Cryptocurrency is confusing. Its very concept produces more questions than answers, and its mention usually results in an immediate and visceral reaction:
- “Doesn’t that have to do with the dark web?”
- “I am the furthest thing from a Silicon Valley tech bro… It’s not for me.”
- “All I know is that it’s some sort of magic internet money, but I’m intrigued. Please tell me more.”
- “Oh, yeah, crypto! I have [insert one of the 17,000+ altcoins here], and…” (You can expect this monologue to last until dessert).
It’s hard to conceive of adding something to your (or your teams’) already full plates. But it’s a rapidly growing asset that, with some focused effort, can exponentially increase your dollars raised.
Just how exponentially? The Giving Block reports that the average cryptocurrency donation amount in 2021 was $10,445. That is 82 times as much as the average online cash donation. This represents a 236% increase from the previous year.
Cryptocurrency is the fastest growing asset within the last ten years, even amidst market volatility. And it behooves any development professional to understand any rapidly growing asset in a fundraising context!
Cryptocurrency is building wealth for people, and they donate it. There is an opportunity cost to not learning more and deciding if it is right for your organization. Understanding and weighing this opportunity, and what it takes to properly resource it, is much easier than what conversations in the crypto landscape might lead you to believe.
A quick primer on cryptocurrency
Broadly defined as an asset that people store value in and one that they care about, cryptocurrency is an electronic peer-to-peer exchange of value, and one that stands in contrast to physical currency. Remember that even fiat currency is based on personal (and often emotional) value — a culturally accepted and mutually agreed meaning that is ascribed to a piece of paper or coin that can be exchanged for goods or services.
Using blockchain technology, cryptocurrency works around the traditional financial system. Blockchain is a digital ledger that records transactions and makes them accessible to everyone — a decentralized platform without middlemen.
Cryptocurrency might be confusing because it is viewed differently depending on the goals and motivations of the user. It can be considered a digital asset, a currency, a financial instrument, or property. Some people think of it as an asset, and they hold it as it builds value. The IRS also views it this way. By donating cryptocurrency, crypto users can offset their capital gains tax liability, making them highly incentivized to do so.
Here are some quick facts about crypto:
- 49% of Millennials own cryptocurrency.
- 94% of cryptocurrency users are Millennial or Gen Z, but Gen X invests the most.
- 95% of hedge funds plan to invest in crypto over the next five years.
- The number of nonprofits accepting crypto donations increased by 10x (or 900%) from 2020 to 2021.
Three steps (closer) to crypto
Currently, there are 400,000 crypto users for every ONE nonprofit. But how do you even get started? We organized this into three steps: Plan, Build, and Broadcast.
1. Plan for your organization’s success with crypto philanthropy.
Make sure fundraising best practices are already in place.
We know that “fundraising best practices” is a broad concept, but there are a few specific areas you should ensure are in place before focusing on the crypto arena. Ask yourself:
- Do we have up-to-date gift agreement policies and procedures?
- Do we already fundraise via social media?
- Do we have a formalized major gifts program?
- Do we currently accept a variety of payment methods with appropriate and timely acknowledgement?
- Do we have a robust giving section on our website, including strong calls to action? Is it mobile friendly?
Consider conducting a needs and opportunities assessment and engaging in an honest discussion with your organization’s leaders and board members about this donation pathway.
You will encounter stakeholders with a range of feelings about crypto philanthropy. It will be viewed by some with suspicion, while others will see it as a golden ticket. Provide them with as much information as possible, including set-up needs and staffing requirements, so they can make an informed decision.
A successful crypto philanthropy program doesn’t necessarily result in a six-figure gift out of the gate (although that is not outside the realm of possibility). Successful programs are those that don’t waste time or involve unnecessary risks. Your revenue should be proportional to the amount of work you intend to put into this channel. And when you do get started, remember the idiom, “Well begun is half done.”
Prepare yourself to receive the gift.
Even if companies such as The Giving Block offer turnkey gift processing, you will still need to dedicate time and focus to this area — your goal remains to attract crypto users to your organization. Attracting crypto donors takes time and intentionality, just like attracting any donor.
Remember, your organization does not need to invest in crypto in order to accept it as a donation. The process of converting crypto donations into fiat currency is automatic and secure, similar to that followed by most nonprofits when they receive gifts of stock.
Although gift processing might be a turnkey process, your acknowledgement and stewardship of the gift should be tailored to the donor. Be prepared with language that thanks your first crypto donor in a targeted way: one that ties their choice of gift outlet to your organization’s impact. As an example, “Your gift of one bitcoin provides one year of safe housing for ten teenagers in crisis.”
2. Build affinity among supporters of both cryptocurrency and your organization.
Start with your database, but don’t stop there.
Identifying probable crypto-minded supporters in your database is a good start (remember that 94% of crypto is held by Millennials and Gen Z, and that Gen X invests the most in crypto), but you must also be prepared to reach out to them. Remember that, like all things in fundraising, you only know if you ask. Share your interest in developing a crypto philanthropy program for your nonprofit.
In addition to a database review, there are other ways to identify and engage your audience: survey them, promote the concept on social media, and invite them to join the conversation by speaking to those you serve, such as a finance student group on campus.
Remember that this is a journey. Start by identifying and reaching out to your existing crypto user base (they exist!) and meet them where they are.
Provide an outlet for advocacy and education.
Crypto enthusiasts are generally not shy about sharing their passion when they have the opportunity, and they discuss the growing list of applications for crypto assets and technology regularly. Partaking in crypto philanthropy, as with other use cases, is a way for crypto users to promote and celebrate the relevancy of cryptocurrency in the real world.
Board development should always represent a diversity of industries, including emerging ones. Create an ad hoc position on your fundraising committee, board of trustees, or young professionals group for a cryptocurrency advocate. Young professionals boards may be especially interested in this topic.
3. Broadcast your nonprofit’s crypto philanthropy pursuits.
Understand that you don’t have to start from scratch.
Graft your crypto philanthropy pursuits onto existing efforts rather than creating entirely new ones. Consider your existing best effort, campaign, or “hook” and create a crypto-specific goal or campaign sub-goal within it. In addition, you can participate in existing crypto philanthropy campaigns such as #CryptoGivingTuesday (which, like the broader crypto industry, has seen year-over-year growth).
While enveloping your crypto goals is valuable, you can also follow the “if you build it, they will come” approach: develop a specific cryptocurrency donor page on your website, develop crypto success stories, and incorporate simple talking points into your gift officer scripts or the “ways to give” sections of your emails or mailers.
Weave the crypto conversation into your major gift efforts.
Remember that the average online donation of cryptocurrency is $10,445 — 82 times larger than the average online cash donation. This catapults the prospect into major gift territory for most nonprofits. At the very least, you’ll want to learn more about them!
And like other major gift initiatives, you only know what your donors care about if you ask them. So, ask the right questions. For example, “We’ve been talking a lot about crypto philanthropy at {insert nonprofit name}. Do you trade crypto?”
Don’t be intimidated. This isn’t much different from a donor discussing a donor-advised fund or a charitable gift annuity. Although you might be reluctant to approach this topic head-on, remember that learning about the assets that supporters have is not uncommon, and it can be identified in many ways. At the very least, your supporter will leave the conversation knowing that your nonprofit is staying on top of the financial and philanthropic landscape.
Crypto donors tend to see themselves as part of a cultural movement and experience vicarious achievement when the movement succeeds. In addition to the other positive feelings charitable giving elicits, crypto giving makes a statement. It is possible to ignite your mission by understanding the crypto donor, creating pathways for their contributions, and celebrating their support.
Vice President of Marketing, Katie Rozycki, also contributed to this article. She can be reached at krozycki@grahampelton.com.
