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  • Writer's pictureTeam TouchPoints

Why and How Nonprofits Should Target Crypto Donations

Cryptocurrency has become quite the buzzword in the investing world, but what role does it play in charitable donations? Not surprisingly, more and more philanthropic individuals are beginning to leverage Bitcoin, Ethereum, and other highly-appreciated cryptocurrencies to achieve maximum impact with their charitable giving. For nonprofits and other charitable organizations, this represents a unique and lucrative opportunity to expand and optimize their fundraising efforts.

What is Cryptocurrency?

For those not yet familiar, cryptocurrency is a digital asset that can function much like traditional currency. Unlike the U.S. dollar and other “fiat” money, however, cryptocurrency is generated by digital code and can be circulated without the need for a bank or other financial intermediary. Each crypto transaction is recorded on a distributed ledger, colloquially known as a blockchain. Units of cryptocurrency are typically referred to as coins. They are highly liquid and can easily be converted into dollars.

Why Accept Crypto Donations?

Due to its unusual nature, many already-busy nonprofit fundraisers view cryptocurrency as too complicated or confusing to consider. But with a sustained valuation of more than $2 trillion, the potential benefit that this digital currency represents can no longer be denied.

Not only is there an ever-increasing pool of potential investors currently sitting on appreciated coins, but there are also a number of favorable tax incentives associated with donations of this kind. Specifically, because cryptocurrency is considered by the IRS to be property, donating it is treated as a nontaxable event. This enables donors to avoid capital gains and potentially boost their itemized deductions.

How to Accept Cryptocurrency Donations

Accepting donations of cryptocurrency isn’t nearly as difficult as one may initially assume. Furthermore, doing so could provide the opportunity to engage with a new pool of potential donors for your nonprofit or charitable organization.

A recent study by Fidelity found that crypto owners tend to be more charitable than other investors. Unfortunately, 46% say finding nonprofits that accept these kinds of donations is still somewhat difficult. Offering this option could help forward-thinking organizations corner the market and maximize their fundraising efforts.

There are several ways to accept crypto donations:

  • Use an intermediary 501(c)(3), such as a donor advised fund (DAF)

  • Receive crypto directly via a cryptocurrency donation processor

  • Use a crypto exchange, such as Coinbase or BitPay, to create an embeddable checkout experience

  • Receive donations directly through an existing crypto wallet without an intermediary

How to Get Crypto Donors

The key to capitalizing on cryptocurrency donations lies in strategically determining which types of individuals to target. That’s where TouchPoints can help. Using advanced data analytics, TouchPoints helps nonprofit organizations quickly and easily identify the crypto owners among their existing donors, saving time and money, and maximizing their fundraising outcomes. To learn more about how this technology can help your organization, get in touch today.

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