GiveWP now has a BitPay add-on to accept cryptocurrency donations in a variety of currencies, including Bitcoin, Ethereum, Tether, Dogecoin, and more. As cryptocurrency becomes a more widely available and accepted currency, it only makes sense to empower current and potential donors to give via crypto. In fact, not doing so could mean you’re leaving money on the table.
On Giving Tuesday, The Giving Block (a donation platform that facilitates crypto philanthropy) launched #CryptoGivingTuesday, in which 1,000 nonprofits participated. The Giving Block reported that they raised $2.4 MILLION dollars in cryptocurrency for the 4,000+ organizations they support. Additionally, the average donation size was $12,600!
The BitPay payment gateway allows you to accept crypto donations and immediately settle your funds in the currency of your choice. Meaning, there’s no risk to you if the cryptocurrency loses value.
With this release, we want to ensure that you are equipped with the knowledge needed to decide if you should accept cryptocurrency donations.
From taxes, to the environmental impact of mining, to the actual “how” behind accepting crypto, we’ve got you covered.
P.S. If you haven’t read What is Cryptocurrency? A Primer for Nonprofits, do that first!
Cons of Accepting Cryptocurrency Donations
Crypto donations can be a powerful form of fundraising, but there are a handful of cons you might want to consider first.
Volatility
Cryptocurrency values rise and fall dramatically depending on a number of factors such as, supply and demand, and the production of a particular type of cryptocurrency.
It’s critical to have policies in place that will determine whether or not your organization will immediately exchange cryptocurrency donations or hold them. If your organization opts to hold cryptocurrency as an investment, there should be policies in place to determine when to liquidate. Updating your policies to reflect that you accept cryptocurrency as a donation is only one part – having clearly defined parameters for when, or if, you’ll exchange cryptocurrency, how, and who will be responsible for handling cryptocurrency donations is important.
The GiveWP BitPay add-on gives you the option to do both. Your nonprofit can opt to cash out crypto donations immediately or maintain a digital wallet of your own.
Digital Wallets
Managing a digital wallet doesn’t have to be a hassle! The BitPay payment gateway will allow you to cash your crypto donations out immediately, eliminating the need for a digital wallet.
However, there are several things you should consider if you chose to maintain a digital wallet for cryptocurrency donations.
Managing a digital wallet requires additional understanding of the cryptocurrency market. You’ll need to pay close attention to the fluctuations and valuations of every type of currency that is stored in your digital wallet.
Wallet Types – Custodial and Noncustodial
Opting to maintain a non-custodial wallet means that you have sole access and control over your currency. There is no third-party involved. However, you are solely responsible for protecting your cryptocurrency funds and not losing your keys or access to your wallet.
With custodial wallets, another party (typically web-based exchanges) controls access to your currency and your keys. Essentially, your organization would trust a third-party to secure your cryptocurrency information and provide it in a timely manner when you want to liquidate, trade, or send funds elsewhere.
Environmental Impact
The mining of cryptocurrency is energy intensive and is concerning to some. If you run an organization whose cause is tied to the environment (or you are simply aligned with those goals), accepting cryptocurrency in its current form might be counter to your goals.
Pros of Accepting Cryptocurrency Donations
There are significant advantages to accepting crypto donations. If the cons have not dissuaded you, here’s some of the pros you should consider.
Tax Implications and Considerations
As far as the U.S. tax code is concerned (and in the UK), cryptocurrency is considered property.
Non-Cash Contributions
This means that cryptocurrency donations are non-cash, in-kind donations and should be acknowledged as such.
For more information on virtual currency transactions in regards to tax implications, please check out these frequently asked questions.
Capital Gains Tax
There are other tax implications to consider when determining if your organization should accept crypto donations. Crypto donations are not taxable, which means that donors won’t have to pay capital gains tax. Additionally, these donations are still considered tax-deductible with a fair market value deduction! It’s a win-win.
Larger Average Donation
As we mentioned in the beginning of this article, the average cryptocurrency donation on Giving Tuesday was $12,600. Part of the reason for larger crypto donations in general, not just on Giving Tuesday, is due to the tax considerations we mentioned above. Since donating crypto benefits the donor, it often results in a larger donation (and deduction).
Crypto Donations are at an All-Time High
The Giving Block reported that their end of year crypto donation BAG Season campaign, which ran the entire month of December 2020, facilitated $2.1 million in crypto donations
This year on Giving Tuesday alone, crypto donations exceeded $2.4 million dollars via the Giving Block platform. That’s an increase of 538% over last year’s Crypto Giving Tuesday and more than all of December!
Expand Your Audience
At publishing, the global crypto market is valued at $2.6 trillion and Bitcoin alone has a current market value of $1.07 trillion. There are also over 100 million cryptocurrency users globally with a user base that almost doubles annually.
Over 60% of cryptocurrency users are under the age of 40. Since many crypto donors only donate in cryptocurrency (remember the tax considerations?), they tend to be new donors.
Being an early supporter and adopting policies to accept cryptocurrency donations allows your nonprofit to secure crypto donations from the community. Expanding your audience into this market now paves the way for broader crypto donations in the future as well.
Payment Diversification
Though cryptocurrency has been around for awhile, it’s adoption has really only taken off in the past few years. However, many believe that cryptocurrency is the future of currency.
Diversifying your payment gateways allows you to meet current and potential donors where they are now and in the future.
Announcing the GiveWP BitPay Payment Gateway
The potential for crypto philanthropy is significant. Understanding cryptocurrency is critical, as is determining if it is the right move for your organization.
We want to make it as simple as possible to accept crypto donations, should you choose to do so. Our payment gateway integration with BitPay is available now.
Additionally, we are in conversations with The Giving Block on an official integration with them as well. Watch for that announcement in early 2022.
If you don’t have a GiveWP plan yet, get one now to gain access to the BitPay gateway when it’s ready!
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