Challenges and Risks of Donating Crypto

By Boris Dzhingarov

Donating crypto helps nonprofits connect with new donors who have amassed significant wealth. But there may be potential hurdles and risks.

Classy has collaborated with partners like Engiven to implement safeguards designed to keep cryptocurrency donations safe and secure.


Donations made through cryptocurrency donations can not only aid nonprofits financially and expand access to funding sources, but they can also be tax-efficient. Donating cryptocurrency directly to a charitable organization allows it to be treated like property without capital gains taxes imposed, often yielding 20-30%+ larger donations and deductions compared to giving cash donations of the same amount.

Cryptocurrency is a digital asset that functions similarly to currency, but differs in that transactions are recorded via an online ledger known as blockchain and aren’t issued by central authorities or have physical form. Recently, many people have begun investing in this new type of asset; according to estimates 10% of Internet users worldwide now own some form of cryptocurrency; Thailand (20.1%), Nigeria (19.4%) and Turkey (18.5% are the countries where most people own some form of digital assets.

Donating cash may be the simplest and easiest way to give to charity, but it may not be the most tax-effective option if you own appreciated assets such as long-held publicly traded stocks that appreciate. With cryptocurrency donations however, capital gains tax is avoided and deductable amounts can be claimed against their fair market values as donation deductions.

When considering crypto donation, be sure to speak to a tax professional so as to understand its tax-efficient implications. In general, make sure that you have held on to it for over one year prior to donating it in order to qualify for fair market value deduction. Also try and give the coin directly rather than selling or exchanging it which could trigger capital gains taxes.

If you donate more than $5,000 worth of cryptocurrency, a qualified appraiser will need to evaluate it as part of the transaction. Since cryptocurrency prices change regularly, this may prove challenging but there are services that can assist. When in doubt, reach out to your Moss Adams professional so you get maximum benefit from your donation.


Cryptocurrency is a digital form of money that operates without a central authority, like currency does. Donating crypto is fast, secure, and transparent thanks to blockchain’s unalterable record of transactions; moreover, donations reach their intended recipients instead of being intercepted by fraudsters and this provides donors with peace of mind that their donation is making an impactful impactful difference in someone’s life.

Nonprofits are continuously looking for innovative strategies to engage younger and diverse donors through digital fundraising, such as social media-friendly giving and recurring donations using credit cards. Crypto offers an exciting new fundraising approach which excites both nonprofit leaders and their audiences alike.

As more people turn to cryptocurrency ownership, it comes as no surprise that some are looking for opportunities to donate their coins to worthy causes. Many may do so in order to diversify their holdings and maximize tax deduction benefits; furthermore, long-held assets may avoid capital gains taxes on value changes.

Charity organizations that accept crypto donations present nonprofits with an invaluable opportunity to increase visibility among younger donors, but the underlying technology can make it challenging for donors to verify the legitimacy of charitable organizations or projects, making it hard for them to select those they would like to support.

As cryptocurrency prices fluctuate rapidly, donors can find it hard to know exactly how much their donation will be worth when they give. Nonprofits should educate potential donors about both the benefits and risks of crypto philanthropy so as to encourage them to give it a try.

There are various tools available to nonprofits that make accepting crypto donations simple, such as The Giving Block’s cryptocurrency donation platform which enables donors to select which form of cryptocurrency they would like to donate and provides a dynamic wallet address leading directly to the nonprofit’s crypto receiving wallet – they then submit their donation amount and receive a tax-compliant receipt for tax records.

Nonprofit organizations should consider working with a brokerage firm that can quickly liquidate crypto into fiat funds for them, making the process simple while helping donors avoid price volatility and budget and plan projects without fear.