Nonprofit organizations across the Valley are now accepting cryptocurrency, opening up a new stream of revenue ahead of Giving Tuesday, experts say.
Cryptocurrency, a decentralized medium of exchange, operates as a digital asset on a secure blockchain network with no central authority that manages and maintains its value.
“There’s a tremendous amount of wealth being created within the digital currency space that doing nothing is no longer an option for philanthropic organizations,” said Ryan Taylor, CEO of Dash Core Group, which created the Arizona-based Dash cryptocurrency.
Bitcoin, the world’s largest cryptocurrency, is more widely accepted than any other digital coin, followed by Ether. Whereas Dash cryptocurrency functions as a mode of payment designed to allow fast transactions.
The global cryptocurrency market is currently valued at over $2 trillion, Taylor said.
More than one in 10 Americans bought or traded cryptocurrency in the past 12 months, according to a July survey published by NORC, a research group at the University of Chicago.
Researchers discovered the typical person who invests in cryptocurrency is under 40 years old and does not have a college degree. Two-fifths of cryptocurrency investors are women or people of color.
Many nonprofits are capitalizing on the new technology to expand their donor demographic, said Pat Duffy, co-founder of The Giving Block. “It’s a good confluence of variables like super young, financially literate, super tech-savvy donors with a super tax advisor mode of money that they can give to charities,” Duffy said.
Organizations, such as Family Promise of Greater Phoenix and Arizona Coalition to End Sexual and Domestic Violence, recently added a cryptocurrency donation application to their websites. While they haven’t received cryptocurrencies yet, they are optimistic about this new fundraising option.
Donations are immediately converted into U.S. dollars and transferred to a nonprofit’s account through the third-party payment processor The Giving Block, Duffy said.
Cryptocurrencies are an attractive asset to donate because they allow donors to bypass the capital gains tax, Duffy said. Another bonus is an income tax deduction.
ASU Foundation announced its cryptocurrency campaign in early November to engage alumni and stakeholders across multiple generations, said Jeff Mindlin, chief investment officer for ASU Foundation, a subsidiary of ASU Enterprise Partners. It has since caught the attention of younger graduates who want to support Arizona State University programs and services.
“As an innovative university, we want to make sure we’re on the forefront of being able to think about how to meet donors where they are,” Mindlin said.
States, universities and nonprofits are interpreting the technology in very different ways.
Gov. Doug Ducey signed House Bill 2544 into law in May, creating a Blockchain and Cryptocurrency Study Committee to research and recommend legislation that defines the acceptable use of blockchain and cryptocurrency technologies in Arizona.
Blockchain is a digital ledger that is distributed across the entire network of computer systems, and on it, cryptocurrency transactions occur, said Nitin Gaur, director of financial services and digital assets for IBM Financial Services, who sits on the committee.
“Blockchain, in general, is going to be very disruptive to every industry,” said Rep. Jeff Weninger, R-Chandler, a committee member who co-sponsored the bill. Weninger, who is running for state treasurer, said it will be best to clarify the corporate and philanthropic use of cryptocurrency with several “piecemeal” policies.
The committee is composed of state government officials, private industry experts, members of the public, and ASU Prof. Dragan Boscovic, founder of ASU’s Blockchain Research Lab. It will file a report of its findings with the speaker of the House on Dec. 31, 2022.
Members have not discussed how cryptocurrency is creating philanthropic opportunities for people who cannot make traditional donations to support a charitable cause.
See the IRS website or consult a tax professional for further guidance on charitable gifts.