“What I can say right now is that I don’t see any downside to nonprofits like the Community Foundation accepting crypto donations, as long as they do it correctly.”
According The Chronicle of Philanthropy, cryptocurrency is worth roughly $113B. How can charities get in on this newest frontier in giving?
“What I can say right now is that I don’t see any downside to nonprofits like the Community Foundation accepting crypto donations, as long as they do it correctly,” says Joshua Forman, a member of the Community Foundation’s Board of Trustees, and a software engineer in the cryptocurrency space.
“The easiest way for an organization to start accepting crypto donations is to sign up with Bitpay, which works a lot like a PayPal integration. Bitpay provides some web plug-ins that make it easy to add this donation mechanism to a nonprofit’s website,” explains Josh. “Bitpay immediately converts crypto donations to cash, and sends the money to the nonprofit’s bank account.”
That said, for some donors, giving through Bitpay might be a little tricky. “It requires a specific protocol for sending crypto that not everyone can do. To make it easier for donors, nonprofits can use methods of receiving funds that require a bit of education to ensure you are doing so securely … and with minimal exposure to cryptocurrency price fluctuations.”
Indeed, according to news aggregator Morning Brew, Bitcoin – a type of cryptocurrency – came close to hitting $20K a year ago; but by this month – in the ever-evolving, fast-changing world of digital or virtual assets – it traded closer to about $4K under the spotlight of increased regulation and other factors.
In The Chronicle of Philanthropy, Debra Bloom further reports, “Spurred by tech-savvy donors’ wishes, breathless headlines, and a handful of high-profile gifts in the past year, charities are buzzing about whether to get in on the cryptocurrency action […] a growing number of groups think it’s worth a look. Fundraisers are teaching themselves about digital assets; talking with board members about the risks and rewards of handling an asset known for its mystery and market volatility; and examining gift-acceptance policies, especially to tackle concerns that crypto donors are anonymous unless they choose to reveal their identity.
“The best guesses say there may now be 500 to 1K nonprofits in the United States with the ability to handle cryptocurrency. In other words, these charities – [like your Community Foundation] – have already established an account with a service like Bitpay, or created a digital wallet to allow them to accept those assets, then find an exchange to convert them into fiat, the crypto world’s term for U.S. dollars and other government-backed currencies. The potential for such charitable giving is significant.”
Did you know? You can now donate to your Community Foundation in Bitcoin. “We’ve made it very easy to do with our Bitpay integration,” says Josh. To do so, get in touch with a member of the foundation’s Philanthropic Services Team at 303.442.0436 or PhilanthropicServices@commfound.org. And if you’re a nonprofit that’s considering fundraising through cryptocurrency, Josh has kindly offered to provide counsel. Learn more about Josh, read his blog, and get him touch with him here.
Says Michael Thatcher, CEO of Charity Navigator, which in August started accepting Bitcoin “This is a real thing for fundraising, an opportunity to meet some donors where they are – or where they might be soon. Everyone should move toward it at their own pace and comfort level, but it is definitely something we all should consider as an option for donors.”
Accepting cryptocurrency gifts may be getting easier, too, as new services are popping up to meet the growing interest, including:
- Network for Good, a donation-management business that will soon expand BlockGive, a pilot program that allows donors to go to one website, choose any charity, and make a Bitcoin gift.
- Coinbase, a platform for businesses and individuals to buy, sell, transfer, and store Bitcoin has added new payment services and tools that nonprofits can use to boost their ability to accept cryptocurrency donations.
- Engiven, expected to be introduced by the end of the year, would help charities set up digital wallets to accept Bitcoin, plus all types of other altcoins, and create a widget on their websites to make it easy for donors to give.
Still, while millions of people have bought and sold cryptocurrency, many view it as too unregulated, and too volatile. “We’re still in an environment where government regulators haven’t figured out how to regulate,” says Erich Mische, Executive Director of Spare Key, a Minnesota nonprofit that helps financially-challenged families facing health issues to pay their housing costs.
On the other hand, Matthew Roszak, founder of the Chicago Blockchain Center, is an advocate for the technology’s potential to open up opportunities for nonprofits. He serves on the board of California-based BitGive, which created a Bitcoin-based donation platform called GiveTrack that allows donors to track their charitable contributions in real time.
So, how do cryptocurrency donations work?
As also reported by Debra Blum for The Chronicle of Philanthropy, for charities accepting Bitcoin and other forms of cryptocurrency from their supporters, here’s how the process works:
Step 1
The donor acquires cryptocurrency by linking a credit card or bank account number to an exchange that enables the holders of those assets to buy, sell, and manage them. Bitcoin is the most valuable and best-known cryptocurrency, though there are thousands of other “altcoins,” many of which can be exchanged for U.S. dollars or other currencies.
Step 2
A secure digital wallet – an app on the donor’s computer or mobile device – holds the cryptocurrency assets. The charity that hopes to receive cryptocurrency gifts must also establish a digital wallet, or an account with a company like Bitpay.
Step 3
The charity’s digital wallet accepts a transfer of cryptocurrency from the donor’s digital wallet. The donor sends funds from their digital wallet to the nonprofit’s digital wallet, or sends funds to a Bitpay integration that the nonprofit has set up in advance.
Step 4
Vendors like Bitpay immediately convert the cryptocurrency gift into U.S. dollars and deposit it in the charity’s bank account. If using its own digital wallet, the nonprofit can either convert the gift into dollars by selling it on a cryptocurrency exchange, or hold it as an investment or spend directly.
All told, Bitcoin’s surge has put cryptocurrency in the spotlight. Stay tuned to this blog for future posts on the mainstreaming of cryptocurrency and philanthropy … and be sure to revisit Josh Forman’s earlier post on making a difference with Bitcoin right here in Boulder County.
