Should We Accept Cryptocurrency Gifts?
According to Yahoo Finance, over 21 million or 14% of Americans own some form of the 10,000 virtual currencies available, such as Bitcoin or Ethereum. These crypto assets or digital currencies are growing in popularity, with another 20 million individuals considering the purchase of cryptocurrency in the next year. As a new source of wealth for many Americans, should your organization consider accepting gifts of cryptocurrency?
The IRS classifies cryptocurrency as property or an appreciated asset. By donating cryptocurrency, an individual may avoid capital gains tax and receive a deduction from their income taxes, according to Fidelity. This may lend a donor the ability to make a larger gift to charity than if the gift were made in cash.
Here are some things to implement before your organization should consider accepting gifts of cryptocurrency.
Establish a gift acceptance policy, procedures and process for accepting cryptocurrency for your organization. Who in your organization will be involved in deciding to accept a crypto asset? Should your organization purchase cryptocurrency as part of your investment portfolio? Will your organization keep or sell the cryptocurrency upon receipt? As with gifts of stock, some nonprofits may either choose to hold onto the cryptocurrency or cash it out upon receipt. FreeWill advises that selling the cryptocurrency right away may be less risky as crypto values can fluctuate even within a day. Online currency converters, such as CoinMarketCap https://coinmarketcap.com/converter, will help you determine the value of a gifted crypto asset.
Select a cryptocurrency platform. A cryptocurrency platform allows you to accept cryptocurrency donations and automatically convert to U.S. dollars. To do so, you’ll need to set up an account for your nonprofit with a crypto payment processor such as Coinbase or BitPay.
Market to your audience. Individuals that possess cryptocurrency are digitally fluent and often spend time on social media platforms. Crypto donors are younger and more likely to donate online or through a link rather than respond to a direct mail piece or phone call. To market your cryptocurrency program, create a link on your website for donors to easily donate.
Determine receipt and acknowledgement. Perhaps one of the things that makes donating cryptocurrency appealing is the ability for the donor to be anonymous. This is not always helpful for the organization to acknowledge and extend a receipt for the gift. When adding a link to your website for the donation of cryptocurrency, use an online form to collect the donors’ contact information and allow you to properly acknowledge and steward the donor for their gift.
Melissa Pence, CFRE
Melissa provides fundraising counsel for AMPERAGE’s nonprofit clients, leading feasibility studies and providing solutions that drive successful fundraising campaign results. A Certified Fund Raising Executive (CFRE), she uses her experience and extensive skill set to continually advance her fundraising practices and develop campaign-specific strategies, materials and training to help clients reach their campaign goals and advance their mission. Melissa has vast experience working in the nonprofit sector, having served in development and leadership roles with Sisters of Mercy and the Alzheimer’s Association. In addition, she has served as a volunteer and board member with local nonprofits, such as the Catherine McAuley Center. Faith-based organizations and causes are of particular interest to Melissa. Melissa moves the needle by always looking for new opportunities and ways to improve professionally. She is currently president of the Eastern Iowa Planned Giving Council and a past president of the Association of Fundraising Professionals-Eastern Iowa Chapter. Melissa holds a Master of Strategic Leadership degree from Mount Mercy University. This busy professional, wife and mother enjoys sports and live music in her free time. A fan of Cubs baseball and Iowa Hawkeye football, Melissa and family enjoy football tailgating, where she’s known for her breakfast burritos. She enjoys the local band scene but says a Foo Fighters concert is her all-time favorite.
