In today's fast-paced digital world, technology has changed the way we do almost everything - even philanthropy! Between new donor outreach methods, the switch to online giving, and now cryptocurrency donations, it’s tricky to stay on top of everything! And we get it, you’re busy juggling a hundred other tasks, which means understanding crypto donations for your nonprofit has probably taken a backseat. But, as it is one of the fastest-growing ways donors choose to give major gifts, we’re here to help you keep up!
So let’s dive into the exciting realm of crypto donations to understand why they matter for your nonprofit and how you can get started.
What is cryptocurrency?
Before we talk about crypto donations for your nonprofit, let’s answer the question: What is cryptocurrency?
Cryptocurrency is a form of digital or virtual currency that operates on a decentralized platform called blockchain. This technology ensures secure and transparent transactions, making it a powerful tool for a variety of applications.
Okay. That’s a lot of jargon. Are you wondering, “What does it even mean?”
Let’s simplify crypto:
Imagine you have a notebook that anyone can write in, but no one can tear out pages or cheat. This notebook is called a "blockchain."
Now, let's say you and your donors want to keep track of the donations they give you. Whenever they give, it gets written in this notebook. But here's the cool part: you can't erase or change what was written, and everyone has a copy of the notebook.
So, if someone tries to trick you by saying, "I gave you $3," but they actually only gave you $1, everyone will see the truth in the notebook. This way, you can all trust the notebook to be accurate, and no one can be dishonest.
That's kind of like how a blockchain works – it's a super secure way to keep track of transactions like trading, money, or even donations!
Why crypto donations matter for your nonprofit
Cryptocurrency donations have benefits for both nonprofit orgs and donors alike! Let’s look at a few of the reasons crypto donations matter:
1. Amplify nonprofit donations with crypto:
According to an interview on Beyond the Donation, Pat Duffy, the CEO of The Giving Block, states crypto donations tend to be 30-80x the size of the average gift given by credit card. By accepting crypto donations, a nonprofit opens the doors to larger gifts and more financial support.
2. Engage new audiences:
Cryptocurrency resonates particularly well with younger generations who are comfortable with digital assets. According to the Chronicle of Philanthropy, Boomers were the most generous generation of 2022, with millennials following in second.
As each generation ages, we’ll see a rise in giving from younger generations who are working and a decline in older generations who enter retirement. However, statistics also show that Millennials and Gen Z prefer to engage with nonprofits online. By embracing crypto donations, your nonprofit can appeal to a demographic that is passionate about leveraging technology for positive change.
3. Take the borders off your donations:
Cryptocurrencies offer a unique advantage to nonprofits by breaking down geographical barriers. Traditional methods of sending money internationally can be slow and expensive. But cryptocurrency transactions are processed quickly, often within minutes. Because crypto can be used by anyone with the internet, a nonprofit can tap into a global pool of potential donations!
The ability to receive funds quickly is crucial when responding to emergencies where immediate funds are needed. Nonprofits can raise funds and deploy support faster, aiding their efforts in disaster relief, humanitarian aid, and other time-sensitive work.
This is a major shift from traditional fundraising methods that often rely on local or national support. Nonprofits can now connect with supporters who share their values and mission, even if those supporters are halfway across the globe.
4. Tax incentives for nonprofit crypto donations
In certain areas, cryptocurrency donations offer tax incentives. If a donor’s cryptocurrency has grown in value, they may have to pay capital gains tax on the increase. However, if instead of cashing out their cryptocurrency, they make donations with their crypto to a nonprofit, they may avoid paying this tax.
Some places also have a higher deduction limit for crypto donations compared to traditional cash donations. This means the donor can deduct a larger portion of their income if they donate to a nonprofit in crypto. This makes it an attractive option for those seeking tax-efficient giving.
How to get your nonprofit started with crypto donations
1. Educate yourself
You’re well on your way to checking step one off your to-do list! Make sure you have a basic understanding of how cryptocurrency works, its benefits, and potential challenges.
You’ll want to research any legal requirements for your specific area. Make sure that your nonprofit is allowed to accept cryptocurrency donations in your area as well as potential tax implications. You’ll also want to look into reporting requirements for your location.
Take time to research which types of crypto you want to accept. Bitcoin and Ethereum are common choices for crypto donations. But there are plenty of options out there worth considering!
You’ll also need to decide how your nonprofit will accept crypto donations. There are many platforms that allow you to accept donations via cryptocurrency.
2. Set up a tech integration:
While the idea of integrating cryptocurrencies into fundraising strategies may sound intricate, platforms like The Giving Block have revolutionized the process for nonprofits. They enable nonprofits to easily add crypto donations to their campaigns and work seamlessly with our donor management system!
Collaborate with platforms like these to integrate crypto donation widgets directly onto your website. This enables donors to give digital assets easily. By providing a streamlined donation experience, you remove barriers to entry and increase the likelihood you’ll receive a gift via crypto.
3. Engage your donors:
Educate your donor base about the option of making crypto donations to your nonprofit. Add that info into your newsletters, email, and social media posts to raise awareness. Design targeted campaigns to engage both existing and new donors. Create educational materials that explain the benefits of crypto donations and how to give with cryptocurrency.
Embracing the Future of Giving
The rise of crypto donations is part of the changing landscape of nonprofit fundraising. Nonprofits must remain adaptable and explore innovative methods to connect with donors and create lasting impact. Crypto donations provide a pathway to a more sustainable and globally interconnected future.
By embracing crypto donations, your nonprofit can use technology to diversify its revenue streams and engage younger donors, while driving meaningful change. By taking the first step into the world of crypto donations, your nonprofit can thrive in an era defined by innovation, connectivity, and meaningful giving.