Cryptocurrency has become the most popular donation option in many countries, and crypto investors are among the most coveted donor associations in history. Most of the big owners of Bitcoins, Litecoin and Ethereum are young, wealthy people motivated to share their capital. They donate hundreds of millions of dollars in cryptocurrencies annually, and nonprofit companies are looking to leverage this new donor segment to diversify profits with digital money and non-fungible tokens (NFTs). Let’s talk about how companies must organize their activities to use cryptocurrency successfully.
Best practices for starting using digital cash donations
To our knowledge, only a small number of charities accept crypto-assets. They employ digital money for specific and limited purposes, e.g., moving capital across borders without reliable, regulated banking services.
Most nonprofit institutions that have developed mechanisms for interacting with cryptocurrencies immediately convert them into regulated assets or fiat currency. If you are also planning to engage in the storage or trading of cryptocurrencies for charitable purposes, consider the mechanism of action.
Ensure the organization uses cutting-edge fundraising technology
Before introducing an additional source of income, ensure the company is already using modern technologies:
- Do you collect money through social networks (most owners of crypto assets prefer Twitter)?
- Do you accept different payment options, e.g., DAF, shares with all necessary confirmations?
- Do you have an up-to-date policy and all the required procedures for entering gift agreements?
In the absence of such innovative approaches, discuss with management what needs to be implemented before starting activities in the field of crypto philanthropy.
Promote crypto to donors
Include digital money donation details and a call to action on the Donation Methods page, and inform potential investors in emails. Ensure your organization’s website is user-friendly and looks great on different gadgets. Promote the donation of crypto coins on social media platforms and in conversations with donors.
Get the data you need about benefactors
When creating a donation page for cryptocurrencies, collecting data about the donor before providing wallet details for making a gift is essential. The anonymity attracts many cryptocurrency entrepreneurs, but they sometimes need help understanding that the present will come anonymously. Tell them you need the data to thank you and fill out tax paperwork.
Choose a policy for interacting with the digital cash
Since crypto coins are unstable, most nonprofits immediately sell them for fiat money. To do this, you can create a profile in the payment system, which automatically converts the cryptocurrency. Storing digital cash for an extended period benefits large organizations with solid fundraising programs and trained staff.
Familiarize yourself with tax law requirements
Many non-commercial organizations inadvertently violate tax regulations regarding the adoption of cryptocurrencies. Although such donations are not unlike gifts in the form of publicly traded shares, some subtleties must be observed when completing tax forms.
Tell your employees about working with cryptocurrencies
Anyone marketing to donors in your nonprofit should be aware of all ways to donate. Specialists need to understand what cryptocurrency is and feel comfortable talking about it. The organization’s reps do not need to know all the intricacies of mining, but they must comprehend how benefactors can transfer digital money and what tax benefits they can expect.
Choose methods for accepting crypto
Such organizations can accept digital money in three ways:
- Use a cryptoprocessor: this is the easiest option for most nonprofits. Find a platform to help you quickly convert digital money to local currency, e.g., BitPay and Coinbase. These world-famous systems support different types of crypto coins, including Bitcoin, Ethereum, etc. These decentralized solutions charge transaction fees, reducing the value of the donation.
- Opening a wallet is a more efficient but complicated way to interact with cyber money. A wallet allows you to manage your donations directly, making it easy to buy and sell. This option reduces the commission for financial manipulations and conversion and provides greater control over finances.
- Use the donation platform: GiveTrack, Binance Charity, and The Giving Block are nonprofit associations that offer other nonprofit organizations a secure and reliable cryptocurrency donation mechanism. They will help you attract crypto-currency donations worldwide, minimizing transaction costs and guaranteeing transparency of operations.
Research by Fidelity Charitable found crypto investors are more generous than standard donors, despite about 50% of investors reporting they need help finding nonprofits that accept such donations.
Accept NFT donations
NFTs are records of assets transferred in the blockchain system in the same way as cryptocurrency, meaning they can be donated to nonprofits.
People are more willing to donate to charity if they know they will get something in return. In the case of NFTs, this effect is amplified by the social status that comes with owning NFTs from a charity auction.
Participate in crypto campaigns
You can experience the full benefits of crypto days for the organization’s development, such as #CryptoGivingTuesday and #BagSeason, which raise awareness for nonprofit institutions that work with cryptocurrency and inspires investors to donate to charitable causes throughout the year.
Expand your target audience
You have most likely already created a plan to attract new donors in general; however, there are other things to keep in mind when communicating with digital asset owners:
Avoid calls and direct mail: most digital asset owners are young people who are unlikely to answer your call and be interested in sending mail.
Send messages: it is an effective way to interact with people who only leave home with their phones.
Implement targets based on interests and demographics. Defining the target audience by age, location and areas of interest related to the mission will ensure the best result.
Cryptocurrency is no longer a new type of donation; digital money seems to be with us for a long time. While there are some risks, accepting contributions in this way can bring significant benefits to nonprofit organizations. Before you deal with crypto coins, ensure you understand how online assets work and take the necessary steps to protect yourself from cybercriminals. Besides, you should ensure potential donors understand how to donate. Following our guidelines, you can successfully incorporate cryptocurrency donations into your fundraising campaigns.
Rachel Jones is a freelance writer working for the company ICOholder global analytics platform with the largest crypto database. It is distinguished by the ease of writing and the ability to interest the reader. Always creates original content.