Accepting crypto donations should be a top priority for nonprofits in 2024.
Here are 5 reasons why:
Tax Efficiency for Donors
52 million Americans hold crypto. 15% of upper-income Americans who have acquired crypto did so over 5 years ago. Many are sitting on large taxable gains.
Tax-savvy donors will be motivated to donate appreciated crypto, just as donors have historically been motivated to gift appreciated stock. Nonprofits can minimize volatility and risk by immediately converting these donations into cash, just as they would with gifts of appreciated stock.
Yesterday, the SEC approved Bitcoin ETFs for some of the world's largest asset managers, including BlackRock, Fidelity, and others. Analysts predict $10-$100 billion of inflows into Bitcoin ETFs in 2024 alone.
The tools to learn about, acquire, and exchange crypto are getting more user-friendly. Global sentiment about the underlying technology is rising. The Bitcoin halving will happen in a few months. There are many reasons why donating crypto is likely to be one of the most tax-savvy ways to give in 2024, and nonprofits should be prepared to accept it.
Early Adoption Advantage
Accepting crypto donations earlier will give nonprofits a competitive edge, positioning them as strategic, forward-thinking organizations. Blockchains are permanent, immutable ledgers of record, and keep score of who began transacting when. Earlier activity will lead to increased visibility, support, and trust from potential & existing donors.
Early crypto activity will especially resonate with tech-savvy donors (not a bad demographic to impress), who will respect and support nonprofits that can leverage emerging technologies to their advantage.
Global, Ideological, Generational Reach
Crypto is global currency, activity, culture, and history. Organizations with the right approach will tap into a global donor base and more effectively scale communication of their mission, as well as more efficiently identify those most likely to be passionate supporters.
Many crypto donors are ideological -- invested (literally) in hopes of a better future. Organizations that accept crypto will signal a willingness to work towards a better future alongside these donors. The ideological tend to give generously.
Many crypto donors will be Millennials and Gen-Z, who might be experiencing financial success for the first time. Accepting crypto will be a permanent signal of awareness and preparedness for how to fundraise from the next generation(s).
Transparency and Accountability
Blockchains are public and transparent. Crypto will enable organizations to offer real-time, verifiable insight into how funds are used, enhancing trust and accountability, especially among:
Millennial and Gen-Z donors: "Millennial and Gen-Z donors want to see the direct impact of their philanthropic involvement. Organizations working with younger donors should be prepared to provide transparency in linking charitable contributions to measurable results."
Beneficiaries: Better insight into how an organization plans to help beneficiaries and their loved ones provides those who might be going through immense uncertainty an important source of stability and trust.
Deeper Connection with Donors
Crypto enables nonprofits to strengthen the positive giving feedback loop (Donate —> feel good about donating —> donate more / encourage others to donate). It’s on the donor to donate, but it's on the nonprofit to optimize how good the donor feels about donating.
At the root of generosity -- of an individual act of kindness, or a robust organization doing good work -- is connection. A recognition that we're in this together.
How exactly can crypto strengthen the positive giving feedback loop and enable deeper connection? How will almost every organization in the world leverage crypto eventually? I call this:
A Token of Appreciation
I donate to an organization. I receive an automated thank you email. Almost all of them are some version of:
Thanks for your donation, here's your tax receipt.
Usually a sentence or two about impact. Maybe an image.
But most thank you emails are bland, both in content and in visualization. White background, black text, basic.
Obviously, a boring, automated email which everyone looks at exactly twice -- once to "Mark as Read", once when filing taxes -- is not the best we can do.
An example: I went scuba diving with Nadine Bauer in September. Here's me diving a shipwreck :)
Nadine sent me this image as an NFT as a thank you for diving with her. You might have heard about NFTs in the context of wild valuations for cartoon projects. A lot of that discourse sensationalizes the speculation and misses the brilliance of the underlying technology.
Why do I appreciate this photo in NFT form, as opposed to if she had just emailed it to me?
The NFT provides context, permanence, and authenticity.
Context & permanence: The blockchain is a permanent ledger of record. By sending me this photo as an NFT, Nadine established the when for our shared experience in the public domain. Additionally, she gave me an asset which I can safely hold on to forever. No risk of a hard drive being wiped, computer being lost, or spilling coffee on it.
My favorite feature is that this asset holds immense value to me and no value to anyone else. I'd never want to sell it, and nobody would likely ever want to buy it. The opposite of speculation and financialization -- something much more meaningful. It's an asset that represents my life experience and memory, forever.
Authenticity: AI creates, crypto authenticates. As AI continues to improve, it is becoming increasingly difficult to distinguish real vs. fake. By sending me this photo in NFT form, from Nadine's authenticated account to mine, this token represents a photo, experience, and historical event that is provably real.
Imagine the impact of giving every donor permanent, visual, public recognition for their generosity. Everyone wins. Everyone connects more deeply. Here's how:
The donor wins because they feel more appreciated, more connected, and have been rewarded with a permanent token that visualizes the impact of their donation, and forever timestamps their support.
The nonprofit wins because they strengthen their connection with the donor and can leverage that relationship for future donations, referrals, and other engagement with the work. The nonprofit wins further by attracting new donors, as anyone in the world can discover these tokens and feel compelled to donate themselves or spread the mission.
The beneficiaries of the work win because the nonprofit is better funded, and -- if they ever wish to -- they can forever see and connect with those who helped them.
Now is the best time for organizations to begin setting up crypto infrastructure, and to be thinking about how to best leverage crypto to maximize impact.
It is crucial that organizations set up their crypto infrastructure strategically, in order to maximize safety, security, and simplicity for themselves and for their donors.
If you'd like to learn how, contact me!