How do I accept crypto donations?
There are many ways to accept crypto donations depending on your organization’s needs. For options 2, 3, and 4 below, the organization will obtain custody of the cryptographic: Therefore, it is essential to set up a gift acceptance policy and handle compliance with IRS regulations and accounting practices. Cryptocurrency gift acceptance policies are similar to physical gifts of property, but there may be specific policies regarding certain coins that you consider more “dangerous.” If you want to keep crypto, you must set a policy regarding when to settle the crypto.
Use Intermediate 501(c)(3)
Minimize legal, accounting and administrative burdens. Your nonprofit organization can accept cryptographic support through another 501(c)(3), such as a donor-advised fund (DAF), without detention of cryptocurrency. This allows you to receive cash subsidies without new accounting or tax return requirements. Generally, all 501(c)(3) public charities are automatically covered with little or no onboarding except for checking their status. Intermediaries are responsible for submitting tax receipts, filing IRS Form 8282, converting to cash, and following evolving regulations and practices regarding cryptocurrencies.
Donating Crypto via DAFs like Fidelity Charitable is only available to account holders, but nonprofits can work with nonprofit contribution platforms such as Every.org that do not charge fees. The biggest part about such intermediaries is that they specialize in dealing with accounting processes and other regulations imposed by local governments.
Use a crypto payment processor
Of course, if you don’t want to work with a 501(c)(3), there are other types of crypto payment management providers, such as:
Specialized Crypto-Donation Processor
Use the Crypto Donation Processor to receive the cipher directly. Your nonprofit can go through a specialized payment processor to accept donations to your own crypto wallet, while automating receipts and cash conversions. This allows you to keep cryptocurrency as an investment if necessary (although it is usually not advised).
Service charges vary by provider, but providers may help develop marketing campaigns and strategies specific to the crypto community.
Standard encryption to Fiat processor
This type of Crypto Payment Gateway is already well known among e-commerce merchants, but it can also be implemented in charity. However, it is clear to know that these processors are not specifically designed to enable donations and therefore cannot meet the needs of the organization.
Use an embedable checkout experience via crypto exchange
For minimal fees, the crypto exchange offers a checkout experience that nonprofits can embed on their websites. Similar to the options above, they have a donation experience with automatic cash conversion. While they are usually cheaper than specialized crypto donation processors, checkout experiences are not created with nonprofits or donations in mind. Therefore, your organization must complete the donor support, create tax receipts, and collect donor information.
Use your own crypto wallet
This allows you to receive donations without an intermediary. This is the most technical and “DIY” of all options. Considering other methods, organizations should only consider this if they have technical staff who can weigh different wallet options and track transactions. Additionally, transactions are usually anonymous on the blockchain, so you need to create a flow to collect donor information. Importantly, you need to create policies regarding access to your wallet, such as securing your credentials, such as seed phrases.
Our opinion
All charity-related organizations differ from others based on the reasons they support, as well as the number of stakeholders, years of work, and overall perceptions in the media. Therefore, each nonprofit organization needs a crypto payment solution that suits its needs. If you’re confident in working with cryptography without an intermediary, give it a try. We also recommend implementing a payment channel to reduce transaction times and fees if you receive regular donations from the same business or individual. Read more about what payment channels are.
Legal Considerations
Before jumping on the crypto bandwagon, you’ll have everything you need to know about crypto donations imposed by the government of the country you run, and the crypto donations imposed by the legislative bodies of the country in which your benefactor lives. It is essential to ensure that you are aware of legal regulations. The accounting process must be carried out by each expert who is familiar with cryptocurrency.
It’s important to know!
Cryptocurrency is not a real currency!
Here are some important facts to know. Cryptocurrencies may be legal, but they are not regular currency, meaning fiat currency, and at least not in the eyes of the IRS. Digital currency is actually considered a property. The rules for donation such as Bitcoin, Ethereum, XRP, etc. are the same as what you’re talking about, you’re donating a second-hand box of clothing to goodwill. It is considered not a cash gift, but a cash gift such as stocks or bonds, or the equivalent security of cash.
Examples of organizations that are already accepting code donations
From environmental organizations to charities supporting the homeless, more and more nonprofits are accepting cryptocurrency donations. Below you can see some of the most notable examples of organizations adopting cryptocurrency donations and the impact that these donations have on their causes.
1. UNICEF Cryptofund
In 2019, UNICEF became the first UN organization to receive, retain and redistribute cryptocurrency.
Since then, Unicef Cryptofund has received a significant amount of BTC and ETH, investing in startups in developing and emerging countries. For example, UNICEF’s Cryptofund invested 25 ETH in Kenya’s emergency response platform, 20 ETH in AI and Argentine blockchain-powered startups, and nearly 12 ETH in digital financial services for refugees in Rwanda .
Approved Cryptocurrencies: Bitcoin and Ethereum
2. Rainforest Foundation
Rainforest Foundation US helps secure land rights for Indigenous peoples. This particular organization teaches communities about the use of technologies to enhance the safety of Indigenous lands and protect forests.
Approved Cryptocurrencies: Bitcoin, Bitcoin Cash, Ether, Litecoin
3. Water Project
501(c)(3) nonprofit Water Project unlocks human potential by supporting trusted water projects for sub-Saharan African communities. The project aims to help people suffer daily due to lack of clean water and proper hygiene.
Approved Cryptocurrencies: Bitcoin, Bitcoin Cash, Ether, Litecoin, USDC Donations (via Coinbase Commerce)
FAQ
Do I need to sell my crypto donations and HODLs instantly?
This depends entirely on your investment strategy, the current state of the market, and the types of crypto coins accepted. Therefore, we recommend that you contact your financial advisor. A financial advisor can help you navigate your plan of action.
Which coins should I accept for my donation?
It’s always good to choose the most popular crypto coins, such as BTC, ETH and other stable coins, but many newcomers such as Meme Coins have also appeared. That’s why we recommend seeking legal or financial advice from a respected professional. There is also a great guide on how to accept ETH as a payment. You might want to check it out too!