Bitcoin makes headlines for its growing popularity and increasing price, but how can Bitcoin be used by nonprofits for the best fundraising outcomes?
Bitcoin’s growing popularity
Recently Bitcoin’s price hit $55,000, a new all time high and bringing its market cap to $1 trillion. The entire cryptocurrency market cap is over $1.5 trillion, larger than almost any company like Facebook and Disney.
Organizations and corporations are purchasing Bitcoin in record amounts. Large corporations like Microstrategy, Grayscale, and Tesla have purchased billions of dollars worth of Bitcoin. Even the country’s oldest bank, BNY Mellon, has started to enter the world of cryptocurrency.
Each day Bitcoin is getting closer to mainstream adoption as companies like CashApp and PayPal make it easy to buy and sell Bitcoin. Even Mastercard and Visa are adding cryptocurrencies to their payment network, after seeing huge buying trends from their users.
There has never been a better time for nonprofits to begin accepting cryptocurrency donations.
Who holds Bitcoin?
In 2020 a research report from Cambridge found that there are over 100,000,000 verified cryptocurrency users. Today, that number is likely even higher since the overall number of users is doubling every 18 months. It might not be surprising that over 60% of users are under the age of 40. Over half of Millennials and Gen-z hold cryptocurrency.
Every time an organization incorporates cryptocurrency to their products, the cryptocurrency ecosystem grows. When PayPal started offering cryptocurrency services on their platform, it gave access to crypto services to 346 million more users. Mastercard will follow with 231 million users.
Given the tax incentive, all cryptocurrency users are all potential donors for nonprofits.
Why is Bitcoin better for nonprofits and donors?
There is a unique tax incentive for users to donate cryptocurrency. Similar to stock donations, crypto offers a more tax efficient way to donate because cryptocurrency is classified as property. For donors, that means no capital gains tax and a fair market value deduction. That can often mean a 20-30%+ larger donation and deduction. Donating Bitcoin directly can benefit both the donor and the nonprofit, by bypassing the capital gains tax.
Bitcoin’s rising price means increasing future donation dollars for nonprofits. Widespread adoption of Bitcoin means new potential donors for nonprofits.
Bitcoin fundraising in action
We’ve seen nonprofits small and large land major crypto gifts. One of our clients, She’s the First, landed over $42,000 in their first couple of months accepting cryptocurrency donations. This turned out to be their second largest gift in a year when they needed it most.
“So yes, cryptocurrency donations are very real… and for She’s the First, it couldn’t have arrived at a more critical time.” – Tammy Tibbetts is the Co-Founder and CEO of She’s the First
Other campaigns like the Barstool Fund raised over $1 million from the cryptocurrency community in just one week.
How can Bitcoin help fundraising?
Accepting Bitcoin donations connects nonprofits with a younger audience and diversifies their donor revenue. Most of the time, there are completely new donors because they are only donating cryptocurrency due to the tax advantage over donating cash. It’s a low effort and low resource way to grow donor revenue without needing to hire more staff. However, it is important to have the right guidance to set up your account and reach the right audience.