How to accept donations in the form of digital currencies

Cryptocurrency is digital money that can be used today not only as an investment vehicle but also to purchase goods and services. Crypto differs from other currencies because of its decentralized nature, as no single entity is responsible for it, and banks aren’t involved in the completion of a transaction. Furthermore, the supply of crypto is immutable, and monetary policy or external factors don’t really impact it; rather, the supply is hardwired into the crypto code. Many individuals are interested in learning how to buy bitcoin with credit card and take advantage of the opportunities that come along with it, but nonprofits should also consider incorporating crypto into their fundraising programs. Why is that so? Well, it’s pretty straightforward: crypto can provide a new source of donations, allowing nonprofits to reach more diverse donors who are also tech-savvy. Want to learn more about accepting crypto donations for your NGO? Keep reading!

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Make sure donors know that you accept crypto

If you want to receive donations in the form of cryptocurrency, you must ensure donors know they have this possibility! To this end, we recommend highlighting this aspect on your website – you can include crypto on the main donation page, the “ways to give” section or create a landing page dedicated solely to crypto donations. Modern donation pages include dropdown alternatives where it’s possible to donate by using PayPal, a credit card, or a checking account. Another idea is to include a line of text on your website’s donation page so that donors can be informed of the crypto giving option and its tax benefits and a link to a donation page for cryptocurrency.

Collect the right information about crypto donors

If you already have a donation form, there will likely be donor information fields; however, when making a crypto-specific donation page, collecting donor information is necessary before offering the wallet information. Although crypto owners enjoy the anonymity that comes with cryptocurrency, when it comes to donations, this means their gift will stay anonymous. However, in order to thank them for their gift, you’ll need to request their information. At the same time, collecting this data is essential because it ensures they will receive the right documents for tax purposes. Just be sure to explain the data collection process to donors to give them peace of mind that you will not trade or share their information and how it can benefit you and them.

Have a crypto donation liquidation policy in place

Due to the volatile nature of cryptocurrencies, nonprofits generally prefer to sell crypto donations for cash, as it decreases risk and allows them to avoid accounting discrepancies between how much has been donated and how much has been received. Luckily, the liquidation of crypto gifts isn’t rocket science – you can utilize a payment processor to convert crypto donations into cash automatically. It’s worth noting that some nonprofits may choose to hold crypto for a longer time, but that’s only the case for those with robust fundraising programs, and a capacity to manage these assets effectively. This isn’t recommended for smaller nonprofits, especially if they’re only getting started with cryptocurrency.

Make sure marketers and gift officers know how crypto donations work

Those within the NGO who communicate with donors should be familiar with the options to give, so it’s essential to educate them on crypto donations and empower them to feel comfortable discussing this option. Now, this doesn’t mean they need to understand all the details about crypto; however, they should know relevant information, such as how donors can give crypto and what tax benefits they can get. Remember not to provide explicit tax or financial advice – it’s enough to give donors a general idea of the tax benefits they can expect and then refer them to financial professionals if they need further advice. Furthermore, the marketing team should know how to target the right donors when it comes to crypto donations – for example, younger people in major cities and those working in the tech industry.

Don’t overlook tax laws for crypto fundraising

Unfortunately, nonprofits often fail to comply with regulations around crypto donations, but it’s important to be well-informed and prioritize this aspect. A crypto gift may not seem different from a publicly traded stock gift, but the difference in tax reporting is notable. This is because the IRS doesn’t include publicly traded securities in the category of charitable deduction property, but they do include crypto. This difference matters because it can lead to extra reporting responsibilities not only for nonprofits but also for crypto donors. Let’s say a nonprofit sells crypto within 3 years of donation; in such a situation, it’s essential to file Form 8282 within a specific timeframe with the IRS (an officer at the NGO must do this); otherwise, the nonprofit could face a penalty of $50 per form, which applies to all donations beyond  $500. While the IRS regulation around crypto donations may not necessarily stay the same, it’s safer to utilize a trustworthy external partner to handle the acceptance, processing, and liquidation of crypto donations.

Promote crypto giving among existing donors

While not all existing donors will want to donate crypto, some of them will definitely be excited that they have this option! When it comes to promoting crypto giving among existing donors, we recommend two approaches: a general announcement where you let everyone know about this new opportunity(for example, including a postscript into an email or adding a paragraph that highlights the crypto donations’ option), or targeted outreach, which requires you to identify current donors and reach out to them directly. You can identify donors interested in crypto by sending a general survey asking them whether they want to donate crypto, offering you valuable insights that will help you create the data foundation for the donation program.

The bottom line

Crypto donations are an exciting field for NGOs, and a powerful way to tap into new donor audiences. So, why not get up to speed on crypto fundraising today and set your nonprofit up for success?