How to Accept Cryptocurrency Donations?
Cryptocurrency is a source of untapped revenue. Needless to mention that cryptos have gained fame over the past years. Despite tumultuous phases, the market cap stands at over $1 trillion. Seeing steady growth, many nonprofit organizations have started looking for ways to accept cryptocurrency donations. It is important to know that how to Accept Cryptocurrency Donations?
Thus, the market has seen a steady rise in cryptocurrency donations. The donation block rose by 1,558% in 2021 compared to 2020.Giving back philanthropy was always coming cryptos and a step further in its global acceptance aspiration.
Besides acceptance, it has faced severe backlash from a few community members discouraging acceptance of donations through cryptocurrency.
As a result, your organization may also hesitate to donate crypto coins. So what should one know before proceeding to accept cryptocurrency donations?
Please consider these insights on how to accept cryptocurrency donations.
Reasons why cryptocurrency donation makes sense
To map it out, here are clear reasons which support the notion of receiving donations in cryptocurrency, which is also the case with many donors and nonprofits.
- Tax Exemptions
One significant benefit of accepting crypto donations is that they are exempt from tax deductions. Especially if you have Schedule A and itemized deductions, you can take home the amount without any capital gains tax.
Further, a swift increase in crypto donations owes majorly to lucrative tax exemptions.
One of the key features which make accepting cryptocurrency donations is its security feature. Since crypto transactions are authenticated and encrypted, thus form a secure way for contributions. The generous amount is always safe and away from the hands of hackers and fraudulent activity as a private key secures it.
- Fast and Transparent
Payments, including donations, take a couple of working days to complete when made through the conventional banking system. However, crypto donations are real-time transferable. So, you send and receive donations in split seconds.
Furthermore, since all transactions are visible on the blockchain, thus donations are highly transparent, and anyone can view them. So, you are striving for transparency; crypto donations are your way of receiving donations.
- Public Interest
Since cryptocurrency donations are for social causes, thus align with the donor’s wish rather than falling under general government policies. It is a handful, especially when you receive large donations, as the government may intervene for capital gains if not donated through cryptocurrency.
Anonymity is more of a tip for donors, as many do not want to reveal their identity. Thus, cryptocurrency provides them an opportunity to make donations with total anonymity.
Similarly, NGOs can also accept anonymous donations.
Managing Cryptocurrency Donations
Knowing the importance of accepting donations through crypto lets us learn how to buy cryptocurrency donations and their management.
- Set up a standard wallet
First, you need to have an account with best New York crypto exchange. It is a relatively simple process and resembles setting up an account with a conventional bank.
Upon opening the account, the platform will provide you with a digital wallet to store your donations. However, there are two types of wallets to choose from – a hot wallet or a cold wallet.
- Hot wallet: A digital wallet always have an active internet connection. Crypto exchanges typically provide hot wallets as their standard storage option. However, these are more likely to get hacked since they are always online.
- Cold wallet: On the other hand, cold wallets are the preferred mode of storing cryptocurrencies, including donations. You only connect them to the internet when making a transaction. Therefore, these are more secure but cost more.
- Utilize a donor-advised fund
In addition to setting up your account, numerous organizations help to manage donations. Even your donor can nominate any such organization enabling you to receive cryptocurrency donations.
Here are a few such organizations:
- TheGivingBlock.com: Donors choose the blockchain network to send nonprofit donations.
- Fidelity Charitable: It is more suited for new crypto users; however, it uses a more traditional passthrough.
- Save the Children
The above platforms offer easy and user-friendly access to receiving cryptocurrencies as donations. NGOs can also use every.org to accept gifts like they would get cash.
- Other options
Furthermore, some platforms convert cryptocurrency and distribute cash, for example – Engiven. It works automatically and does not require expertise. They accept cryptocurrency and convert them to fiat money before forwarding donations.
Who can receive cryptocurrency donations?
Since cryptos are a decentralized platform that the government does not govern, there are no restrictions for receiving cryptocurrency donations.
However, a registered account is more viable in case governments or regulating authorities decide to run an audit. But, as the crypto ecosystem suggests, any NGO can receive cryptocurrency donations after having a digital wallet.
Frequently Asked Questions
Are cryptocurrency donations taxable?
No, donations through cryptocurrency are not taxable. In addition, not even capital gain taxes apply to grants. So, a nonprofit organization can receive the total amount of donations without paying a single cent to authorities.
Can we receive donations in Bitcoins?
NGOs can receive donations in all major cryptocurrencies, including Bitcoin and Ethereum.
Are crypto donations convertible to dollars?
Some exchanges convert cryptocurrencies in exchange for fiat money like dollars or euros; thus, you can convert crypto donations into dollars.
How do I ask for crypto donations?
The Giving Block is the largest and the best crypto donation platform. It provides a platform for charitable and nonprofits to fundraise in cryptocurrencies.
Is there any limit to cryptocurrency donations?
There is no as upper or lower limit for receiving a cryptocurrency donation. So, nonprofits can accept donations in any quantity.
Cryptocurrency is gaining momentum and replacing traditional finance in all walks of life, including donations. A new of donators emerged offering their mined cryptocurrencies. Subsequently, nonprofit organizations started accepting those donations.
We covered in detail how to accept cryptocurrency donations in this article. It is a simple task, as nonprofits can safely receive donations in their digital wallets. Furthermore, few crypto platforms allow cryptocurrency exchange with fiat money (like dollars).
Despite specific points of concern associated with cryptocurrency, you are opening doors to more potential donors while accepting crypto. Thus, having more funds to fast-track your mission.
However, the important thing is to keep stakeholders on the same page before accepting cryptocurrency donations.
Please leave your feedback in the comment section, as we always look forward to hearing from you.