A Nonprofit’s Guide to Accepting Cryptocurrency Donations
Your nonprofit may be able to unlock a new source of funding: cryptocurrency (crypto) donations. The crypto markets had more than $1.6 trillion in market value at the end of 2023.1 When a donor approaches your nonprofit with a large crypto donation, will you be ready?
FORVIS presents key considerations for why your organization might consider accepting crypto donations as well as a four-step process for doing so.
Why Consider Accepting Crypto Donations?
- A total of 52 million Americans own crypto.2
Familiar comparisons to illustrate how many Americans own crypto.
Source: coinbase.com - The average crypto donation in 2022 ($6,295) was nearly 31 times larger than the average online gift ($204).3
- In addition, more than 90% of cryptocurrency donation volume came from gifts worth at least $5,000 at the time of donation.4
- In 2020, nearly half of all crypto owners donated $1,000 or more to charity.5
- In 2022, 99.9% of donated crypto were gifts of $5,000 or more.6
Source: thegivingblock.com
A Four-Step Process for Accepting Donations:
- Discuss the opportunity with your board.
- Open communication is important when taking on new forms of donations. Gaining buy-in from the top can be critical to a new project’s success.
- Reviewing your gift acceptance policy will help manage the donor expectations and serve as a guide for staff members on the receiving end of contributions.
- In the case of certain crypto donations, you may be approached to receive nonliquid crypto and may not be equipped to dispose of the gift.
- Having the proper controls in place before fundraising can be imperative to safeguarding your organization’s donated crypto. Thinking through these items ahead of time can set you up for success. Consider establishing a crypto donation policy that touches on the following items:
- How to accept the crypto donation. Generally, there are three common ways to accept a crypto donation:
- Set up and maintain your own noncustodial wallets.
- While this may be a lower-cost option, security risks are generally higher in this scenario.
- Use a crypto donation processor. Examples include but are not limited to:
- Engiven
- The Giving Block
- CryptoforCharity
- Use an intermediary 501(c)(3), such as a donor-advised fund.
- Set up and maintain your own noncustodial wallets.
- Liquidation policy that addresses when will you liquidate donated crypto and when will you hold it on the balance sheet.
- How to account for the crypto on financial statements including:
- Valuation
- Disclosures
- How to comply with tax rules and regulations.
- How to strengthen your control environment for items such as:
- Password or private key protection
- Segregation of duties
- Reconciliation and rollforward
- How to accept the crypto donation. Generally, there are three common ways to accept a crypto donation:
- Fundraise!
What to Do Next
Accepting cryptocurrency donations can be a new way for nonprofits to diversify their funding sources and reach new donors. However, it is important to note that working with crypto involves many risks. Staying informed and working with the right advisors can help mitigate those risks.
Consider exploring the opportunity of accepting crypto donations with caution and creativity by first preparing yourself to discuss this opportunity with your board. With the right approach, accepting cryptocurrency donations can be a valuable addition to your fundraising strategy.
Reach out to a FORVIS professional who can work with you to help your organization establish safe measures when accepting crypto donations.
- 1"Total Cryptocurrency Prices by Marketcap," Coinmarketcap, Accessed February 20, 2024.
- 2"A Call To Action: Mobilizing 52 Million Crypto Owners Into An Army of One Million Advocates For Change," Coinbase, September 19, 2023.
- 3"2023 Annual Report Crypto Philanthropy Data, Trends & Predictions," The Giving Block, Accessed February 20, 2024.
- 4"2023 Annual Report Crypto Philanthropy Data, Trends & Predictions," The Giving Block, Accessed February 20, 2024.
- 5"Growing Popularity of Cryptocurrency Could Fuel Charitable Giving," Fidelity Charitable, October 28, 2021.
- 6"2023 Annual Report Crypto Philanthropy Data, Trends & Predictions," The Giving Block, Accessed February 20, 2024.