Crypto Fundraising 101: How to Start Fundraising Crypto & NFT Donations

Crypto Fundraising 101: How to Start Fundraising Crypto & NFT Donations

By on Oct 4, 2022

Tagged:     

Cryptocurrency (crypto) has become the fastest-growing donation method in the US, and crypto investors are one of the most desirable donor communities in history. The average crypto user is young, wealthy, and motivated to give. They donate hundreds of millions of dollars via crypto each year, and nonprofits are eager to tap into this new donor demographic and diversify their revenue with crypto and NFTs (non-fungible tokens).

In a recent Blackbaud webinar, Alex Wilson, Co-Founder of The Giving Block, an all-in-one nonprofit crypto fundraising solution that has raised over $100 million in crypto donations and is used by nearly 2,000 charitable organizations, shared his insights which we have summarized below.

Why is Crypto Philanthropy important to nonprofits?

The crypto market today is over $1 trillion. Over 300 million people are using crypto, and globally that number has nearly doubled every year. 83% of millennial millionaires are investing in crypto. To understand crypto’s reach, consider that Coinbase, a 10-year-old crypto exchange platform, has over twice as many users as Fidelity Investments, a 75-year-old traditional financial services company.

To understand what that means for nonprofits, look at how people search for donation options. Over the last three years, Google search volume for donating bitcoin has reached the same volume of searches for those looking to donate stocks. Nonprofits need to be in that space and appeal to the cryptocurrency market.

Why do people donate crypto?

It’s a way of donating pre-tax dollars. Like stock, the IRS considers crypto to be personal property or assets. If the owner sells their crypto, they must pay capital gains tax. If they donate their crypto directly to a 501(c)3 nonprofit, however, the donor doesn’t have to pay that tax, and they may deduct the donation on their tax return based on the crypto’s value at the time of donation. Depending on where the donor resides and other factors, the donor may be giving as much as 30% more than if they had cashed out their crypto and donated the resulting amount, and they may receive roughly 30% more in tax deductions.

Nearly one-third of hedge funds are moving into crypto, which means crypto may become the most tax-incentivized donation method for many wealthy Americans. As their crypto increases in value, they are more incentivized to donate it to offset capital gains tax liabilities.

Crypto users are also highly cause-driven. Theirs is a community of young people constantly engaged with other crypto enthusiasts who are eager to use their assets to power social good. They are also keen to demonstrate the positive impact of crypto on society to drive mainstream crypto adoption.

How do crypto donors differ from traditional donors?

According to the Blackbaud Institute’s 2021 Charitable Giving Report:

  • The average traditional donor age has increased from 62 to 65
  • The average gift amount in 2021 was $813
  • The average online donation in 2021 was $204
  • $20 was the median donation amount for gifts below $1,000 in 2021

Crypto giving is flipping that traditional giving model. While major and mid-level donors have traditionally been older and younger generations have given smaller gifts, that is not the case with crypto donors.

According to The Giving Block’s 2021 Annual Report:

  • The average age of crypto users is 38
  • Crypto investors are more likely to donate $1,000 or more
  • The average income of crypto users is $111k
  • The average donation size in 2021 was $10.5k

As these donors age and their income increases, they will have even more capacity to donate. By engaging them now and keeping them engaged, nonprofits could generate funding for decades.

Don’t Accept Crypto; Fundraise It

The American Cancer Society began accepting crypto donations years ago but didn’t experience a lot of donor activity. It wasn’t until they started truly fundraising crypto that donations increased dramatically. In 2021 they launched the Cancer Crypto Fund campaign specifically for the crypto community and raised over $1 million in the first round.

Crypto is the only donation method that is also a donor demographic with a distinct community and culture. These are a few steps to get started:

  • Develop crypto-specific giving campaigns to elevate your exposure to the crypto community.
  • Show up in search. Budget for paid advertising and optimize pages on your website for crypto fundraising apart from your traditional donation forms.
  • Be visible in crypto community-focused giving groups, such as The Giving Block’s Impact Index Funds.
  • Ensure your current donor base and prospects know how to donate crypto to your organization.

Best Practices to Fundraise Crypto

  1. Make crypto easy for your team. Outsource to crypto philanthropy experts who can convert donations to US dollars in real time, screen donors, and help you reach out to the crypto community. While there is a cost to that partnership, you should see a better return on investment than navigating it on your own.
  2. Don’t neglect crypto donors’ unique needs associated with NFT drops, smart contracts, large block donations, etc. Ensure your partner can help with complicated scenarios and protect your nonprofit and the donors who want to support you.
  3. Create a crypto fundraising strategy. You wouldn’t add a “major gifts” button for donations of $10k and up to your website and expect to grow your major gifts program. Similarly, you are unlikely to see a significant lift in crypto donations just by making it an option on your donation form. Crypto donors require a custom approach, and nonprofits benefit most when they tap into their community.

There are many ways to accept crypto, but only a few ways to fundraise it successfully. It comes down to understanding the crypto community, working with the right people, getting the proper support, and having the right resources.

Conclusion

Crypto donors are the next generation of donors. They are more generous than traditional investors and dramatically more tax-incentivized to give crypto than they are to donate dollars. To tap into this valuable donor pool, nonprofits must embrace the crypto community, create crypto-specific marketing strategies, and learn to steward crypto donors.

Sign up for our next Surpass Your Fundraising Goals With Cryptocurrency Donations webinar to learn more about fundraising crypto, creating a year-end crypto campaigns strategy, and stewarding this younger, more tech-savvy demographic.

The crypto community is unique, including its jargon. We recommend referring to Forbes’ Cryptocurrency Glossary to clarify any terms or acronyms.

Common Crypto Misconceptions

  1. There’s been a downturn in the crypto market
    1. Long-term, cryptocurrency has been the best-performing asset class in the last five- and ten-year periods. While crypto and stocks have experienced short-term downturns, most crypto investors are still up significantly from a few years ago.
  2. Crypto is too volatile
    1. While it may seem unintuitive, crypto is more volatile to the upside and is appreciating drastically long-term. Every time there has been a downturn in crypto, it has come back stronger.
  3. The environmental impact of crypto is greater than traditional banking
    1. Crypto mining uses relatively less energy, and the energy mix powering crypto is much greener—almost 70% is created using renewable energy sources.
ABOUT THE AUTHOR

As the senior content marketing manager for Blackbaud’s Education Management and Enterprise marketing teams, Kimberley Martin combines her passion for education and technology with extensive marketing experience. Before joining Blackbaud, she was marketing director for a company that grew from five to twenty locations during her tenure. Kim is an avid volunteer, board member, and fundraiser for non-profits in her community, focusing on human services and supporting trauma survivors. She is passionate about powering social good, one story at a time.

Leave a Reply

Your email address will not be published. Required fields are marked *