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Cryptocurrency and the Nonprofit Sector
Ellen Stone
In July, we shared a Forbes article about Using Cryptocurrency in Your Nonprofit on the Pathways to Growth LinkedIn page that generated more engagement than anything else we had posted. Because of that interest, we wanted to follow up with additional information.
First, let me acknowledge that I am not an expert in this field. I read more than a dozen articles in financial and nonprofit forums and asked advice from colleagues who advise nonprofits on financial planning to gather information for this blog post. As a former nonprofit executive director, this was where I started when new issues or opportunities arose for my organization – I did my research.
Cryptocurrency is a rapidly growing sector of the economy. Much like the stock market, you don’t necessarily have to understand the intricacies of how it works in order to accept donations (this analogy was used repeatedly in articles – apparently most people don’t understand the stock market J). There are several things that are important to understand:
- Cryptocurrency is volatile – the value of each currency varies greatly from day to day and month to month. Some cryptocurrencies seem to disappear while others are relatively stable in presence if not in value. Some people have made millions of dollars investing in this area. Some of those investments have evaporated overnight. If your organization chooses to accept cryptocurrency donations, you will need to establish a policy about what you do with the donations. Do you leave them invested and hope for a strong return, or do you convert them to cash immediately? I strongly urge you to consult with an attorney and/or a financial advisor when making this decision with your board.
- Cryptocurrency has the potential to open up new funding streams. Fidelity Charitable reported receiving $69M in cryptocurrency donations in 2017 compared to $7M in 2015 and 2016 combined. From crypto-millionaires who have donated to various nonprofits to the Pineapple Fund which has given almost $56M anonymously to 60 different organizations, there is growing potential funding opportunity in cryptocurrency. Tapping into these new donors is still a bit of a puzzle for most nonprofits.
- Cryptocurrency is considered an asset, not a currency, for IRS purposes. This has substantial implications for donors as they may receive a larger deduction under current tax rules. This also has implications for organizations that retain cryptocurrency rather than converting it to cash. (Consult a financial advisor for specific tax/reporting advice)
- Cryptocurrencies are anonymous, uninsured, and technology dependent. If something goes wrong, you do not have the same recourse to get money back as you do with a bank or credit card company.
- As a nonprofit, you need to exercise due diligence in trying to identify donors, but the IRS does allow for donors to remain anonymous. However, if you are an organization that issues grants, there are additional requirements. Consult an attorney and financial advisor to ensure you meet all applicable standards and best practices if your organization chooses to accept cryptocurrency donations.
- Cryptocurrency is an evolving sector. The technology, currencies, philanthropy, and laws are all changing on an almost constant basis. While it is necessary to establish a policy and procedure for accepting cryptocurrency donations, it is important to understand that this is not the type of policy that stays in place for years. If you choose to accept cryptocurrency donations, you will need to reexamine your policy regularly (at least once, if not twice a year) until this sector stabilizes.
For more information on this subject, check out the following resources:
- This CoinTelegraph article focuses on current trends in crypto-fundraising and what that might tell about the future
- This Forbes article discusses “What You Need To Know About Using Cryptocurrency In Your Nonprofit”
- Guidestar: Blog provides a basic introduction to Bitcoin with their view on how early adoption can help nonprofits get a fundraising competitive advantage
- com provides a list of 5 things organizations should take into consideration when deciding whether or not to accept cryptocurrency donations
- Windfall provides information about the tax implications for donors and organizations when accepting cryptocurrency donations
Please note: Pathways to Growth does not offer legal advice or financial investment advice as this is outside of our area of expertise. Your organization should consult a financial advisor and attorney when determining whether or not to accept cryptocurrency donations and whether to retain or convert those donations.
Every child has a hero, someone who inspired vision in them, someone they aspired to be like. For me, as a little girl, I had two heroes- Benjamin Franklin and Dr. Seuss. Although from different times and disciplines, they both taught me invaluable lessons I still use today. Despite their different fields of expertise - Franklin in politics, science, and invention, and Dr. Seuss in children's literature - they both left a lasting legacy that continues to shape and inspire generations. Both were unique influential philosophers who found purpose and fulfillment through connections to others. From the wisdom of “Poor Richards Almanac” to the lyrical ingenuity of “Oh The Places You Will Go,” both Franklin and Seuss were storytellers with a voice for change. Their words made me think and encouraged me to dream. At eight years old, I knew I also wanted to write and tell stories that would encourage people and change the world. It's fascinating how childhood aspirations can pave the way for unexpected yet fulfilling careers. Little did I know that this passion would one day lead me to a successful career in grant writing. Inspired by the works of two literary giants, I found myself drawn to a path of advocacy and change. So, after a successful 25-year career in non-profit Executive leadership, I was given the opportunity to join the Pathways to Growth Team as a grant writer. Pathways has been a leader in the non-profit consulting arena for many years so to be able to work with the best of the best has been a privilege! To me, grant writing is a harmonious blend of science and art, where data-driven methodology meets creative expression to produce persuasive and impactful proposals. Sounds impressive, right? So, what did I learn about grant writing from these two? For that, I will start with good ole Ben.
Securing a grant represents a monumental achievement for any entity or individual striving to confront societal challenges or propel constructive transformations forward. It signifies a crucial step toward making a tangible impact and fostering positive change within communities. While obtaining a grant marks a substantial milestone, the true impact transcends mere acquisition; it hinges on the adept execution of the proposed program or project. Effectively implementing the envisioned initiatives is where the transformative potential of the grant truly manifests. Maximizing the impact of a grant necessitates a meticulous approach, characterized by thorough planning, strategic execution, and continuous evaluation. This comprehensive process ensures that resources are allocated judiciously and utilized optimally, ultimately leading to the attainment of desired outcomes. Below are eight fundamental strategies essential for the effective implementation of programs, designed to unlock the full potential and maximize the impact of grants. These strategies serve as guiding principles, shaping the trajectory of grant-funded initiatives toward meaningful and sustainable outcomes.
It is a very competitive grant world out there, so be sure you understand the vital link between board giving and grant success.
As the leader of your nonprofit, your leadership abilities are crucial for the welfare of your staff, volunteers, and the community you serve.
To quote my Aunt Babe (age 93), “It’s a poor dog that won’t wag its own tail.” This gives you permission to share positive observations about yourself.
his article is a continuation of a blog we posted two weeks ago on efficient productivity in grant seeking. Here is a recap of the first five steps: 1) Manage your Energy, Not Your Time, 2) Be Your Own Coach or Find A Trusted Coach, 3) Read About Productivity, 4) Set Goals. Let’s continue with #5…
Some of us are wired to organize and seek out efficient productivity. Some of us are not, but no judgment here! The good news is that regardless of how easy it is for you to stay organized and have efficient productivity on a daily basis, there are some tried and true steps that will help you stay on track and meet your grant goals.
I did not expect to receive lessons in grant seeking while on holiday break this year with my husband.
Writing the narrative takes the bulk of the time you spend preparing a grant proposal, just like mixing the cookie ingredients. However, grant budgets are just as important; they are like recipes when you are baking.
Why keep #grant-seeking as a priority during COVID-19 when there are so many urgent needs? Take a breath, take a minute, and remember – your mission depends on it.
#PathwaysToGrowth
