Donating Bitcoin and other crypto to charity

Donating Bitcoin and other crypto to charity

Donating Bitcoin and other crypto to charity

An increasingly popular option for individuals and organizations wishing to make charitable contributions is to donate Bitcoin or other cryptocurrencies. Many of the world’s major charities now accept crypto directly, while several donor-advised funds have sprung up to accept your donation and distribute it as you see fit.

In addition, many NFT projects donate all or part of their revenue to various humanitarian causes. Some have been set up specifically for that purpose.

Here, we’ll take a closer look at why it makes good sense to make your donation with cryptocurrency rather than a check or credit card, and where you can go to do this.

    Why donate crypto (and not cash)?

    During the crypto bull market of 2017-18, millions of people around the world made their fortunes. Many of them chose to give a portion of their newfound wealth to charity. Unfortunately, these investors weren’t yet aware of the significant tax advantages of donating cryptocurrencies directly. At the same time, very few nonprofits were set up to accept such donations.

    Then, along came “Pine”, an anonymous Bitcoin whale who In 2017 created the Pineapple Fund as “an experiment in philanthropy with cryptocurrency.”

    So far, Pine has given away nearly 5,200 BTC to 60 different charitable organizations. The fund donates Bitcoin directly to recipients’ wallets. This donation model provides a few significant benefits to both the donor and the recipient:

    • The gift is larger than if the crypto is sold and the cash donated. That’s because of the capital gains tax. In the United States, this can amount to as much as 20% for long-term gains (crypto held for a year or more and then sold), and up to 37% for short-term. Other countries have similar programs. By donating directly and not selling, the charity receives the full, pre-tax value of the donation, while the donor’s income tax deduction is equal to the crypto’s full market value.
    • Depending on the cryptocurrency and the size of the donation, the transaction fee could be significantly less than a credit card charge.
    • There’s also the benefit of privacy. You can easily make an anonymous donation by sending crypto to a wallet address because you don’t have to provide any personal details.

    Where can you donate crypto?

    If you’re considering donating some Bitcoin or other cryptocurrency, there are numerous U.S. 501(c)(3) tax-exempt charity funds that can help, making sure your contribution is invested and distributed according to your wishes. Virtually all of these accept Bitcoin, and most welcome major altcoins as well. Here are few examples:

    Endaoment offers a wide range of field-of-interest funds focused on “social impact.” You can donate to an existing fund that aligns with your philanthropic goals, or create your own. Any crypto you donate is converted to USD Coin (USDC) and managed through smart contracts.

    The Giving Block was founded in 2018 as a platform to help nonprofits accept crypto donations, and donors to identify crypto-ready charities. Bitcoin and about 70 other cryptocurrencies can be donated to over 1,000 nonprofits.

    A Fidelity Charitablegiving account” can be funded with Bitcoin or other cryptocurrencies, as well as a wide variety of other assets.

    Donate in Crypto supports nearly 100 nonprofits, including several Ukraine charities, the American Red Cross, Electronic Frontier Foundation, Greenpeace and Save the Children.

    In addition, many channels have recently opened specifically to support Ukraine’s war effort, including the official government wallet address.

    NFTs for charity

    Non-fungible tokens offer an interesting donation alternative. In March 2021, Twitter founder and CEO Jack Dorsey auctioned an NFT of his first tweet for ETH 1,630 ($2.9 million at the time), which he donated to GiveDirectly, a nonprofit working to eradicate poverty in East Africa.

    Some NFT collections have pledged to donate all or part of their sales revenues to specific charities. For example, Blazed Cats gives its entire 10% royalty to Mental Health America (so far more than $273,000 in ETH.) And an artist from Art Blocks, an Ethereum-based NFT creation platform, donated ETH worth a record $3.5 million to the Australian branch of Doctors Without Frontiers.

    Several NFT projects have been set up specifically to help Ukraine. UkraineDAO raised $6.75 million from sales of an NFT of the Ukrainian flag. Proceeds were donated to the Come Back Alive Foundation, which provides food and supplies for Ukrainian soldiers and civilians.

    Of course, it’s important to do your own research before donating to any cryptocurrency or NFT charities to make sure your money really goes to those in need. But if you do choose to donate Bitcoin or other crypto assets to the charities of your choice, you’ll not only enjoy greater privacy than if you give cash, but your contribution will go further, providing more help to those who need it.

    This content is for informational purposes only and is not investment advice. You should consult a qualified licensed advisor before engaging in any transaction.

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