- Eric Obernauer
More than 90% of cryptocurrency donations during 2022 were gifts of $5,000 or more. The average crypto donation that year ($6,295) also was more than 30 times larger than the average online gift amount ($204).
Authors of the online guide A Nonprofit’s Guide to Accepting Cryptocurrency Donations, published by accounting and professional services firm FORVIS in New York City, make the case for cryptocurrency with additional data and suggested steps organizational leaders can take.
Crypto was already a force in 2020 when nearly half of all crypto owners donated $1,000 or more to charity, according to the authors. Since then, the crypto market has grown exponentially to where nearly 1 in 6 Americans — about 52 million — now own cryptocurrency in a market valued at more than $1.6 trillion domestically and nearly $2.8 trillion worldwide. Nearly twice as many Americans own crypto as own stock. The data show that those with spare change to invest in crypto also have deeper pockets with a higher capacity for giving than the average American, making it more critical to be prepared when one of them is ready to donate.
Engaging your organization’s leaders to ensure they understand these opportunities should be a priority for these reasons. “Open communication is important when taking on new forms of donations. Gaining buy-in from the top can be critical to a new project’s success,” the authors wrote.
Establishing a clearly articulated crypto donation policy with support from your board can set you up for success. The policy should start by setting appropriate password and security protocols to safeguard donated crypto assets.
The policy also should include protocols for how your organization will accept crypto, which generally can be done in one of three ways. One way is to set up and maintain noncustodial wallets, which typically offer a lower-cost option but come with higher security risks. The other options include setting up custodial wallets through a third-party donation processor or working with an intermediary charity such as a community foundation or manager of donor-advised funds (DAFs). Finally, the policy should address how long you will hold crypto on your organization’s balance sheet before liquidating it and how you will account for it on financial statements and tax filings.
Cryptocurrency can be a powerful tool for nonprofits seeking to diversify their funding sources and reach new donors. However, as with all financial tools, there are risks to consider. “Staying informed and working with the right advisors can help mitigate those risks,” wrote the authors.
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