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Wednesday, August 8, 2018

Cryptocurrency Donations: Why Not?

At the end of last year when Americans were rushing to make their tax-deductible donations before the new year, a few donors asked Charity Navigator if they could donate to us using their cryptocurrency. At the time our answer was, unfortunately, no, but we’re excited to announce that that has changed!  As you’d expect from the nation’s largest independent nonprofit evaluator, the decision for Charity Navigator to accept cryptocurrency donations was arrived at only after careful consideration.

Keep reading to learn why we decided to accept cryptocurrency and open the door to what some believe will be the future of charitable giving.

First, we asked ourselves, “Why should we consider accepting cryptocurrency?”

It’s an emerging channel for charitable giving. The fact that donors asked us about it is a great indicator of the leading edge of a new consumer/donor behavior. We believe that if a donor wants to give to Charity Navigator then it is our responsibility to provide options that recognize that donors are not one-size-fits-all. Finally, since donors look to us to guide them through good giving decisions, our choice to accept cryptocurrency donations also encourages donors to think of contributing through their cyberwallets to other nonprofits as well. 

Next, “How will we go about accepting gifts in a non-traditional currency?”

We decided that we would use a gift acceptance policy that is consistent with how we manage stock donations and immediately sell cryptocurrency once it's received. This helps to ensure that we receive the financial value intended by the donor at the time of the gift, avoiding potential fluctuations in the market.  It also allows us to put the funds to use immediately, rather than maintaining them as an investment for the future. Through our new vendor, BitPay, individuals can donate the cryptocurrencies BitCoin (BTC) or BitCoin Cash (BCH). BitPay will immediately exchange their gift into U.S. dollars and distribute the donation to us. BitPay charges a very low processing fee of 1%, which is lower than most credit card donation processing fees. An important note, since we don’t sit on a reserve of cryptocurrency, we have a no-refund policy on cryptocurrency gifts.

“What about the IRS? How do they classify cryptocurrency donations?”

As with stock donations, the IRS classifies cryptocurrency gifts as property. Additionally, cryptocurrency donations to tax-deductible charities aren’t subject to capital gains taxes

"Are other charities doing this?"

Cryptocurrencies have been making a huge philanthropic splash as of late. Take a look at a few of these crypto stories for the nonprofit world:

The last question we were left with is one that remains to be answered…
“When will Charity Navigator receive its first cryptocurrency donation?” 

The option is there now and we’ll just have to wait and see, or “HODL” without “FUD” for some serious “sats”, as members of the cryptocurrency community might say.

Got questions about our decision to accept cryptocurrency or donating to other charities with crypto? Leave them in the Comments section below.

Written by Kyle Gardner, Senior Development Manager at Charity Navigator.

As a 501 (c) (3) organization itself, Charity Navigator depends on public support to help donors make informed choices. Please consider investing in the future of Charity Navigator by making a donation today.  Donate now >>

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