Donating crypto can be one of the most tax-efficient ways of supporting our work. Because the IRS considers such donations property donations, donors don’t need to recognize capital gains and may deduct its fair market value as part of their deductions.
Cryptocurrencies have become an integral part of daily life for nearly one in five Americans, so including them in your giving strategy could open up a vast pool of donors.
Tax-Deductible
Crypto donations are tax deductible, providing donors with an effective means to avoid capital gains taxes when giving appreciated assets to charity. Furthermore, itemizing deductions instead of taking the standard deduction could reduce overall tax liabilities significantly – particularly helpful for investors with significant gains accumulated within their cryptocurrency holdings.
Donations of property are tax deductible when made and deducted from your gross income in the year they’re made, whether cash or asset donations are involved. Whether cash or asset donations, their charitable deduction will depend on the character of donated assets – for instance, inventory, works of art created by donors themselves, manuscripts written by donors themselves, capital assets held less than one year, etc are treated by the IRS as ordinary income while property held for more than one year can be deducted at their fair market value when donated to charity.
FMV of cryptocurrency donations is calculated by either its spot price on an exchange or certified appraisers. Donors who wish to donate more than $5,000 of cryptocurrency will need a qualified appraisal for their donation; this requirement does not apply when giving cash or publicly traded securities as donations.
For optimal tax benefits, donate cryptocurrency you have held for more than one year and that has significantly appreciated in value. Doing this will allow you to avoid large Capital Gains Tax bills and claim up to 30% of either your adjusted gross income (AGI) or fair market value of cryptocurrency as a deduction; any donations in excess of this limit may be carried forward for five years.
Donors can take advantage of an additional tax benefit by contributing cryptocurrency to a Donor-Advised Fund (DAF). Donations made in this manner allow donors to claim a deduction equal to its full fair market value and give away untaxed assets to charities of their choosing, though prior consultation with Moss Adams professionals should always be sought before doing so.
Transparent
Cryptocurrencies are digital assets that operate on a decentralized ledger system known as blockchain. Every transaction recorded on this ledger provides donors with absolute transparency and assurance that their donations are reaching their intended destination without incurring extra costs or delays, thus building trust as part of philanthropy.
Nonprofits can accept cryptocurrency donations via various platforms such as BitPay and Binance Charity, however it’s essential that nonprofits vet these companies before choosing one as a partner and establish safeguards to ensure the digital wallets used by donors remain safe from hacking or theft.
Once a nonprofit decides to accept crypto donations, it must also put policies in place to deal with market volatility. As cryptocurrency prices can vary widely over time, so their value could change drastically over time; nonprofits should plan for this variability by setting clear acceptance policies similar to what would be seen when accepting stock donations.
Crypto donations can save nonprofits money by eliminating middlemen organizations’ expenses, and more of the donation can reach those in need more directly. However, accepting anonymous donations must be carefully balanced against potential risks such as difficulty verifying donor identity resulting in potential fraud or other issues that could arise from this lack of donor details – otherwise this could create further complications within charities and cause them issues in terms of identity theft and fraud.
Donating crypto can help non-profits expand their audience and expand their base of supporters, particularly in an age when many struggle to afford basic necessities. Cryptocurrencies provide an innovative solution that empowers donors to give back and support causes they care about while being financially accessible for many individuals – even though some still see crypto as a fad or novelty, its adoption amongst the public continues to rise and become a mainstream form of giving.
The Pineapple Fund demonstrated the power of cryptocurrency as a form of generosity, and more charities should embrace its role in future philanthropy. A cryptocurrency donation may make an impactful statement about your priorities – helping homelessness, hunger, gender equality or animal rights causes are just some of the areas it could impact positively on.
Easy to Use
Crypto is one of the fastest-growing means of wealth transfer, making it no surprise that more donors are giving cryptocurrency away to support causes close to their hearts. Donations is one way that crypto industry hopes to create an inclusive financial world and bring unbanked individuals into its global economy.
Cryptocurrency donations offer donors fast and secure giving options that don’t involve waiting around to donate using traditional donation methods like check or money orders. Donors can choose any major cryptocurrency such as Bitcoin and Ethereum to donate; additionally they have the option of keeping their wallet address private if desired – perfect for donors seeking anonymity or donators wanting to avoid sharing personal details with nonprofits.
Donating crypto can also bring tax advantages for donors. If their coins have appreciated since purchase, donating them can avoid capital gains taxes; additionally if given to an IRS-qualified 501(c)(3) organization they can claim back the fair market value on their taxes.
Donorbox’s seamless integration with The Giving Block makes accepting crypto donations from US nonprofits much simpler, allowing donors to select “Donate Crypto” and then choose whether or not to add contact info – they will then receive both QR and hex codes which they can scan or copy into their wallet for donation purposes.
Once a donor’s transaction is complete, The Giving Block will distribute funds based on Project HOPE’s current valuation to Project HOPE in US dollars – nonprofits may then accept these payments like any other currency (cash and checks accepted).
Though there are numerous methods for accepting crypto donations, some organizations may require more complex solutions. They may need a specialist for fundraising, tax reporting and compliance issues while other may use a payment processing service capable of handling multiple currencies – these services come at an extra cost but could save nonprofits both time and money by taking care of all paperwork for them.
International
Crypto donors from around the world can assist women and families in fighting injustice through donations of crypto currency. Your gift is then allocated towards meeting children living in poverty’s most urgent needs – such as food, medicine, education or clean water projects wherever it’s most necessary.
Your donation experience should be quick, easy, and secure. Simply select the cryptocurrency of your choice, provide contact info (or donate anonymously), and a dynamic wallet address will be created for you to send your crypto to. Using blockchain security technology, your contribution is verified across thousands of computers worldwide before being converted instantly into fiat money upon arrival.
The IRS classifies cryptocurrency as property, so donors can claim a tax deduction for its fair market value and avoid capital gains taxes when giving cryptocurrency donations through The Giving Block. Funds will then be distributed based on their current valuation to Project HOPE via US dollars based on this process. We accept various cryptocurrencies but only transfer your crypto donation to nonprofits with active 501(c)3 status; for more information about crypto donations we suggest consulting your tax or financial advisor for guidance.
