Charity hack fixes your crypto CGT bill: Endaoment

Robbie Heeger’s Endaoment has facilitated the donation of over $30 million of cryptocurrency to 243 different charities. These donations come from altruistic cryptocurrency investors who are also partly motivated by reducing their tax burdens to Uncle Sam and keeping more of their profits.

Born in Silicon Valley, Heeger, now in his early 30’s, was exposed to entrepreneurship from a young age. Though he initially worked in big tech, he soon became so enthralled with blockchain that he dropped everything to pursue his new passion in 2018. This led him to create Endaoment, which he calls the first regulatory-compliant nonprofit built entirely on the Ethereum blockchain. The project allows anyone to donate one of over 150 cryptocurrencies to a charity of their choice and, in doing so, reduce their tax liabilities.

Endaoment represents the latest generation of blockchain giving — but it is not the first. In 2017, a mysterious figure calling themselves Pine anonymously donated 5057 Bitcoin, worth $55 million at the time, to a collection of over 60 charities.

These donations not only encouraged major charities to accept cryptocurrency contributions for the first time but also served to counteract the perception of Bitcoin being primarily used in dishonest or criminal activities. While the Pineapple Fund helped legitimize cryptocurrency as a medium of charity, it was by no means the first. As early as 2011, Bruno Kučinskasin created Bitcoin 100, an initiative to donate Bitcoin to charities that would openly accept BTC.

Despite many charities‘ early exposure to cryptocurrency, few have continued to receive substantial donations on the blockchain and many even removed such donation options from their websites. The reason was simple on one level and yet complex by nature — taxes.

Endaoment

Upon graduating from university in 2012, Heeger accepted a full-time position with Apple where he first worked as a content publishing quality assurance engineer before becoming a manager of production operations. As his career progressed, his fascination with blockchain technology grew and in 2018, he “left Apple with this understanding that crypto was not just something that I could be tangentially interested in anymore — it was consuming.” Despite his experience at a major tech company, he saw himself as technically weak and took boot camp-style classes in solidity coding and blockchain web development.

“I started brainstorming ways that I could take this new skill set and try and build something that would funnel crypto capital into non-profit organizations that otherwise would have had very little exposure to crypto,” Heeger recounts of his early days. One of his initial ideas was to create a “media chain” by which to verify news content and make it resistant to censorship.

The brainstorming paid off, as he recalled how he had made it a habit to give away a portion of his Apple stock to a donor-advised fund each year because he “had stock that had tax obligations on it and I wanted to give that stock away without having to sell it first.” Charity can, of course, be more than simply selfless giving, as strategic donations can often allow for both individuals and businesses to reduce their tax burdens. While selling AAPL stock before donating it would have incurred additional capital gains taxes, giving the stock to a donor-advised fund allowed him to receive tax benefits for the entire value of the stock without incurring capital gains taxes, as charitable donor-advised funds are not liable to tax.

“I had crypto that had appreciated significantly and I didn‘t want to sell it first in order to donate it. I thought ‘wouldn‘t it be cool if there was a donor-advised fund that took crypto’ and that was the seed that became Endaoment.”

Heeger, now in his early 30’s, founded Endaoment in March 2019. Its core function is to provide a tax receipt in exchange for a donation of cryptocurrency. As a donor-advised fund, those making donations receive “advisory privileges” which means that they can suggest where they would like the proceeds of their cryptocurrency to be donated. In practice, this means that 99% of the time, funds go to the donor’s desired U.S. charity of which Heeger says there are about 2.5 million. The 1% of times when the funds do not reach the donor’s first choice of destination include situations where the grant recommendation “is to a hate group or an organization that‘s not in good standing with the Internal Revenue Service, or one that presents some conflict of interest for the organization,” Heeger explains.

“Give us your crypto and we will give you a tax receipt that says you donated it to a 501C3 tax-exempt non-profit public benefit corporation called Endaoment,” he clarifies regarding the business model.

Thank you for the bids on Grifter #659. One of three rats in the collection and without doubt the most pretty.
All proceeds will go to the Grifter Fund in collaboration with @endaomentdotorg