Crypto fundraising: diversifying donations for GivingTuesday

With GivingTuesday approaching on November 29, nonprofits are working to strategize how to generate revenue and bring renewed awareness to their work. The nonprofit sector’s recognition and adoption of diverse revenue streams, including cryptocurrency, has increased significantly over the last year, but many still feel hesitant when it comes to crypto fundraising. 

The most significant hurdle facing “crypto-philanthropy” continues to be a gap in education. Many 501(c)(3) organizations lack the resources and technical experience to directly accept cryptocurrency donations, and the vast majority are unaware of publicly available infrastructure that can be used to simplify the process. 

While some nonprofits may feel unsure about this new, donatable digital asset, it’s worth noting that cryptocurrency donors and the Web3 space, or the next evolution of the internet, share many common values with the traditional philanthropic space.  

This Venn diagram highlights the overlapping ideals like transparency, real-world impacts, and mission-driven work that Web3 and traditional philanthropy share. Contrary to mainstream perceptions, much of the Web3 community is increasingly generous and is looking to do good with their newly generated wealth. 

In fact, according to Fidelity Charitable, one-third (33%) of crypto holders have reported donating digital assets to nonprofits. However, nearly half (46%) of these donors felt it difficult to find charities that directly accepted cryptocurrency donations.  

3 reasons to consider embracing crypto fundraising this GivingTuesday 

This GivingTuesday, consider these three reasons why your nonprofit stands to benefit from accepting crypto-originated donations: 

1. Diversify and grow your donor base using crypto fundraising  

Nonprofits across the country are looking to grow their donor base, aiming to engage the next generation of philanthropists. Despite their best efforts, however, some may still struggle to “meet today’s newest donors where they are.” Enter the crypto-philanthropy landscape!  

According to Endaoment’s 2021 Impact Report, the average cryptocurrency donor skewed younger—between the ages of 25–34. In addition to attracting a younger donor base, crypto fundraising can help nonprofits to increase their average grant size. In fact, Endaoment’s average cryptocurrency-originated grant, delivered as US dollars, was $36,000.  

Comparing this amount to the national average grant of $4,407 suggests crypto donors may engage in philanthropy differently than previous generations. Many of today’s newest donors are looking for grassroots organizations to support, and it appears they don’t require the typical cultivation and stewardship that their parent’s generation deemed important. 

However, when seeking to engage this audience, it’s important for nonprofits to use inviting language, not insider jargon, to welcome these donors into their ecosystem—thereby “meeting them where they are”. For example, some nonprofits may be communicating with younger, crypto donors in the same way as they do with previous generations. In order to best engage today’s newest generation of donors, it’s helpful to have a social media presence, create hands-on opportunities to get involved, and show—not tell—impact stories.  

2. Introduce a new asset class and (tax-advantageous) method of donating 

Remember when nonprofits started receiving stock donations? This change in behavior took years to adopt, and yet the benefit of stock donations outweighs those of cash. Donors are looking for tax advantageous ways to donate and crypto donations meet this need.  

While I am not an accountant, and this isn’t tax advice, my understanding is that crypto is viewed as a non-cash asset by the IRS. This creates an incentive to donate appreciated digital assets just like shares of stock.  

According to TokenTax, donations of crypto to 501(c)(3) organizations are not subject to capital gains taxes, and donors may write off the full value of cryptocurrency tokens held longer than one year* against their taxable income. This GivingTuesday, consider adding a crypto-fundraising method to allow your donors to take advantage of these tax benefits before year-end. 

3. Showcase your innovation to boost interest in donating to your nonprofit  

Nonprofits that accept crypto, or crypto-originated donations, may be viewed as innovative and forward-thinking compared with their peers. If nonprofits want to stay relevant with the next generation of donors, I highly recommend exploring this new avenue of crypto fundraising. By using a platform that converts from crypto assets into dollars, your organization doesn’t need to directly hold or manage any cryptocurrency and can receive donations sent to your bank account as US dollars.  

Once set up, I would also encourage organizations to do a little research into crypto fundraising language and make sure that they’re communicating effectively with their donor base. Be sure to mention crypto donations in your GivingTuesday campaign communications, such as email newsletters, social media, or in whatever way that works best to share information with your community.  

Another tip for crypto fundraising success this GivingTuesday: Consider running a matching campaign for crypto donations or offering other types of incentives to encourage people to donate, specifically on this year’s GivingTuesday. Not only should you be externally promoting the fact that you’re set up to accept crypto donations, but equally as important is your ability to communicate this new method of giving with your nonprofit’s staff.  

In anticipation of GivingTuesday, consider the above points, and do your research on how to get started with your crypto fundraising campaign. Wondering where to begin? Check out our Crypto 101 Vocab Guide, Joan Garry’s podcast, and this blog post on cryptocurrency and the future of donor-advised funds.  

Platforms, like Endaoment, can help you navigate the world of crypto donations without having to directly receive crypto tokens. I recommend looking into the cost of crypto fundraising for your nonprofit. Endaoment is free for nonprofits and takes an industry-low donor fee of 1.5% per transaction. For more information, please visit endaoment.org. 

*Note: Endaoment does not give tax advice. Please consult a tax professional when determining how a gift of cryptocurrency could affect your tax liability.