Statistical Overview of Crypto Donation
Practical Guide for the Neo-Philanthropy
Why are more organizations considering to accept crypto donations? The reason is clear — because the benefits outweigh the drawbacks.
Here I outline the benefits and challenges linked with fundraising from “modern donors”.
1. The Basics of Cryptocurrency
Cryptocurrency is a decentralized digital form of money utilizing blockchain technology based on cryptographic principles to secure transactions and ensure transparency, guarding against data manipulation.
The growing pupularity and value of cryptocurrencies have led to a rise in charitable contributions through these digital assets.
What varieties of cryptocurrencies exist?
In this article, my focus is on these two types of tokens:
Fungible tokens — Bitcoin (BTC) is the first and most well-known cryptocurrency, often referred to as digital gold. Altcoins refer to all cryptocurrencies other than Bitcoin. Examples of altcoins include Ethereum (ETH), Ripple (XRP), Litecoin (LTC), and Bitcoin Cash (BCH).
Stablecoins — Stablecoins are crafted to preserve a consistent value by anchoring their worth to an underlying asset like a fiat currency US Dollar. Stablecoins aim to combine the advantages of blockchain technology with the stability of traditional fiat currencies. Popular examples include Tether (USDT), USD Coin (USDC), and DAI.
Who are the modern donors?
Accepting cryptocurrency donations can help organizations connect with a fresh donor base, composed of a new generation of philanthropists and supporters like:
- Cryptocurrency enthusiasts who transcend borders
- Tech-savvy and forward-thinking individuals, entrepreneurs, and investors
- Younger donors who are more comfortable with digital currencies
How big is the crypto philanthropy market?
In a recent report, The Giving Block, a cryptocurrency charitable site predicted that cryptocurrency donations to charity could reach $10 billion by 2034. [1]
2. Examples of Successful Crypto Donations to Organizations
University of Pennsylvania
In May 2021, the University of Pennsylvania received a $5 million cryptocurrency donation from an anonymous donor, which is the largest crypto currency gift in the university’s history.
The gift was made in the form of Bitcoin and will be used to support programs in the Stevens Center for Innovation in Finance at the Wharton School.
Donation was processed via NYDIG, which offers an organized framework for receiving these donations. [2]
“As the nature of philanthropy continues to evolve, Penn stands at the forefront of innovative ways to make a difference in the world.”
— Amy Gutmann, the president of the University of Pennsylvania (2004-2022)
University of California San Diego
Vitalik Buterin’s philanthropic fund, the Balvi Filantropic Fund, has donated 15 million USD Coin (USDC) to the University of California San Diego (UCSD) to support research in airborne diseases.
This contribution stands as one of the most largest cryptocurrency gifts ever given to a university in the United States. It holds the record as the most substantial funding received to date for supporting open-source research on aerosols.
The funds will be used to establish the Meta-Institute for Airborne Disease in a Changing Climate, also known as “The Airborne Institute”. [3]
The Water Project
The Water Project focuses on constructing water wells in developing nations. This project received an anonymous donation of 38 Bitcoins, equivalent to $23,000 USD at that time. This contribution is to be utilized to provide clean water and sanitation facilities for a school in sub-Saharan Africa.
This donation demonstrates Bitcoin’s philanthropic potential as the Bitcoin community has previously supported five water projects, showcasing the cryptocurrency’s capacity for charitable initiatives. [4]
“So we don’t know who you are, but we’re grateful. And so, just in case you hang out here, we want to say thanks!
Today you gave enough BTC — totally anonymously — to provide clean, safe water and sanitation facilities to an entire school AND for the monitoring and repair funds to keep it working for years to come.”
— The Water Project organizers thanked the donor on Reddit
3. Statistical Overview of Crypto Donation
According to 2023 Annual Report on Crypto Philanthropy from The Giving Block [5]:
- The average size of a tax-optimized cryptocurrency donation was $6,295
- More than $125 million in cryptocurrency has been donated via The Giving Block to date
- The largest crypto donation processed by The Giving Block in 2022 was valued at $9.4 million
- For the first time the stablecoin USDC became the most donated crypto asset via The Giving Block. Before 2023, BTC and ETH have been the most-donated cryptocurrencies
- USDC donations solely worth $22.7 million was processed by The Giving Block in 2022
Insights
USDC became a popular crypto asset for donation in 2022, and it is explained by the explosive growth of stablecoins in general.
Stablecoin settlements surpassed $7 trillion in 2022, which is significantly more than Mastercard’s $2.2 trillion. [6]
Remarkably, major financial institutions like BlackRock, Visa, Mastercard and PayPal have all begun investing in and supporting stablecoins.
4. How to Recieve Crypto Donations
If your organization is considering embracing cryptocurrency donations, there are several differenct ways to get started:
Create a crypto wallet — Creating a crypto wallet is a simple way to accept cryptocurrency donations. Organizations can create a digital wallet QR code that donors can scan on their wallet apps to send crypto coins. (Assess if individuals can safely manage their private keys by considering potential risks.)
Collaborate with a reputable service provider — Collaborating with a service provider like BitPay, The Giving Block, or Infinite Giving can help organizations accept and manage cryptocurrency donations.
Intermediary 501(c)(3) — An intermediary 501(c)(3) like Every.org can help your organization accept crypto donations without additional legal or accounting burdens.
Intermediary 501(c)(3) is a nonprofit organization that receives donations from individuals or other organizations and then distributes those donations to other 501(c)(3) organizations that are working on specific charitable causes. This allows donors to support a particular cause without having to research and select individual grantees.
5. Benefits for Organizations
Reduced transaction costs
Making a donation in cryptocurrency can be faster, cheaper, and easier for international donors since it eliminates fees for currency conversion and international transfer transactions. Therefore, it allows more of the donated funds to directly impact the cause.
Immediate receipt of funds
Unlike traditional bank transactions, cryptocurrency donations can be received immediately, within few seconds to minuites. It eliminates the delay of several days for overseas bank transactions, allowing organizations to access funds more quickly.
🎁 Imagine a global charity receiving a $10,000 cryptocurrency donation. Normally, a traditional bank transfer of the same amount would take 3–5 days to process. Yet, thanks to cryptocurrency, the blockchain confirmed their transaction within 10 minutes.
Global reach
Cryptocurrencies transcend geographical boundaries, enabling donations from individuals across the world. This expanded reach helps organizations connect with supporters who might not have been accessible through traditional channels.
Diversifying revenue streams
Accepting cryptocurrency donations can help diversify your organization’s revenue streams and attract a new donor demographic. This helps mitigate financial risks and provide additional resources for various programs and initiatives.
Innovation and technology adoption
Measuring this benefit can be difficult— yet accepting crypto donations demonstrates the organization’s willingness to embrace innovation for the future. It can position the institution as forward-thinking and attract a fresh global donor demographic.
6. Challenges for Organizations
While accepting cryptocurrency donations can provide several benefits, there are also some challenges that we should be aware of:
Regulations and compliance
The regulatory landscape surrounding cryptocurrencies is evolving and can vary from region to region. Organizations need to stay informed and navigate legal intricacies to ensure compliance with local laws and tax regulations.
Volatility
One of the significant challenges of cryptocurrency donations is their price volatility. Organizations need to be prepared for fluctuations in the value of received donations. To mitigate this risk, converting crypto funds into stable fiat currency is a good strategy.
On the other hand, some organizations, like UNICEF, is keen on retaining and distributing cryptocurrencies rather than instantly converting them to local currencies. [7] This decision represents their dedication to a long-term commitment.
Security risks
Consider partnering with established and trusted cryptocurrency platforms that have security measures in place for transactions. Also, search for reviews, discussions, and news articles about the organization within the crypto community. This helps you understand how reliable and credible the organization is.
Educating donors
Some of the potential donors should be unfamiliar with the process of donating cryptocurrencies. Providing clear instructions and resources on how to make crypto donations can bridge this knowledge gap. It’s recommendable to provide step-by-step instructions that donors can refer to when making crypto donations.
Conclusion
The next wave of donations powered by cryptocurrencies is already here. As the philanthropic landscape evolves, organizations need to adapt to the changing preferences of their supporters.
While there exists concerns and hesitations among us about accepting crypto donations, I see this trend is steadily growing, and more organizations are accepting this new form of philanthropy.
I’d be delighted if my article could assist you in embarking on a new path ahead. 🚢
References
[1] BeInCrypto. (2023, April 3). Crypto Donations Could Surpass $10 Billion in the Next Decade.
[2] Mott, A., & Winicov, P. (2021, May 20). Penn receives $5m cryptocurrency gift, largest in University’s history | Penn Today.
[3] Cointelegraph. (2023, March 8). Vitalik Buterin’s philanthropic fund donates 15M USDC to UC San Diego.
[4] Redman, J. (2016, September 15). Anonymous Donor Gives 38 Bitcoins to African Water Project. Bitcoin.com News.
[5] The Giving Block. (2023). The 2023 Annual Report on Crypto Philanthropy.
[6] CryptoSlate. (2022, December 23). Adoption grows as more than $7T settled with stablecoins in 2022.
[7] Joshi, M. (2019, October 14). Cryptocurrency donations will not be converted to fiat, UNICEF — Cryptopolitan.
Author
Miyoko Shimura has over 8 years of engineering experience in the technology industry bringing together analytical perspectives.
DLT Mentor at German think-tank Frankfurt School Blockchain Center and Technical Editor at Coinmonks. For further updates please follow me on LinkedIn or Twitter 🌏
Portfolio https://linktr.ee/miyokoshimura
