5 Reasons Why More Charitable Organizations Should Accept Donations in Cryptocurrencies

Beginner’s Guide / 18.03.2020

About six months ago, UNICEF launched a cryptocurrency fund in partnership with the Ethereum blockchain platform that would enable it to receive, store, and distribute funding in crypto.

UNICEF stated that they wanted to explore the opportunities offered by cryptocurrencies as the digital currency gateway that will shape the lives of future generations. Today the fund is up and running, and it accepts donations in bitcoin and ether.

This is not the only or the first global charitable organization to have recognized the value of cryptocurrencies. United States Fidelity Charitable signed up for crypto donations back in 2015 and has since raised over $100 million in many coins, including $BTC. 

Other organizations with a global impact that accept cryptocurrency donations today include, American Red CrossWiki Leaks, Save the ChildrenRoyal National Lifeboat Institution, and The Water Project. Recently Human Rights Foundation (HRF) also started accepting donations in Bitcoin.

These organizations have realized that cryptocurrencies offer many irrefutable benefits and advantages over fiat currencies. These include convenience, easy and low cross border transaction fees, global instant reach, transparency, new investment opportunities, and tax benefits.

Cryptocurrencies Offer Convenience and Tax benefit to Donors and the Charitable Organizations

According to a recent report by Statista, there were over 44 million people worldwide with bitcoin wallets by the end of 2019. These are addresses that people use to store and trade cryptocurrencies.

Taxes are always a sensitive subject to many if not all, with a lot of people feeling like governments around the world take away more than they should if they should take people’s money at all. This is why donations in fiat currency may make people with the will to do good to pull back because they don’t want their goodwill also to be taxed.

However, with cryptocurrencies, there is convenience, as crypto donors can write off their full donation amount because there is no capital gains taxation.

For example, if a philanthropic individual made a lot in cryptocurrency and wanted to donate it in fiat, they would be taxed around 20-30% of the amount. However, if the charity organizations accept crypto donations, the whole amount could instantaneously be transferred at meager transaction fees.

Donors feel good knowing their money isn’t being lost somewhere in banking fees, cross border taxation or transactions, and charitable organizations are aware of this fact.

Reaching a Global Pool of Philanthropic Hearts

Giving is not about how much you’ve got or where you are, but fiat currencies have a way of taking this from people. Not everyone who wants to give may have access to the institutions affiliated with the organization they wish to donate to. If the process of getting the documentation right becomes a burden, people might shy away, despite their good intentions.

Cryptocurrencies have made it possible to jump over all those hoops. It has given global financial access to millions of people who had no hope of being traditionally banked for the next five to ten years.

Today, crypto donors only need access to the internet, a crypto wallet, or an exchange wallet to make a donation. It also opens up new avenue channels for these organizations as crypto makes even the smallest donation count.

Distributing Funds Conveniently Across International Borders

When organizations have projects running around the world, there are always complexities involved in border regulations, financial instructions, and other factors that may slow down the progress of development.

Blockchain transactions take minutes at most to complete transactions independent of the location, and this is because most of the popular exchanges are centralized. There is a growing movement of decentralized exchanges that transfer crypto from wallet directly to wallet, and they are even faster, more secure, and reliable.

International crypto donation transfers reduce the time needed to move money from institution to institution and the fees associated with it. Another good thing is that it protects the money from corrupt governments and officials, which is a fact that has frustrated many charities, especially in regions that need help the most.

Decentralization in Cryptocurrency Promotes Security, Accountability and Transparency

The way a blockchain network works is through distributed ledger technology that stores immutable records, forever. This means that once information about a transaction is entered, it reflects on all other ledgers across the network for everyone to see, and it can’t be tampered with at all.

The ledgers are also maintained by a network of nodes or computers that can be located anywhere around the world. It means that organizations do not have to worry about centralized servers that can be sabotaged or tampered with by someone with proper access. Another problem with centralized servers is building and maintenance costs, which are being phased out by blockchain technology.

Therefore, people can be held accountable for how they use the funds, and it can also help organizations during auditing and fundraising campaigns to attract more donors. Donors on the network are able to see other donors making contributions, and they can follow the money to see where and how the organization is using their donation.

Transparency promotes honesty and makes it easy to root out the bad seed while making sure that funds are used for the purpose they were intended for. It also expands the reach of the funds to the development projects and to benefit more people, which is always the goal of any charitable organization.

Investing Opportunities for Crypto Funds

While people might shy away from the crypto market because of outrageous volatility rates, it has one of the most rewarding returns, both for the long term and short term investment plans.

To understand volatility, consider the fluctuations in the price of bitcoin over the years, as the number one crypto coin by market capital and trade volume.

For instance, mass liquidation by a Chinese scammer with Plus Token wallets has been devastating the price of bitcoin for more than three months now in a pump and dump scheme that has cost investors millions of dollars.

There is also a lot of speculation in the cryptocurrency market, and since most coins, like Bitcoin, are not backed by anything, any slight panic causes huge losses. In the same way, there are always huge gains to be made from trading cryptocurrencies. Any traditional investor, especially where the stakes are high, would look at the prices of bitcoin prices since 2009 and would advise against trading in it.

Charitable organizations should be not shy away from this; instead, they should consult with certified crypto analysts and institutional traders, as they are rarely wrong.

Final Thoughts

Evidently, some of the advantages people get from using crypto for transactions are unbelievable to people who are used to traditional banking. The crypto industry is still considered young and volatile, unlike established markets. Still, it is the fastest-growing market and attracts the best of the generations that will be responsible for making decisions for future generations.

Joining the crypto movement for charitable organizations is crucial as it represents adapting to change because, just like the internet brought in the third industrial revolution, blockchain technology is here to start the fourth industrial revolution.

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Wayne is a Blockchain enthusiast and expert in crypto trading. Currently, he covers trendy issues on digital currencies.