With the cryptocurrency market capitalization exceeding $ 2 trillion, there is now a record interest in anthropophylanthropy. Many nonprofits are gaining traction with the generous help of crypto enthusiasts, from helping to build a school in Uganda to raising funds for cutting-edge medical professionals and raising awareness for artists with intellectual disabilities.
But the reward for giving away cryptocurrency to charities is not limited to a sense of accomplishing an altruistic mission. Currently, the IRS classifies cryptocurrency as an equity asset, like stocks. This means that an investor can deduct the full market value of the cryptocurrency at the time of the donation from their regular income (i.e., salary) over several years, while completely avoiding capital gains tax.
Let’s say, for example, that crypto investor Elsa makes $ 85,000 a year from earned income (individual tax return) and bought Bitcoin (BTC) for $ 10,000 four years ago. In December, she donated all of her investment, now $ 29,650, to the American Cancer Society.
Not only does the USCS receive a lump sum to fund operations, but Elsa can deduct 30% of the value of her donation annually, with the remainder remaining for a maximum of five years. Thus, her first tax year income would be only $ 76,105, and Elsa saved a total of $ 7,116 in federal taxes thanks to her donation.
The generous tax regime for cryptocurrencies may be the reason this practice has become so popular. In an exclusive interview with Cointelegraph, Alex Wilson, CEO of the non-profit fundraising platform The Giving Block, discussed how this setup creates a win-win situation for both investors and charities. On Tuesday, Crypto Giving Monday, the organization raised over $ 2.4 million in charity in one day.
Results of Tuesday for cryptocurrency. Source: The Giving Block
Cointelegraph: How Do You Collect Charitable Donations?
Alex Wilson: We knew how we did it, so all donations from the donor always go straight into the wallet of the charity. Now we’re not a chaplain or anything, so money always goes straight to the wallet of the charity. And on the back they have institutional accounts with Gemini. This way you don’t have to worry about managing their private keys and the like. Through us, they use the Gemini Depot solution.
CT: Was the main topic this year related to donations?
Amy: I mean, I’m naturally a bit like everyone else when it comes to this topic. We see a wide variety of charities, including different sizes. We work with many local charities as well as national and international brands. So, really a little. This is not to say that there is one group or one type of non-profit organization that receives more donations than others. But I would say that some of the larger charities tend to do well, like some of the brands you might recognize, like Save the Children or the American Cancer Society – you know the names. They tend to be very good at raising money. or groups like St. Jude. They are generally good at fundraising, so they tend to be better at collecting cryptocurrencies as well.
CT: How many donations have you received this year and how is it compared to previous years?
Alan Woods: This year alone, we’re going to make over $ 100 million in donations. This is usually more than people expect. So this is much more than last year. Last year, for the whole of last year, we earned $ 4 million. We do more than that every month. We are also working with the exponential growth of the number of non-profit organizations. Last year, there were about 100 non-profit organizations on the platform, and now we have crossed them. Thus, the number of non-profit organizations accepting cryptocurrency has grown 10 times. It has now reached a tipping point and is becoming more and more popular. Thus, non-profit organizations are becoming more comfortable with the idea of scaling up cryptocurrency, especially now that they have seen such great results. It’s not margin anymore. They see large companies entering the cryptocurrency market and are becoming more comfortable with the concept of cryptocurrency fundraising.