Nonprofits that don’t accept cryptocurrency donations are like “cash-only businesses where customers are coming in with credit cards,” says Jim Carter III, a programmer and self-described “crypto-evangelist.” “You’re not setting yourself up for success.”
Here’s everything you need to know about the newest frontier in fundraising and giving.
Carter, co-founder of the shopping and donating website Giving Assistant, advises Pencils of Promise, an education charity that works in the developing world, on technology. Last year, he found that with just a few new lines of computer code, Stripe, the gift processor for Pencils, could accept Bitcoin from donors’ digital wallets. He tested the charity’s Stripe account with a small contribution of his own.
“We saw that it worked, and we thought it was just a fun idea to have this option,” Carter says.
At the end of 2017, the fun became real: Pencils was offered a Bitcoin gift valued at $1 million by the Pineapple Fund, an anonymous grant-making entity that went on a $56 million giving spree at the end of 2017 and early this year. Pineapple made the transfer to the charity’s Stripe account, which then traded the Bitcoin for dollars. Within 48 hours, Pencils had a new $1 million gift in its coffers.
Stripe has since stopped supporting Bitcoin transactions, but other options for nonprofits interested in accepting cryptocurrencies are available. Here’s some advice and considerations for the crypto-curious:
Talk about cryptocurrency like any other type of gift.
“You don’t need to talk to the board right away about the blockchain and things a lot of people don’t understand,” says Edwin Goutier, senior director of innovation at United Way Worldwide. “Start off communicating about cryptocurrency just like you would about things that are more familiar, like a capital donation, gifts of stock, so everyone can be comfortable with the idea that this is just another giving option.”
Shop around for the best vendors.
Some groups might be ready to set up their own digital wallet to accept and exchange cryptocurrency. For most others, finding the right and trusted services and intermediaries is key. When selecting vendors, consider things like set-up fees and per-transaction costs; what currencies are accepted; whether digital-to-dollars exchanges happen automatically or have to be triggered; how the service integrates with other payment options; what it’s like for donors to use the service; and what technical support your nonprofit can get once it starts handling digital assets.
Fine-tune your investment and gift-acceptance policies.
Most nonprofits that accept cryptocurrency require the gifts to be immediately converted to U.S. dollars. Also consider: website security, handling anonymous donors, and tax receipts.
Determine how much risk you’re willing to accept.
Cryptocurrency values have been more volatile than many other types of investments, and the assets have sometimes been connected to security lapses and criminal activity.
“There’s a comfort level that you have to have with the whole ecosystem,” says Michael Thatcher, chief executive of Charity Navigator, the nonprofit watchdog, which started to accept cryptocurrency gifts last August.
But Geoff Hill, chief financial officer of DonorsChoose.org, the education charity that got a huge altcoin gift earlier this year, wants to calm nerves: “It sounds a lot scarier than it is. I knew close to zero about [cryptocurrency] in January; now I think it is the future and we should all be ready.”
