Over the past few years, Bitcoin and other digital currencies have taken flight as transferable assets creating huge gains for many people worldwide.
One unnamed donor set up the Pineapple Fund to give away $86 million worth of their personal bitcoin to various charities, “because once you have enough money, money doesn’t matter.” If your nonprofit accepts Bitcoin donations, you can apply today.
How Your Nonprofit Can Accept Bitcoin Donations in Three Easy Steps
- To accept bitcoin donations, you will need a place to store your bitcoin. In the bitcoin world, this is called a “bitcoin wallet.” Think of your wallet as the digital version of a bank account. To create a wallet for free, go to Blockchain, the world’s leading software platform for digital assets.
- Once you have your wallet, you will need a way to receive bitcoin donations. BitPay is a great option since registered 501(c)(3) corporations can have their bitcoin donations processed at no charge. It’s also very easy to setup and use.
- Lastly, for additional assurance that you will receive the money, you’ll want to secure your bitcoin wallet address through the Blockchain Security Center function. This will help verify that your nonprofit is the owner of the wallet. Yes, this also a free service and you’ll see the Security Center once you sign up for your bitcoin wallet.
The Best Way for Your Nonprofit to Receive Bitcoin Donations
Before your donor sells their bitcoin and donates the after-tax proceeds, you may want to suggest that the bitcoin be donated directly to your nonprofit. This framework contains two significant benefits for both the donor and the nonprofit.
First, the donated bitcoin gift to your nonprofit will be larger because, instead of the donor paying capital gains taxes, the nonprofit will receive the full value of the contribution. Second, the donor’s tax deduction will be equal to the fair market value of the donated bitcoin instead of only the after tax proceeds from the sale minus taxes paid.
How to Convert Your Bitcoin Donations Into Dollars
Bitcoin may be the currency of tomorrow but there are still very few nonprofits that accept them today. This good news is just how quick and easy converting bitcoin to dollars is now. In many ways, a bitcoin donation is like a simple stock donation.
As such, most nonprofits will want to immediately convert the bitcoin into dollars. Simply deposit the bitcoin in a digital marketplace and they will be matched to an interested buyer. The digital marketplace will quickly and easily convert your bitcoins to dollars and transfer them to a debit card, bank account, or digital wallet of your choice.
To learn how to convert your donated bitcoin to cash in 11 easy steps, click here.
Should your nonprofit accept bitcoin donations? What happens if you don’t?
Marc Stein is Co-Founder and Managing Director of The Global Center for Nonprofit Excellence where nonprofits, funders and industry experts work together for the greatest impact. For more thought leadership on nonprofit best practices and operational excellence, please visit www.theglobalcenter.net.
Disclaimer: Neither Marc Stein nor The Global Center for Nonprofit Excellence provide tax, legal or accounting advice. This article has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.