By Davide Menegaldo, CryptoGivingTuesday, COO at Helperbit
Bitcoin and other cryptocurrencies are taking a leading role in payments that are not related to banking systems. Despite the price volatility that characterizes this ecosystem, and some uncertainties about their nomenclature, cryptocurrencies are contributing to fostering charitable activities and some nonprofits benefit quite a bit from the use of this payment method.
In this article we briefly review how charities can benefit from bitcoin donations during GivingTuesday and what are the fundraising opportunities.
Bitcoin (BTC) is the first and prevailing cryptocurrency, created in 2009 by an anonymous individual/group and that uses peer-to-peer technology to enable payments without using banks. This electronic cash system is open, public, borderless, neutral and censorship resistant.
Starting from Bitcoin, other cryptocurrencies (called altcoins) were born, each with its own value proposition. Now the total market capitalization is $200+ billion, whose Bitcoin represents 65% and Ethereum about 8%. The remaining 27% is constituted by the capitalization of thousands of altcoins.
There are no precise estimates about the number of people involved in this world (that buy, sell or hold cryptos) but a recent survey reports that 9% of the population owns Bitcoin, including 18% of those aged 18-34 and 12% of those aged 35-44. Near half of those aged 18-34 agree that most people will be using Bitcoin in the next 10 years and 59% of them agree that Bitcoin is a positive innovation in financial technology (source: Blockchain Capital Blog).
Shifting the attention to the use of Bitcoin in charity sector, according to the Global NGO Technology Report, today cryptocurrency donations represent 1-5% of the used payment method for charitable donations, with a +100% growth in some countries.
In addition, as reported by CryptoGivingTuesday, research shows that more than 13,300 BTC and the equivalent amount of $200+ million in cryptocurrency have been donated to charities that have implemented this method of payment.
Crypto Charitable Initiatives
There are many factors that may convince a crypto holder to donate to charities: he/she could have an imaginable amount of money due to the increase of BTC price, therefore a portion of the funds are addressed to charities; the donation could be linked with tax deduction, if the holder has to pay taxes on the crypto capital gains; or the action could be a direct consequence of goodwill.
Pineapple Fund, defined as an experiment in philanthropy with cryptocurrency wealth, was an initiative lead by an anonymous individual, which donated 5,057 bitcoin ($55 million at the time) to 60 charities. Two of the top 3 biggest BTC donations of all the times were made by Pineapple: 320.8 BTC ($5.3 million) were donated to GiveDirectly; 274.3 BTC ($2.1 million) were donated to Institute for Justice. In its ‘call for proposals’, it received more than 10,000 applications.
Fidelity Charitable declared to have raised over $100 million in crypto for nonprofit organizations and Givecrypto, a nonprofit that distributes cryptocurrency to people living in poverty, raised $4 million. Another very worthy donation of 281.1 BTC ($1 million) from an anonymous donor was received by Charity water.
There were many other charitable activities and here below we list some of the most worthy ones:
- in June 2019 Ripple Co-Founder donated $25 Million in XRP to San Francisco State University;
- Ripple donated $29 million in XRP to the DonorsChoose charity fund and $50 million to 17 universities, as part of its University Blockchain Research Initiative;
- Ashton Kutcher has donated $4 million in XRP to Ellen Degeneres’ Wildlife Fund.
6 Reasons Why You Should Accept Crypto Donations
Here below you can find a short list of benefits in accepting Bitcoin and other altcoins:
- Target a new segment of possible donors, constituted by a growing amount of people that own Bitcoin;
- Add a new method of payment and maximise the volume of donations;
- Boost your brand and get a visibility return, as a forefront charity in innovative technologies;
- Improve the knowledge of your employees, donors and stakeholders about this movement;
- Provide a charitable solution to bitcoin holders that have to pay capital gains taxes (tax deduction is available in U.S. and other countries);
- Be different: today only few charities accept Bitcoin and you could get the attention of crypto philanthropists.
How to Accept Crypto Donations
There are several ways to accept donations in Bitcoin and other cryptocurrencies, each with its advantages and disadvantages.
Use a Payment processor
The simplest and fastest way to accept donations in Bitcoin is using a platform that deals with the immediate conversion in local currency (Euro or Dollar).
Some platforms that work all over the world are BitPay and Coinbase; they are leaders in merchant payments, support at least 3 cryptocurrencies (BTC, BCH, ETH) and charge a transaction fee.
Their position in Bitcoin ecosystem is controversial and the so-called “bitcoin maximalists”, usually early adopters that joined the movement for its vision and now hold a considerable wealth in crypto, do not appreciate them and this could partly reduce the possibility to receive donations.
All these platforms are centralized services, which therefore require several documents to complete the KYC and AML procedures. No blockchain traceability can be provided, as the addresses used to receive payments change every time.
Open your personal wallets
Instead of using centralized platforms, you can directly manage donations by opening your own Bitcoin wallets.
Wallets can be generated online (web wallets), by downloading desktop software or using physical devices (hardware wallets).
In this case you have to involve your IT department, as it is required much attention to security aspects.
This approach does not require the verification of wallets’ owners. It is possible to provide blockchain traceability to donors, as the addresses to receive payments do not change, so you can add addition information on the use of the funds to publicly visible transactions.
Hybrid solution: platforms for cryptocurrency donations
There are several platforms that help nonprofits to accept cryptocurrency donations, providing them solutions that are a tradeoff between the economic independency and a centralized management. They designed better user experience interfaces in comparison to personal wallets and are focused also on donation traceability features, matching payments information with blockchain transactions.
Some services are GiveTrack (1 crypto accepted), Binance Charity (4 crypto accepted), Helperbit (30 crypto accepted).
They require some documents to verify the truthfulness of the charity.
GivingTuesday (December 3rd, 2019) is the perfect chance to improve your fundraising and explore this method of payment.
When you have launched your crypto fundraising, add your nonprofit in CryptoGivingTuesday, an aggregator of charities and donation platforms that accept crypto.
In CryptoGivingTuesday, charities manage their own personal profile, they can add information about their activities, accepted coins, social media accounts, text and media materials and can also get insights about the visibility of their page through the dashboard.
The “Donate Crypto” button redirects donors to their donation landing page, as the platform does not manage donations.
The hashtag of this movement is #CryptoGivingTuesday and don’t forget to also tag our Twitter profile.
If you need help in accepting Bitcoin and crypto donations, contact us and join the crypto movement!