What is Cryptocurrency?The first cryptocurrency, Bitcoin, was launched in January 2009. Since then, many more cryptocurrencies have popped up like Ethereum (ETH) and Litecoin (LTC). A cryptocurrency (commonly referred to as crypto) is a digital peer-to-peer currency that uses cryptography for security, preventing counterfeiting. Built on a distributed blockchain ledger, it is maintained by a decentralized computer network, not a central authority, rendering it immune to any single entity manipulating the network unless they have control of at least 51% of the network.
Why Do People Donate Cryptocurrency?Today, donors can’t contribute crypto to most nonprofits. The IRS classifies crypto as property, like stocks, so when you donate crypto, neither you nor the nonprofit pay capital gains taxes. If you convert that crypto to cash, you pay upwards of 30%+ in taxes, meaning a 30%+ smaller donation for the charity, and a 30%+ smaller tax write off. In other words, if an organization is not equipped to accept their cryptocurrency, they may take it elsewhere – it’s that simple.
Why Do Nonprofits Accept Cryptocurrency Donations?In addition to the revenue potential, crypto fundraising is a powerful marketing/awareness tool for nonprofits. The mere act of opening crypto wallets generates buzz (search: “lupus foundation cryptocurrency”). Furthermore, the average million-dollar gift does not grab headlines, while a million-dollar Bitcoin donation – that’s a story.
How Many People Use Cryptocurrency? Estimates range from 40M to 50M active cryptocurrency users. Consider for a moment that there have only been 24M Honda Civics sold since 1972. Or that there are only 25M active FitBit users. Most of your donors don’t drive a Honda Civic, and they don’t wear a FitBit. But imagine if we told you that you that, currently, no one with a Civic and/or FitBit could donate to your organization. You’d probably want to change that.
How Much Cryptocurrency Has Been Donated? Over the last two years, we’ve seen hundreds of millions of dollars worth of crypto donated to nonprofits. Let’s dissect some of the largest examples we’ve seen:
- Pineapple Fund: This anonymous person or group of people donated ~$56M in Bitcoin to 60 charities. [https://pineapplefund.org/]
- Fidelity Charitable: Between 2017 and 2018, Fidelity Charitable received $100M in Bitcoin donations. In 2016, they raised $7M. What changed? In 2017, they implemented a targeted engagement of the cryptocurrency community. [https://www.coindesk.com/bitcoin-crypto-69-million-2017-fidelity-charitable]
- Ripple: Ripple has their own cryptocurrency (XRP), and has donated over $125M to charities over the last two years, including $75M to universities, $39M to Donors Choose, and $4M to the Ellen Wildlife Fund (courtesy of Ashton Kutcher – Watch Here: [https://www.youtube.com/watch?v=a7JQzSn8Ptg])
Partnerships. Beyond major gifts, nonprofits are partnering with organizations in the cryptocurrency industry, both for the immediate partnership benefits, and to garner the attention of crypto donors. Recently, we launched an Ad Grants initiative with Brave Browser. Brave currently has six million monthly users, quickly gaining ground on competitors like Firefox and Chrome. First up, the Human Rights Foundation and Code to Inspire will receive tens of thousands of dollars in ads.We’ve also established a partnership with cryptocurrency project IoTeX where a “Charity of the Quarter” will receive cryptocurrency rewards produced from The Giving Block Delegate, a node on their network which passively generates rewards by approving transactions. First up, the Lupus Foundation of America. This marks the first time a nonprofit will passively fundraise via a crypto rewards system.
Summary. Though Bitcoin’s price has increased by over 1,000,000% since 2010, few nonprofits are actively fundraising cryptocurrency.The opportunity today is a powerful one, as the user base is large enough to effectively fundraise from, while still small enough to be a tribal online community that can be mobilized around your efforts. The cryptocurrency donor pool will continue to grow, but the radically high level of excitement around the technology is ephemeral.Additionally, occupying this limbo state between niche and mainstream leaves crypto organizations uniquely in need of partnerships to elevate their perceived brand – making them one of the most desirable/accessible non-vested partner demographics.