The newest of new vehicles, crypto donations are making headway.

Crypto philanthropy’s ‘big bang’ event came in 2017, when an anonymous philanthropist set up the Pineapple Fund to distribute Bitcoin grants worth a total of about $55 Million to 60 charities. Today, a mere decade and a half removed from the invention of Bitcoin, nearly half (49 per cent) of the organizations listed on Forbes’ ‘America’s Top Charities’ will accept cryptocurrency donations.

Even major corporate brands have ventured into the crypto space, including TIME and Stella Artois, both of which debuted non-fungible token (NFT) collections to raise crypto for charities last year.

The fact that many people may not fully understand the intricacies of cryptocurrency has not prevented thousands of non-profit organisations from receiving hundreds of millions of dollars in crypto donations in recent years.

How donating cryptocurrency works

First, a word of explanation of what will be new and confusing territory for some. For charities using a sophisticated crypto fundraising solution, receiving a crypto donation is similar to getting an online credit card donation. (Note that specific offerings will vary by platform.)

When charities sign up with a crypto fundraising platform, they can expect to get a unique donation form that can be embedded into a donation page on their website.

Donors can select a cryptocurrency supported by the form and enter the amount they would like to give (for example, 0.25 ETH, or ~$473 at the time of writing). To receive a gift acknowledgement for tax purposes, they can input personal details like their name and email. Next, donors will copy the charity’s wallet address that has been generated, and send the chosen amount to that address from their own crypto wallet. This wallet-to-wallet transaction is standard practice for the crypto ecosystem.

(For those curious, here’s a deeper technical explanation of how blockchain transactions work.)

Once the donation has been sent, the charity will receive the donation in their account. Charities can opt to automatically convert the donation to cash upon receipt, or hold the donation as an investment.

Towards the tipping point

So what is driving crypto philanthropy towards its tipping point? For one thing, crypto investors have good reason to donate crypto instead of cash. In the UK, the US and elsewhere, donors can avoid paying capital gains taxes on appreciated crypto that is donated directly, and can write off the donations as non-cash charitable contributions. For crypto enthusiasts, donating is a golden opportunity to help spread crypto adoption.

Apart from the eagerness of the crypto user base, it’s becoming easier for charities to accept crypto donations securely and seamlessly.

By signing up with one of several crypto fundraising tools (such as The Giving Block) charities do not need to be blockchain experts in order to manage donations. While offerings vary from platform to platform, the automatic sale of crypto donations for cash, acceptance of multiple crypto assets through one account, and integrations with non-profit CRMs are just a few of the available options that make crypto fundraising accessible to the sector.

What is the donor demographic?

Trendspotting charities have noticed that crypto is breaking into the mainstream. Today, crypto users number around 320 million, a figure nearly equal to the population of the United States. But for charities, the allure is not solely tied to the crypto user base’s numerical growth.

The majority of crypto users are Millennials, followed by Gen X and Gen Z, which means they have decades of charitable giving potential ahead of them. On top of that, their relative affluence and outsized generosity suggest that many of them are major giving prospects – a hypothesis that is backed up by the data.

Last year, for example, the average cryptocurrency donation size processed by The Giving Block was $6,295, which is up to six times higher than the most common gift size counted as a major gift, according to a recent Major Gifts Fundraising Benchmark Study.

Crypto’s popularity among Millennials has increased, too, with a new survey suggesting that 46 per cent of millennials across major populations own cryptocurrencies. Set to inherit trillions in what is being called the Great Wealth Transfer, it’s fair to assume that cryptocurrency will play an even greater role in philanthropy in the decades ahead.

Emerging trends in crypto philanthropy

Caught between fundraising shortfalls from the pandemic and a looming recession, charities are seeking out crypto philanthropy to diversify revenue streams, recession-proof their organisations, and begin connecting with this donor class for long-term gift stewardship. The active presence of these organisations in the crypto space has fostered a wave of crypto-based innovation in charitable giving.

As a result, charities can tap into numerous crypto fundraising and giving methods, including:

• NFT-based charitable fundraising
• Crypto peer-to-peer fundraising campaigns
• Social impact-driven decentralized autonomous organisations (DAOs)
• Automated giving from blockchain-based ‘smart contracts’ (similar to recurring online donations)
• Corporate giving from the crypto/blockchain industry

From vogue to mainstream

Transcending its initial ‘trend’ status, crypto philanthropy has now emerged as a legitimate pillar of charitable giving.

Further to the point, crypto donors have shown their resilience throughout the crypto bear market, supporting numerous causes like aid to Ukraine, groundbreaking medical research and Syria/Turkey earthquake relief despite the volatility of crypto prices. Crypto donations to each of these causes have been valued at seven to nine figures when converted to USD. Clearly, these donors are not just giving for the tax write-off.

Save the Children, the first global NGO to accept crypto donations back in 2013, has reportedly raised more than $7 million in crypto. Smaller organisations have achieved positive fundraising outcomes, too, through their stewardship of cryptocurrency donors or NFT projects like World of Women, which has donated a percentage of its royalties to several organisations.

Despite being a donor demographic that has flown under the radar of many charities, crypto donors appear positioned to make a gigantic impact during the industry’s next bear market and beyond.

Overcoming common hurdles and getting started

Of course, cryptocurrency is still cryptic to many people. That’s why it is vital that accepting cryptocurrency donations is a stress-free process.

Our own experience at the Giving Block in pursuit of that end has included efforts to enable integrations with non-profit CRMs, traditional fundraising platforms and popular crypto wallets.

The bottom line is this: with less time worrying about basic processing issues, charities can spend more time tapping into the fundraising opportunities that crypto offers.

Despite the clear benefits, not every organisation has adopted a pro-crypto policy. Some have yet to amend their gift acceptance policies to clarify their policy on crypto donations.  Uncertainties around the asset classification and environmental footprint of cryptocurrencies have left others undecided on their stance.

But for organisations that wonder if crypto philanthropy can be a viable new revenue stream—or even a financial lifeline—the most common hurdles tend to be sorting out the myths from the realities of crypto and making the business case to their leadership. From there, organisations can select a crypto donation platform and begin actively fundraising.

According to Wells Fargo, crypto is nearing a ‘hyper-adoption phase’ similar to the Internet adoption wave in the mid-to-late 1990s. In fact, it’s already begun: even movie theatres will accept crypto payments. As crypto transactions are more integrated into our daily lives, shouldn’t crypto become a universal giving option for donors, too? If you were to ask the leading charities, more and more of them would agree.

Sam Kahler is the Senior Content & SEO Manager at The Giving Block, the leading cryptocurrency fundraising solution for charities and non-profits.

Upcoming issue: New giving vehicles and tools

New giving vehicles and tools have proliferated in recent years with the conventional foundation model supplemented by donor advised funds, limited liability companies and personalised giving services. At the same time, technology is providing more direct means of fundraising and bringing in new people as donors. What are the implications of these changes? Is the conventional foundation model at risk of being supplanted? And are new means of individual giving producing greater democracy? This special feature explores the implications for institutional philanthropy.

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