Spreading holiday joy through charitable giving with cryptocurrency
The holidays are the perfect time of the year for giving back, and the rise of cryptocurrencies has created even more opportunities for charitable initiatives. This was highlighted during Giving Tuesday 2021, the Tuesday after Thanksgiving which saw over $2.4 million raised in cryptocurrency from the nonprofit fundraising platform The Giving Block.
As crypto philanthropy becomes a new subsector of the cryptocurrency economy, some in the industry believe that crypto donations will only continue to increase. Alex Wilson, co-founder of The Giving Block, told Cointelegraph that last year the organization raised about $4 million in crypto donations, noting that this year, over $100 million in crypto donations will likely be received.
According to Wilson, this growth is partly due to the fact that donating crypto is more tax efficient than fiat donations. “Anyone who donates before December 31 is able to claim a deduction for the 2021 tax year. This is a great way to offset some of your gains.” Wilson added that over 1,000 nonprofits currently accept crypto donations through The Giving Block, a few of which include St. Jude, Save the Children and United Way. “Next year, we have a lot of partnerships that are going live and we expect our growth to accelerate. We're estimating that we'll process nearly $1 billion in donations next year and work with over 6,000 nonprofits.”
Cryptocurrency giving campaigns for the holidays
While a number of nonprofits have started to accept crypto donations, it’s also notable that campaigns centered around cryptocurrency philanthropy are being launched this holiday season.
For example, in early December, Upbring Innovation Labs — a Texas-based organization seeking to advance technology in the nonprofit sector — launched the Give Big TX Crypto Fund. Ryan Park, vice president of innovation of Upbring, told Cointelegraph that the fund is a joint cryptocurrency campaign working with twelve Texas-based nonprofits:
“You can think of this as a ‘cause fund.’ The cause here is to make Texas a better place to live. This is also about showing nonprofits that they can adopt new Web 3.0 technologies to advance. The larger goal overall is to see Texas emerge as a leader in crypto philanthropy.”Park shared that the Give Big TX Crypto campaign is partnering with organizations including Austin Pets Alive, Big Brothers Big Sisters Lonestar, Catholic Charities of Central Texas and eight other nonprofits. He added that the Texas Blockchain Council — a 501 C (6) organization — is also part of this initiative given the group’s involvement in advancing blockchain throughout different industries in Texas.
Kelsey Driscoll, senior innovation program strategist at Upbring, further told Cointelegraph that the campaign will be accepting over 40 different types of cryptocurrencies for donations through Dec. 31, all of which are facilitated by The Giving Block. “When donations are made, The Giving Block automatically converts them to United States dollars, so accepting crypto has been just as easy as accepting fiat donations, if not easier,” she remarked. Driscoll added that the subreddit group r/Bitcoin will be matching Bitcoin (BTC) donations when contributions are made to any of the charities supported by The Giving Block.
Pawthereum, a decentralized community-run project supporting animal shelters, has also launched a charitable cryptocurrency campaign this month. John Weathers, community manager for Pawthereum, told Cointelegraph that its 12 Days of Crypto Giving campaign allows for crypto donations to be made for specific projects that help animals in need. The Pawthereum project was created as a fork of the meme cryptocurrency project Grumpy Cat Coin, which raised $70,000 in crypto funds for the Sterling Animal Shelter in Massachusetts.
Most recently, Pawthereum raised $25,000 through crypto donations for Muttville Senior Dog Rescue, a San Francisco-based animal shelter caring for dogs with special needs. According to Weathers, close to $400,000 worth of crypto has been donated since the campaign was launched on Dec. 14.
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Nonfungible tokens, or NFTs, are also being leveraged for donations this year. Given that the market growth for NFTs sales is expected to reach $17.7 billion by the end of 2021, this sector is launching one of the largest crypto charity events this season. Known as Right-Click, Give!, this is an auction open to the public hosted on the NFT platform Opensea. The auction ran through Dec. 24, and all proceeds will be donated to Blankets of Hope, a charity that provides warm blankets to the homeless while also teaching kindness to children in school.
Mike Fiorito, co-founder of Blankets of Hope, told Cointelegraph that as an avid NFT collector, he is well aware of how welcoming the NFT community is as a whole. As such, he believes that more NFT-focused charitable campaigns will emerge. “There are a lot of kind people in the NFT space that are making fortunes — no matter how big or small — and want to give back,” he said.
Park also pointed out that the Give Big TX Crypto campaign is allowing NFT artists to work directly with nonprofits to donate proceeds earned from minting nonfungible tokens. “Many artists doing NFT drops are looking to work with nonprofits and this is an opportunity to do so. We have two NFT projects donating proceeds from their mints to our fund.”
Will charitable crypto campaigns catch on?
Although there are currently only a handful of charitable crypto campaigns present, the benefits associated with cryptocurrency donations may result in mainstream adoption moving forward.
While U.S. donors don’t have to pay capital gains taxes on any crypto assets they donate to a registered nonprofit, there are other technological advantages. For instance, Nawzad Amiri, community leader for Pawthereum, told Cointelegraph that the transparency provided by a blockchain network, along with the speed of transactions, is impressive when it comes to crypto donations versus fiat.
Moreover, statistics from The Giving Block found that crypto donors may be willing to contribute more to charity, noting that $11,000 is the average cryptocurrency donation size on The Giving Block. Donation data from Giving USA found that $737 was the average charity donation for Americans in 2020.
While the benefits may be clear to some, education seems to be the biggest challenge hampering adoption. For example, although Texas is growing into one of America’s biggest crypto capitals due to its friendly stance toward blockchain and mining power capabilities, Park shared that it has been challenging to bring Texas nonprofits on to the Give Big TX Crypto campaign:
“We reached out to about 60 nonprofits and are partnering with 12 total. It seems like this would have been a shoo-in but there is still a long way to go in terms of educating the world on the potential of crypto philanthropy.”Another challenge worth mentioning is that while NFT’s may appear as ideal donation assets, there is uncertainty regarding tax deductions. Fiorito explained that he is still trying to determine if donating NFTs is considered a tax-deductible event. “This is a cloudy area because we are so early in the NFT space,” he commented. Due to this uncertainty, the Right-Click, Give! Auction is also accepting cryptocurrency donations through The Giving Block.
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Challenges aside, it’s clear that crypto philanthropy has opened a new door of opportunities to a generation eager to give back. For instance, Park pointed out that the donor base for many of the nonprofits partnering with the Give Big TX Crypto campaign is over the age of 70. According to statistics from The Giving Block, the average age of crypto users is 38 years old, as Wilson added:
“The people donating here are individuals that live and breathe Web 3.0 or that have held crypto for a long time. A big piece of this now is just educating those people that this opportunity exists.”