- As more and more charities accept cryptocurrency as a form of payment, well-wishers may donate their cryptos, such as Bitcoin, Ethereum, BNB, XRP, and even NFTs, to revolutionize the world into digitalism.
- One of the main benefits of cryptocurrency charity is the tax deductions and tax credits that donors receive.
Crypto philanthropy is very different from conventional charitable donations. These variations are altering the characteristics of donors, funding strategies, and even the motivations for giving. The increase in the frequency of these cryptocurrency gifts indicates that this kind of giving will likely remain important to the nonprofit industry and even change philanthropy.
The availability of cryptocurrency for charitable giving has already inspired new generations of young people to think about philanthropy and helped smaller charities compete for donations, but as digital assets become more ingrained in our lives, these may only be the first steps.
Blockchain’s Contribution to Accelerating Global Donations
By far, 2017 was the biggest year for cryptocurrency donations. Around 45% of bitcoin investors made charitable contributions in 2020, compared to 33% of general investors, according to Fidelity Charitable, the nonprofit arm of the financial services behemoth that offers advice to contributors on charitable giving. In contrast to $28 million in 2020, Fidelity Charitable got over $331 million in cryptocurrencies. Giving Block, a cryptocurrency giving platform, announced a record 1,558% increase in donations last year, totaling $69 million, in its annual report.
Charitable organizations can access donors from all over the world because of the simplicity of exchanging cryptocurrencies. Donations in cryptocurrency are now being accepted by numerous worldwide nonprofit organizations. To deal with cryptocurrency, UNICEF established a new financial entity called CryptoFund. Large groups, like the Red Cross and Greenpeace, have come a long way to accept this.
Cryptocurrency Is Increasingly Present in Global Philanthropy
With the development of blockchain technology, numerous beneficial characteristics that were previously absent from Web 2 or conventional banking systems are now present. In consequence, charities that act dishonestly have the opportunity to misrepresent or overspend all donations, keeping donors in the dark and not letting them know how their monetary contribution was utilized. Significantly, in the US and other worldwide countries, many charity donations that don’t reach an amount exceeding $25,000 aren’t even allowed to make any filing of an annual return.
Charitable organizations can use blockchain technology to gain from:
- It Brings Transparency and Leads to Accountability: Since all cryptocurrency transactions (donations and withdrawals) are tracked on the blockchain, using blockchain technology resolves the problem of transparency. Since every donor may check the money coming in and going out of the nonprofit’s address, thanks to blockchain’s public nature, transparency and accountability are maintained among organizations. Blockchain offers a more open donation conduit than conventional ones, though it is not completely secure.
- Access to Philanthropies Worldwide: The option for donors to send money to any location in the world is quite important, even though transparency and accountability continue to be two of the main reasons why individuals choose to make donations using cryptocurrencies.
It leads to a Reduction in Taxes and Fees: Tax advantage and credit exposure are the accelerating criteria that donors receive, which make them choose charity donation in the form of crypto as the most desired procedure of charity. If a donor donates using crypto or bitcoin, they shall be permitted to be subjected to deductions from their taxes in numerous countries at the full amount of fair market value of the cryptocurrency at the time of such a contribution. However, every nation doesn’t favor cryptocurrencies as a form of donation because each government determines the worth of cryptocurrencies in different ways.
