have gained monetary success through their knowledge and use of cryptocurrency, a growing number of organizations and individuals are tapping into the digital resource and using them for good causes.
Benefits for Charities:
The number of charities accepting cryptocurrencies is quickly on the rise for a number of factors. One of the biggest, besides the ability to tap into a boom of eligible donors, is the amount of money non-profits can save by accepting cryptocurrencies. When people donate to a good cause, the expenses associated with their good deed is often the last thing on their mind. However, with every donation comes a host of fees and taxes, especially when one considers large donations coming from an international source. This is one of the areas where cryptocurrency donations have been making a big difference.
Because cryptocurrency donations go directly to the charity in a traceable, nonretractable, transaction through the blockchain, charities can receive funds without losing a percentage to banking fees and international exchange rates. This is particularly important for organizations that operate in countries that have a low-value local currency, and ones in countries with less than reputable governments or banks. Former UN General Secretary Ban Ki-moon estimated that as much as 30% of donations do not reach their intended destinations, which means a large portion of money intended for the cause is being lost to high fees.
Charities are also beginning to cash in on a new pool of donors who hold their assets in cryptocurrencies. As the number of crypto users around the world grows daily, non-profits also have a growing ability to reach a global audience. The simple act of adding the option of accepting cryptocurrency donations, or fundraising with cryptos, can raise awareness for nonprofits in new and emerging markets. This means they have the potential to reach larger audiences and that are not bound by local currencies.
Thanks to the crypto boom, many organizations have already seen an increase in large donations from crypto users. With the sudden rise of wealth among certain individuals, Millennials in particular, came an increased desire to give back. With an increased number of Bitcoin and cryptocurrency millionaires, non-profits have seen donations up to $29 million from a single donation.
Moreover, as the number of registered charities continues to rise each year as well, so does the cost of fundraising and the ability to stand out from the crowd. Luckily, since the number of organizations accepting cryptocurrencies is still relatively low, those who decide to join the movement are rewarded by having a selection of donors who are looking specifically for crypto-friendly non-profits.
Benefits for Donors:
Charity organizations and the causes that they serve are not the only ones who are benefitting from this shift toward cryptocurrency use, there are also benefits for the donors themselves. As mentioned, it is well known that when a donor sends funds to a cause, there are relatively few ways to determine how much of that money is actually being used for its desired intent. One of the beauties of making a crypto-based donation is the added transparency gained through the use of blockchain. Donors have a greater ability to track where their money goes, since once a transaction is made, it exists forever on the decentralized, digital ledger. They also can rest easy knowing that their donations are going directly to the cause and not being lost to the aforementioned fees.
Another big incentive to make a crypto donation is found in how these donations are taxed. Because the donor and charity do not need to cash out first with direct blockchain transactions, there is no capital gains tax on transferred funds. This cost to the donor and non-profit often keeps individuals from wanting to give more. Some nonprofits are even incentivizing donations by providing tax benefits to their donors.
Although there are some who remain concerned about their donations due to potential fluctuations in cryptocurrencies’ worth, many organizations have been increasing the stability of their donations by turning to stablecoins. Since stablecoins are married to fiat or physical assets, donors won’t have to worry about a drop in coin prices after making a donation, though in many cases, this is not much of a concern because charities rarely hold on to their assets for very long, as they have a constant need to use the funds for the benefit of the cause they are raising money for.
So this year, instead of tossing a few coins at a jaded Santa ringing a bell on the street, with no credibility or accountability for what will happen to your money after you walk away, consider making a cryptocurrency-based donation to one of the many non-profits that accept cryptos, knowing the cause you care about will benefit directly from your kindness!
