Last week our colleagues on Today’s Modern Educator featured an article about the emergence of cryptocurrency as a major source of charitable giving. What makes this an attractive option for donors? And why is it happening now? You’ll find answers to these and other questions below.
It seems like everybody’s talking about cryptocurrency these days, including nonprofit fundraisers at colleges, universities, and K-12 schools. If you work in alumni relations or annual giving, there’s a good chance you’ve already been approached by alumni interested in donating crypto assets to your annual fund or other initiatives. And if the subject hasn’t come up yet, rest assured it will. As the blockchain-based digital currency gains an increasingly devout following and wider mainstream acceptance it’s poised to become an important vehicle for charitable giving. Those educational institutions who’ve done their homework on this burgeoning asset class and are ready to participate in the crypto economy stand to benefit.
Attention Fundraisers: The Cryptoverse is Expanding
Today, nearly 300 million people own cryptocurrency, and that number is expected to hit one billion by the end of 2022. In the last three months alone the value of held assets has more than doubled. Meanwhile, industry bellwethers like Morgan Stanley and Visa are dipping their toes into the waters of digital currency, signaling a growing acceptance of the asset class by mainstream financial institutions—which is exactly what crypto enthusiasts had hoped for. Some of the world’s largest charitable organizations are now accepting donations of crypto, and educational institutions—big and small alike—are beginning to take notice.
Last year, fewer than 100 U.S. schools accepted gifts of digital currency, but adoption rates are on the rise. By April of this year, GiveCampus had processed more than $440,000 in cryptocurrency donations. And the average donation size was a staggering $14,715. If we take a step back and look at who owns crypto, why they own it, and how they feel about philanthropy, we can begin to connect the dots and understand why schools in particular should care about this exciting new way for donors to support organizations they care about.
Young Alumni are Passionate About Crypto and Philanthropically Inclined
Digital currency is especially popular among younger, college-educated Americans earning more than $50,000 a year. Morning Consult recently found that 45 percent of crypto owners are Millennials born between 1980 and 1996; more than half hold a college or post-college degree. These crypto enthusiasts are better known to colleges and universities as alumni, and many—especially the early crypto adopters—are looking for ways to offset the tax liabilities of their newly realized capital gains. Philanthropy is a smart strategy.
Crypto is treated as stock when it comes to taxes and is attractive to donors for the very same reason. The IRS considers it to be property, so donors receive a tax deduction equal to the fair market value of the donated cryptocurrency which means they do not have to pay capital gains taxes. That said, the tax benefits piece is only part of the reason this donor class is so inclined to share their newfound wealth.
Crypto-savvy Millennials are among the most charitably inclined generation of donors. Nearly three in four consider themselves philanthropists and say that charitable giving is a “significant or pretty important part” of their life. Fidelity Charitable also found that “half of Millennials understand cryptocurrency and believe in its long-term potential.” That’s an important finding because it reveals another key understanding behind what motivates this particular class of donors to give: Simply put, they invest in what they believe in and want to do that using an asset class they believe in.
People who really believe in crypto want to validate it and they want the institutions that they believe in to validate it as well because it helps the asset class stabilize and become mature. In part, their desire to give to charitable organizations and educational institutions is a validation of the asset class itself.
It’s Time to Meet Today’s Young Donors Where They Are
More than $2 trillion of wealth is now held in crypto assets, and many of the people holding that wealth want to give some of it away to support causes they believe in, including education. Now is the time for colleges, universities, and K-12 schools to have important conversations with their boards and leadership about the viability of this emerging donor class. We believe donors should always be able to give in the way they want to and be able to do so easily. Our fundraising platform currently supports more than 80 cryptocurrencies, in addition to other modern payment methods including Venmo, PayPal, Apple Pay, Google Pay, and instant bank transfers. This is just one of the many ways we’re helping educational institutions meet today’s young donors where they are.
The author, Felicity Meu, is the Director of Partner Success at GiveCampus.