When you think about cryptocurrency users, who do you picture? Wealthy investors? Technologists and computer scientists? How about a new class of philanthropists?  

In the span of several years, crypto donors have demonstrated their generosity on a global scale, whether as individuals making billion-dollar-value donations for COVID-19 relief or as a mass movement to send monetary aid to Ukraine. 

Gradually, more charities have taken notice and begun to accept donations in Bitcoin and other cryptocurrencies. In the past four years we, at The Giving Block, have processed $125 Million in crypto donations for thousands of organizations. Right before our eyes, a growing number of cryptocurrency users and charities are charting a new course for modern philanthropy. 
 
What are cryptocurrency donations, and what do Canadian charities need to know? 

Cryptocurrency is a digital asset class exchanged over a system called the blockchain. Crypto originally functioned independently of the traditional finance system. However, today there are many ways to buy crypto with cash, and in turn, to exchange crypto for cash.  

While cryptocurrency may seem like a difficult concept, crypto donations are in essence another viable alternative to cash donations. By offering crypto as another way for donors to give, you can embrace a growing swath of new donors while expanding your available fundraising strategies.  

Crypto holdings are treated as commodities by the CRA, which means that there are tax implications for Canadian taxpayers that donate cryptocurrency. Presently, donating crypto is considered a Gift-in-Kind. Canadian charities may issue a tax receipt for the original fair market value of the donated crypto, regardless of whether it has appreciated in value by the time of donation. *  

Who donates cryptocurrency to charities? 

Globally, crypto adoption is nearing a “hyper-adoption phase” similar to Internet usage in the late 1990s. With 300 million users worldwide, the potential crypto donor base is roughly as large as the population of the United States. Cryptocurrency users are on the rise in Canada, too, with current estimates suggesting that  13% of the population (or 5.02 million people) has invested in crypto.  

Understanding the average cryptocurrency donor 

As a demographic, crypto users are highly desirable for charities of all kinds. The average cryptocurrency user is a combination of two much sought-after donor types: young donors and major donors.  

With an average age of 38, crypto donors are mostly Millennials, with growing numbers of Gen X and Gen Z joining their ranks. In general, they are digital natives, optimistic about their potential impact on the world, and open about their political and social values. At the same time, their relative affluence means that they have potential to be major donors today, rather than in several decades.  

The crypto philanthropy landscape is growing 

Individual donors represent only a portion of the donation sources your charity can expect to encounter in the crypto community. Organizations can also expect to engage with a variety of other entities, such as:

• Non-fungible token (NFT) projects and creators who may want to donate a portion of their proceeds
• Crypto and blockchain companies interesting in developing corporate social responsibility initiatives
• Decentralized autonomous communities (DAOs), which are community-led entities that often allocate funds toward social impact causes
• “Web3 for good” collectives that crowdfund donations to direct toward charities

Crypto donors have already helped charities weather economic downturns, rebound from fundraising lapses caused by COVID-19, and future-proof their organizations in the face of declining donor retention rates.  

Can nonprofits actively fundraise for cryptocurrency donations? 

Crypto-friendly charities have countless ways to increase their visibility and connect with potential cryptocurrency donors. Organizations have found success by: 

• Being active in digital spaces. The crypto community is highly active on online social platforms like Twitter, Discord and Reddit. Nonprofits that post regularly for a crypto audience have a better chance of attracting crypto donors.
• Using SEO to attract crypto donors. Charities that optimize their crypto donation pages with specific keywords and FAQs improve their odds of helping crypto donors find their cause. 
• Joining viral fundraising campaigns. Annual fundraising initiatives like Crypto Giving Tuesday and Bag Season attract thousands of donors each year, providing opportunities for nonprofits to steward new donors from this community. 
• Collaborating with NFT projects. Over the past two years, NFTs have become a vehicle for social impact. Charities have found great success working with creators to execute NFT charity auctions. 
• Establishing a crypto donation fund. A crypto-only fund highlights the impact of your crypto donors and indicates your charity’s excitement about this new donor demographic. 
• Asking existing donors to donate crypto. Odds are increasing that the average donor will hold some cryptocurrency as an investment. Informing your current donor base that you accept crypto donations can encourage giving and even help re-engage lapsed donors. 

These ideas are just the tip of the iceberg. Following hashtags like #DonateCrypto and #CryptoPhilanthropy can give your team inspiration as you build out a crypto strategy for the first time. 

How do charities begin to accept crypto? 

In the very early days of crypto philanthropy, organizations had to “DIY” their crypto acceptance, which led to numerous headaches for their finance and compliance teams.  

Luckily, things are different now.  

Charities can rely on crypto fundraising tools (such as The Giving Block) that securely process cryptocurrency donations and even automatically convert them to cash upon receipt.  

Looking to get started? Updating your charity’s gift acceptance policy is a simple act that can be the first step toward unlocking the crypto fundraising opportunity. Then, find a crypto donation platform that offers what your charity needs to get started, whether that’s an easy technical set-up, educational resources, or ongoing advice and support. Before long, your fundraising team will have a new giving option to offer your current and future donors, and numerous strategies to increase revenue in the year ahead. 

*Content in this article should not be considered financial advice. Please speak with a tax expert to ensure that your organization’s understanding of cryptocurrency donations and their tax implications is fully accurate and up-to-date with applicable laws. 

Sam Kahler is the Senior Content & SEO Manager at The Giving Block, the leading cryptocurrency fundraising solution for charities and nonprofits. With more than a decade of experience in the charitable sector, Sam uses the written word to bridge the gap between traditional philanthropy and the innovations of the web3 ecosystem.