An increasingly popular topic in the world of business and nonprofit operations is that of cryptocurrency. But how does this relate to nonprofit organizations, or better yet, how can it be used to their advantage?
Cryptocurrency refers to a digital form of currency that can be used to make purchases or trade stock. Much like with stocks, the value of cryptocurrency is inconsistent. Cryptocurrency value can change over time based on factors like supply and demand since it is produced in limited amounts.
By accepting cryptocurrency as a form of monetary support, you can help your prospective donors be more inclined to donate in more formats. This encouragement could, in turn, boost your nonprofit fundraising growth. To facilitate this, it helps to know how donors can benefit from donating in cryptocurrency so that you can communicate these factors when you announce crypto as one of your donor payment options.
Appeal to Younger Audiences
The youth are the donors of our future, so getting young adults interested in donating for causes is a great way to secure funding for your cause for years to come. Because of this, since the vast majority of young adults have been familiar with the internet for most of their lives (if not all) and are tech-savvy, they will likely take well to the idea of providing donations digitally with cryptocurrency. Therefore, when telling your supporters about your new crypto donation option, it may be advantageous to keep younger adults in mind as a target audience to whom you can market this idea.
Tax Advantages for Donors
An advantage to using cryptocurrency as a form of donation can come in the form of tax benefits. People who donate cryptocurrency that has appreciated in value can avoid the capital gains tax on their cryptocurrency that they would have had to pay if they sold it. Additionally, they can get an income reduction that is worth the value of the crypto that they donated.
Easy Donation for Anywhere
Another reason that cryptocurrency is beneficial for donors is that it is an easy asset to donate. Donors who donate crypto do not need to go through the time-consuming transfer process with a brokerage. The fees for crypto platforms are generally less expensive than the high broker fees that donors who donate with real estate or stock would be subjected to.
Using crypto also means that donating and accounting for money can be done quickly and from anywhere. Therefore, international donations can be performed with cryptocurrency quickly by transferring the value of the crypto donations into local currency. This way, organizations can instantly get funds without needing to deal with paying wire fees on the transfers.
Anonymity
And finally, your supporters may enjoy the anonymity that comes with crypto donations. While you can provide an option for donors to identify themselves when donating, some may choose to make anonymous donations instead, which is easy to do through cryptocurrency transactions. An example of this occurred in 2021 when The University of Pennsylvania received a $5 million gift in Bitcoin from an anonymous donor.
Getting Started with Cryptocurrency
If you’re interested in accepting cryptocurrency at your nonprofit organization, it is easy to get started. It would be best to begin by setting your organization up with a cryptocurrency platform account. Through these accounts, you will be able to accept cryptocurrency from donors and immediately transfer it into equal value in traditional currency.
If you would rather sell your nonprofit’s cryptocurrency donations, you can open a crypto wallet for your nonprofit instead. This way, you can still accept crypto from donors and sell the funds to transfer them into their US currency equal value amount.
Remember that the value of cryptocurrency can fluctuate. Therefore, keep this in mind as you decide whether or not to transfer it to its value in US currency immediately. While holding on to crypto may cause it to increase in value, it also has the risk of depreciating in value.
Encouraging Crypto Donations
As previously mentioned, donating in crypto opens doors and provides advantages not only for nonprofits but also for donors. Once your nonprofit has gotten set up with a way to accept crypto, you can tell your donors about this new method to encourage donations.
You can do this as an announcement in an email newsletter to get the word out or with any advertising technique that helps you spread information about your nonprofit.
In this case, direct links in your online marketing advertisements can be helpful as they can instantly transport your supporters to your nonprofit’s website with information and options for donating with crypto.
As you communicate this new option to your supporters, be sure to let them know about the advantages of cryptocurrency, as listed in this chapter. However, it would be best to be transparent with them regarding changes in value to portray trustworthiness.
