by Cindy Huynh
There are many large charity organizations accepting cryptocurrencies as donations despite cryptocurrencies being highly volatile. According to The Asia Times, charities are accepting cryptocurrency donations because, over the past few years, many mega-wealthy donors have opted to donate assets such as cryptocurrencies so that they can reap mostly charitable tax breaks.
Small and Large Charities Open to Cryptocurrency Donations
When it comes to charity funds and cryptocurrency donations, a great example is the largest charity in the United States, the Silicon Valley Community Foundation. According to their annual financial statement, and the San Francisco Chronicle, one-third of their $13.5 billion investments,(approximately $4.5 billion) was in the form of digital assets.
While the Silicon Valley Community Foundation most likely holds more cryptocurrencies as assets than other charities, Fidelity Charity, the largest donor-advised fund in the US noted that cryptocurrencies were one of the most significant growing types of donations in 2017. Even small charity organizations are now accepting cryptocurrency donations as well.
Since Bitcoin, the most popular cryptocurrency increased by 1,318 percent against the US dollar in 2017, and XRP, the third-most popular token gained 36,018 percent over the year, these gains quickly became significant losses in 2018. The losses were quite concerning, especially in the first eight months of 2018 when cryptocurrency prices declined significantly.
There is a general concern that many charities that received large amounts of cryptocurrency donations in 2017 may not have had the chance to convert these tokens into fiat money before losing a lot of its value in 2018. Charities are however open to cryptocurrency donations because of the changes like philanthropy in the last few years.
Mega-Donors Tend to Give Assets, Not Money
According to The Asia Times, many mega-donors chose to donate assets like stocks, bonds, and cryptocurrencies because they can benefit significantly from donating assets that have increased in value over time.
For example, if a couple purchased stock in a company at $1 per share, but the shares are now worth $1,000 when the couple donates the stock they gain two benefits. Firstly, they receive a $1,000 tax deduction. Secondly, they do not need to pay taxes on the $999 gain in value of the donated stock as their income.
Donating assets to charity is a highly popular form of philanthropy. A great example is the top executives of Facebook and how they have given to charities in the past. Mark Zuckerberg and his wife Priscilla Chan have donated Facebook stock valued at over $1.75 billion to a donor-advised fund and another $2 billion worth in Facebook shares to an organization associated with the Chan-Zuckerberg Initiative in 2017. In 2016 and 2017, Sheryl Sandberg also donated over $100 million in Facebook stock.
The desire to donate assets like cryptocurrencies is quite common, especially when the value of Bitcoin and other cryptocurrencies allow investors to gain significantly large charitable tax breaks.