by Christina Comben
Bitcoin donations are an excellent way for charities to encourage more donors to participate. For donors, sending funds in Bitcoin is easy, as long as the charity has an online wallet set up. And for charities, they can receive funds from around the world, from a modern type of donor, who prefers this payment method.
“Bitcoin is an exciting, new digital currency that allows for global payments to happen 24/7, 365 days a year with nominal fees,” says Christopher Moussa, Chief Investment Officer at Crypto Capital Investments. “Charities are beginning to realize the many potential benefits in accepting Bitcoin donations. Being at the forefront of accepting Bitcoin donations opens your organization up to a new community of donors that prefer to deal exclusively with Bitcoin.”
Sounds awesome, right? And it is. But, like anything else in life, you should read the fine print first. If you’re a charity, and you want to accept Bitcoin donations, there are a few things you should know. You don’t let issues such as tax compliance, volatility, and security of your bitcoin donations put you off. But do your research first.
Once you’re aware of the possible risks and know how to process bitcoin donations correctly, accepting this type of funding can have major benefits for your charity. Let’s take a look at a few of them here.
A Wider Donor Pool
Charities are up against some pretty stiff competition when it comes to attracting donors. Not only do they have to convince donors to hand out money from their own pockets, but they have to compete with thousands of other causes as well.
In the United States alone there are 1.5 million registered nonprofits. Convincing donors to choose yours over the rest is no easy feat.
Accepting Bitcoin donations not only opens up the potential donor pool, but it gives you a leg up on the competition who don’t accept cryptocurrency. It’s easier for international donors to send money as well. And for donors who prefer complete anonymity, sending Bitcoin is an added incentive.
Just think about the Pineapple Fund that donated $55 million worth of Bitcoin to charities anonymously. That wouldn’t have been possible without Bitcoin.
Nonprofit consultant, Paul Lamb points out, “One clear benefit is that, as more and more individuals become aware of and comfortable using Bitcoin and other cryptocurrencies, the greater the ability of charities to capture new funding streams.”
Appealing to the Millennial Demographic
Startup charities have it particularly hard trying to catch donors’ attention. They usually don’t have the funds to market themselves and aren’t well known to the public. When most people donate, it’s to the biggest charities and the go-to names they’re used to seeing in the media.
Appealing to millennials should be part of any charity’s priorities. Millennials are more passionate about causes and more altruistic than generations before them (the average millennial donates almost $600 a year to charities). Millennials also happen to be the most active generation using Bitcoin. They’re willing to donate to your cause if you make it as easy for them as possible.
There are several crowdfunding platforms that make it easier for small charities to make themselves known, including bitgive and bithope. Once you get your charity in front of the right audience and make it simple for them to donate by accepting Bitcoin, you widen your appeal.
“Millennials are the demographic most actively using Bitcoin,” says Lamb, “and as charities attempt to recruit younger donors, cryptocurrency is an unprecedented and growing fundraising opportunity area. Also, the ability to accept Bitcoin carries with it a kind of ahead-of-the-times cache, which can capture the attention of the modern and more innovation-oriented donor.”
A Substantial Global Revenue Stream
In March, Ripple donated $29 million to DonarsChoose.org so that they could donate to every teachers’ request on the site. This is just one example of cryptocurrencies getting more proactive in philanthropy.
It’s not only beneficial to charities but helps blockchain companies address some of the negative press around cryptocurrency and the accusations that most people in it are criminals or only out for personal gain. Charities are primed to take advantage of this goodwill to drive more donations.
Getting the Whole Benefit of the Donation
While charities accepting donations through traditional means, such as credit card or PayPal, are subject to fees, with Bitcoin donations, those can be substantially reduced. While transaction fees still exist, they are significantly lower.
“This allows the nonprofit to realize the full benefit of the donation and it significantly cuts down the processing time,” Moussa explains. “Donations with Bitcoin can be accepted from individuals around the world. The benefits of Bitcoin donations are that the transactions happen quickly, usually within 15 minutes.”
Accepting bitcoin donations means that you don’t have to pay capital gains, which allows charities to get the whole benefit of the donation–so long as charities understand the volatility of Bitcoin value and the potential tax implications.
The main takeaway is that you must be compliant. So don’t accept donations and then recklessly HODL. “For charity organizations,” Moussa advises, “it is important to note that holding Bitcoin donations as an investment may require them to pay unrelated business income tax on any income that may be realized. Tax professionals are increasing their focus on Bitcoin taxation and will be able to help organizations navigate this new frontier.”
Jeromy Spence, Director of Finance at iComply Investor Services Inc. adds, “In the U.S. where capital gains use the first in first out method, it would be beneficial to donate sooner rather than later so that they could get a tax receipt on their most taxable crypto. There are extra benefits for first-time donors which should also be noted.”
However, he concludes that “Ultimately charities should be excited and learn how to market to those interested in crypto-donation so that it can be a win-win for the donor and the charity.”
Closing Thoughts on Bitcoin Donations
There are plenty of benefits from accepting Bitcoin donations for your charity. Especially if you want to widen your donor pool and make it as easy as possible to give.
Accepting Bitcoin gives your charity greater possibilities, which can have untold impact on the work you do. Be smart about it, be compliant, and open the door to more funding and a brighter future.
This article was originally published on Coin Central.