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.