There’s no need to fear, cryptocurrency is here

The growth of crypto philanthropy unlocks a new donor demographic for not for profits, but the sector needs to be less afraid of change, an industry expert says.

If you asked charities about their stance on cryptocurrency – a de-centralised and non-government controlled unit of currency – a few years ago, it’s likely you would have been met with hesitation, negativity or even outright dismissal.

Fast forward to today and crypto philanthropy is becoming mainstream. Not only are charities more frequently receiving crypto donations, the size of these donations are significantly larger than their cash counterparts.

US-based crypto fundraising platform The Giving Block helped facilitate more than US$69 million to not for profits around the world in 2021, an increase of more than 1,000 per cent from the year before. Meanwhile, the average value of crypto donations was 82 times larger than the average online cash donation, at US$10,455 compared to US$128, in the same time period.

Despite its popularity, many charities are still afraid to enter the crypto space, a decision that The Giving Block’s co-founder Alex Wilson believes shuts organisations off from a critical donor market, threatening their long-term success.

“Not only are non-profits alienating an entire demographic of donors when they choose not to accept crypto, they are also closing themselves off to potential major donations,” said Wilson.

“Crypto donors are some of the most financially literate donors on the planet, and they understand the benefits of donating crypto directly. Most crypto donors are also young, high-net-worth individuals that many charities have had difficulties engaging.

“Accepting crypto donations provides an opportunity to fundraise from this coveted donor demographic.”

Tapping into this donor market is especially important in the coming years, given Australian philanthropy is set to experience its largest intergenerational wealth transfer of over $3 trillion across the next two decades. 

Several high-profile charities have already started accepting crypto donations in all its forms, including the 30 Australian not for profits that partner with The Giving Block, such as UNICEF Australia, Habitat for Humanity and Rainforest Rescue. 

See more: Crypto’s the word – lessons from one charity’s journey into cyber donations

The topic of cryptocurrency more broadly is front of mind for the entire sector.

Earlier this year, the Australian Charities and Not-for-profits Commission (ACNC) issued new guidance on crypto-assets, labelling them as a “high-risk investment” that are “typically not appropriate for charities”, and urging organisations to consider the risks involved in both investing in and accepting crypto.

Commissioner Sue Woodward said that “in general, the risks connected with a charity investing in crypto-assets are greater and harder to manage than the risks connected with accepting donations of this kind”.

“It is critical that those who run charities develop their understanding or seek advice to ensure they are making the right decision for their charity,” she said.

See more: Do you need a crypto policy for donations?

But while the ACNC is cautious, Wilson says the appetite for crypto in Australia echoes international trends – and will only continue to grow.

“Australian non-profits accepting crypto donations is quickly growing,” Wilson continued. 

“Crypto is borderless, so it is one of the few ways that people can donate to their favourite causes regardless of where they are located. We’re seeing the same giving trends in Australia as we see in the US and Europe.

“The crypto community has grown year over year, and there is no reason to think that it won’t continue to grow over the next decade.”

See more: Cryptocurrency-funded groups called DAOs are becoming charities – here are some issues to watch

While crypto is an emerging area that many in the sector believe is important to invest in, charities should view it as another tool to utilise in fundraising, not a silver bullet. 

Wilson argues that one of the most effective ways to fundraise is by engaging with the crypto community through social media, as crypto donors are younger and more digitally-savvy than other donor bases.

He also suggests charities immediately convert crypto donations received into dollars, which removes the volatility associated with the crypto market.

As the co-founder of a crypto fundraising platform, Wilson is keen to encourage charities to be comfortable with not understanding everything about the industry.

“One of the most frequent things we hear from new clients is that they tried to research the industry and immediately felt overwhelmed by all of the new terms,” concludes Wilson. 

“You don’t need to understand cryptocurrency in order to crypto fundraise, so try not to overwhelm yourself with the technical jargon.”

However, the ACNC advises a more careful approach, suggesting that charities and their Responsible People ensure they understand how crypto-assets work, as well as their potential benefits and risks.

Charities wanting to learn more about crypto can read the ACNC’s guidelines here.