Like any other type of currency, most people don't realize that cryptocurrency can be donated to nonprofit organizations. However, currencies like Bitcoin and their associated blockchain technologies, are being recognized by more and more businesses with each passing month.
As such, donating your currency is becoming an easier option by the month. Here are ten facts about donation (five good and four bad) that should have you thinking about whether it not it’s for you.
How Cryptocurrencies Are Good for Nonprofit Donation
Overall, we believe that the donation of cryptocurrency is a great way to both help a nonprofit and help with your taxes. Leading us to this idea are five major benefits (both to you and the nonprofit) from donating these coins to nonprofit organizations.
Donations of Cryptocurrencies Come with Low or No Taxes
When you sell your coins, you have to pay taxes, just like selling a stock or selling a physical item. However, much like any other type of donation, when you donate your coins, you can actually reduce the taxes you owe, if not get some money back. The important thing here is to follow the correct procedure for donation, starting with a certified appraisal of your coins so that your accountant knows what to do at the end of the year.
Donating Coins Can be Easier Than Donating Money
If you prefer to donate money to a charity that is in Canada, then you might have a hard time donating your money to their cause. After all the international exchange fees and banking fees, not only would it cost a lot of money, the nonprofit could end up with less than expected. However, given crypto is not tied down to any one country, it doesn’t need an exchange fee or banking fee.
Cryptocurrency Donation Can Ease the Banking Process
When you donate money to a nonprofit, especially through direct deposit or credit card, they have to do a lot of bookkeeping and waiting on the banking processes. However, when you donate with crypto, the money can be in their digital wallet in minutes. This can be especially helpful for nonprofit businesses that are struggling to make ends meet.
Cryptocurrency is Tracked
Unlike cash or even credit card donations, crypto wallets and the coins within them are tracked transaction by transaction. This makes it virtually impossible for a nonprofit to use the funds for ways that were not intended. In fact, should a donor wish, they could track their donation from their wallet to the nonprofit’s wallet and further to what the nonprofit spent it on in the end.
Cryptocurrency Donation Could Give Further
Much like the donation of a stock, donating a crypto coin could mean giving the nonprofit much more than the initial gift. For example, you donate $500 in Bitcoins to the local animal shelter. Instead of spending the money or cashing out, they leave their coins in the wallet for a year, assuming that the worth will increase. If they were right at the end of the year, they could have $5,000 - netting them $4,500 more than you originally donated.
How Cryptocurrencies are Not Helpful for a Nonprofit
However, whether or not you should be donating crypto coins isn’t a perfect yes. There are a few cons to think about and decide if you (and your chosen nonprofit) will be okay with overcoming.
Cryptocurrencies Aren’t Accepted by All Nonprofits
While all nonprofits will take cash donations, not all nonprofits want crypto coins. While some just haven’t thought about it, some have made an active decision to avoid their use for one of many reasons. That’s why, before you make your final decision, you should consider where you want to donate your coins and a second option if that one becomes unavailable.
Crypto Coins Mean More Paperwork
While this money is trackable and legal, it’s also the dark web's primary payment source. As such, the government likes to audit cryptocurrency transactions to ensure that no laws are being broken. Make sure you have a very knowledgeable accountant and always follow all laws and regulations to ensure that both you and the nonprofit you’ve donated to won’t face fines or unexpected penalties from the transaction.
Cryptocurrencies Have No Reverse Payment or Recovery Method
Let’s say you donate your Bitcoins to a charity. Perhaps, a day after you’ve gone through the donation process, you learn something that requires you to get your money back. If you would have used a credit card, this process would be possible. However, there is no way to reverse the payment of coins once paid. If you choose to donate your coins, make sure you are very certain this is the path you want to take.
Crypto Has No Direct Cash Exchange Method
There is no direct way to exchange coins into real cash. For example, if you were to give $100 USD to a Mexican Nonprofit, then they could simply walk to a cash exchange that day. While they’d lose some of the money during the exchange, they’d have money in their hands right away. That’s why it’s much easier to treat this coin like a stock in hopes it rises in cost before selling it to someone else - something many nonprofits do. However, with more and more places accepting payment from Bitcoin and similar, this con might soon come to an end.
Our Verdict on Bitcoin (& Other Cryptocurrency) Donations
Alt Coin Taxes loves and firmly believes in the use of Bitcoins for donation to charity. However, it’s important to keep in mind that not all charities use them and that the process can’t be refunded.
That’s why we believe that you should make sure to do your research (we have an amazing Blog and FAQ section) and once you’ve decided, find a professional that can help you with the process.