In the world of philanthropy, digital currencies are all the rage.
“Don’t leave your donors hanging without an option to donate cryptocurrency,” the National Council of Nonprofits urges on its website. The Chronicle of Philanthropy sells a digital collection titled Accepting Gifts in Cryptocurrency: What You Need to Know. Other respected groups and experts also regularly extol the virtues of digital giving.
In all, more than 1,300 nonprofits nationally accept cryptocurrency donations, according to Yahoo Life, and the number continues to grow. In 2021, The Giving Block, a platform that facilitates such contributions, reported more than $69 million in total donations, a massive 1,558% jump from 2020.
With those trends in mind, some of Western North Carolina’s most prominent nonprofits have taken the plunge.
Pisgah Legal Services began accepting bitcoin, ethereum and other such currencies in September through the donation platform Engiven, says Development Director Ally Wilson. The Asheville-based group offers free legal assistance in 18 counties.
“We really felt like being able to accept crypto donations gave us an opportunity to tap into a new source of funding,” she says. “Crypto holders tend to skew younger, and it was an additional way for people to support us. We want to make it easy and make it beneficial.”
How it works
Cryptocurrencies are digital assets that function like conventional currencies but are not backed by governments or central banks. Instead, they rely on a decentralized online system to record, manage and exchange denominations known as tokens. Transactions can be handled peer to peer and are recorded on blockchains, a kind of digital public ledger.
Although cryptocurrencies have reached a total valuation of over $2 trillion more than once, the market is notoriously volatile because, in most cases, these currencies are not backed by any physical assets.
That was one of Pisgah Legal officials’ main concerns when debating whether to accept such gifts, Wilson explains, saying, “It wasn’t a decision we made lightly.”
Her group is working with Engiven, a platform specially designed to help 501(c)(3) nonprofits manage cryptocurrency donations. For a 4% fee, Engiven will accept such contributions, immediately liquidate them and give the cash proceeds to the organization in question.
That frees Pisgah Legal staff from having to create a crypto wallet or worry about when to sell an asset. “It’s similar, from our perspective, to receiving stock donations,” which are also handled through a third party, notes Wilson.
To date, the nonprofit hasn’t actually received any cryptocurrency donations, which Wilson finds a bit surprising in light of the national conversation over digital giving and the experiences of groups in other places. Last October, for example, Engiven said it had accepted a bitcoin donation of $10 million to an undisclosed faith-based organization.
“I don’t know if cryptocurrency has really come to Asheville yet,” says Wilson, adding, “I want to give it more time and see.”
In the meantime, Pisgah Legal now has a designated donation button on its website and has mentioned that it accepts cryptocurrencies in some newsletters, though the organization has yet to make a major marketing push. “Maybe it’s not something that is needed for our donor base here in Western North Carolina,” she says, adding, “It’s something we can always reconsider.”
Too soon to tell
MANNA FoodBank decided to start accepting cryptocurrencies after several staff members participated in a Feeding America webinar featuring The Giving Block, which works with more than 1,000 nonprofits and facilitates donations in over 70 different cryptocurrencies. The Giving Block partners with Gemini, an exchange that enables clients to either immediately convert donations into cash or store them in their current form.
“We became more educated and comfortable with the technology and process,” says Mary Nesbitt, chief development officer for the organization, which serves 16 WNC counties. “Internally, our highest priority is the protection of our donor information, and therefore very strong cybersecurity for MANNA and our donors was our greatest consideration.”
MANNA only recently modified its website to accept such donations. “So we do not yet know what the interest level will be and are interested to see how it will be embraced,” continues Nesbitt. Like Pisgah Legal, MANNA sees accepting cryptocurrency as a potential way to attract new donors.
Experts cite several benefits for donors, but as with conventional currencies, the most prominent one is tax breaks. “The tax advantages are the same for a donor as ‘real property,’” says Nesbitt. “Therefore, a crypto donation is tax deductible.”
Digital downsides
At least one local nonprofit has no immediate plans to jump on the bandwagon, however.
“Bitcoin and other proof-of-work cryptocurrencies are highly energy intensive, and their wider adoption could have disastrous effects on our climate and planet,” says Karim Olaechea, communications director for the environmental advocacy group MountainTrue.
“Mining,” the process of verifying cryptocurrency transactions, uses computers to solve increasingly complex math problems. Because of the massive computing power required, this generates huge amounts of carbon emissions. According to an analysis by Cambridge University, bitcoin alone uses more electricity in a year than all of Argentina, a country with over 45 million people.
Olaechea says MountainTrue is keeping an eye on efforts by cryptocurrencies to adopt verification models that consume less energy. Nonetheless, he notes, “We have broader concerns that would have to be addressed before we begin accepting donations in cryptocurrencies.”
As an example, Olaechea points to a growing number of controversial crypto mining operations in rural areas. Cherokee County residents have launched an online petitioncomplaining about “the 24/7 deafening noise and vibration” at two crypto mines in the area.
“Some of these mines have proven to be public nuisances that provide little or no employment, local tax revenues or other public benefits,” Olaechea reports. And meanwhile, “All of them have the potential to generate significant amounts of electronic waste.”
PULL QUOTE
“I don’t know if cryptocurrency has really come to Asheville yet.”
— Ally Wilson, Pisgah Legal Services
If I were running a non-profit, I might accept crypto donations but I’d immediately convert them into FDIC backed currency. I can’t imagine a non-profit being very easy to run when one of your main asset’s value is at the whim of a speculative market.