Crypto Fundraising: Strategies And Best Practices

Day after day, charities raise much-needed funds through fundraising work, which might involve talking to potential donors face-to-face, running a community event, or setting up an online appeal. There is no one path for fundraising. Some nonprofits will focus on events, while others will center on digital techniques. The rapid growth of cryptocurrencies offers voluntary organizations the opportunity to grow their revenue sources while also retaining their existing supporters. Some of the world’s biggest charities – including the Red Cross – accept cryptocurrency.

What Is Cryptocurrency And How Does It Work?

All currency is a social contract: we assign it value and agree to honor that belief so we can exchange it among ourselves. Cryptocurrency works the same way. For example, Cardano’s native coin, ADA, is valuable since it’s a limited resource and people want it. ADA price prediction is a challenging task due to the high volatility of crypto markets, with significant changes in supply and demand. The increasing interdependence with the real economy has made cryptocurrencies irreplaceable, and hence, their long-term sustainability is inevitable.

One of the things that sets cryptocurrency apart is that no one is in control. There’s no need to rely on financial intermediaries to hold or process digital assets to complete a transaction. Peer-to-peer transactions and information flows without companies that operate digital platforms. Following Bitcoin’s success, countless alternative cryptocurrencies have been created. Launched in 2017 via an Initial Coin Offering (ICO), ADA is one of the oldest active cryptocurrencies. The newly formed Crypto Strategic Reserve could potentially include ADA.

The Major Advantages Of Cryptocurrencies For Charities

Being able to quickly donate from any place in the world without incurring high fees is one of the biggest and most impactful innovations unique to cryptocurrency. Despite market volatility, the philanthropic use of cryptocurrencies remains robust, which testifies to the sector’s adaptability and resilience. Most users are young and affluent, so cryptocurrency has created a new source of income for nonprofits. A number of charitable organizations accept crypto donations or are contemplating ways in which they can use digital assets to advance their purposes. 

The advantages of crypto donations include but aren’t limited to:

●       Private transactions: Privacy and data protection are increasingly important to donors. Crypto users can transact privately using wallets that support change addresses, which create new, unused addresses and send the remaining funds there. The money can’t be tracked on the blockchain.

●       Tax advantages: Crypto donations are tax-deductible and exempt from capital gains tax. It’s a powerful way to support animal causes, breast cancer, schools and education, etc.

●       Lower fees: Cryptocurrency comes with lower built-in fees and faster transaction processing. The costs are lower compared to traditional systems, especially for large international payments.

Cryptocurrency has the potential to be one of the most valuable sources of revenue for charities. The United Nations High Commissioner for Refugees (UNHCR) started collaborating with the Cardano Foundation in 2022 to support forcibly displaced people. The Cardano Foundation aims to give the community the necessary tools and support to take advantage of the Cardano protocol to solve world problems.

Potential Risks And Challenges To Accepting Crypto Donations

While cryptocurrency can provide charitable organizations with access to a new class of donors, nonprofits must also consider potential concerns. As mentioned earlier, rapid and significant price fluctuations occur routinely in the crypto market, so if cryptocurrency isn’t immediately converted to cash, the donation can be bigger or smaller. Additionally, there’s no regulation on the use of cryptocurrency. Staying informed about legal developments ensures robust management and helps avoid penalties. From the very get-go, ensure key principles are internalized and implemented by stakeholders.

How To Launch A Successful Crypto Fundraising Campaign

Cryptocurrencies could become a mainstream route to investing, trading, and moving assets. Blockchain technology’s path to mass adoption varies greatly depending on scalability, efficiency, cost of operation, security, privacy, and user-friendliness. Nonprofits have often been at the forefront of innovation, and they might benefit from working with digital assets. Please continue reading to learn how to prepare for your first crypto fundraiser.

You can set up a crypto wallet, which allows supporters to send funds directly. Your primary considerations ought to be security, ease of use, and compliance with government and financial regulations. A wallet manages cryptocurrencies like ADA but doesn’t directly store them. Custody and safekeeping are crucial, so explore options like cold wallets or consider engaging with third-party custodians. Collaborating with a trusted intermediary simplifies the process. For minimal fees, crypto exchanges offer a checkout experience that charities can embed into their sites.

You can add a donation button on your site’s homepage. Have a clear call-to-action like “Your support matters. Donate now!” or “Join us in making a difference.” Letting donors select crypto on your website can streamline the process and encourage further donations for your organization. If you already have supporters wanting to donate their favorite coins, there are free, easy options like Fundly that don’t require you to take on additional risk.

By harnessing qualitative and quantitative data, you can obtain invaluable insights about donor behavior, optimize your marketing strategies, and increase engagement and contributions. Your donation form should include fields for information like full name, preferred nickname, mailing address, phone number, and so on. Let donors know you’re requesting this information to thank them for their gift. 

If you receive digital assets as a donation, there are no capital gains implications. Cryptocurrency provides tax relief to both the charity and the donor, so it suits everyone’s objectives. Since crypto is volatile, many charitable organizations prefer to cash out the cryptocurrency by using a centralized exchange to avoid discrepancies between the amount donated and the amount actually received. Still, a more efficient option is to hold cryptocurrency through market fluctuations to profit from long-term value appreciation. Cardano’s ADA could experience renewed growth in 2025.

Wrapping It Up

Given the complexity of the process, you should consider partnerships with intermediaries when integrating cryptocurrency. Expertise is vital.