Charity Crypto Fundraising Platforms and Cryptocurrency Donations

What crypto fundraising is and everything you need to choose the best crypto fundraising platform for cryptocurrency donations to your charity.

Charity Crypto Fundraising Platforms and Cryptocurrency Donations

What charity crypto fundraising is, how choose a crypto fundraising platform for cryptocurrency donations to your charity, crypto risks, benefits and cryptocurrency regulatory guidance, as well as useful links to crypto fundraising guides.  This guide has been formatted to comply with existing crypto fundraising guidance, so can be used both as a crypto toolkit and as a policy template for your charity.

CRYPTO FUNDRAISING PLATFORMS & DONATIONS

There aren't that many charity crypto fundraising platforms but cryptocurrency donations may represent a way to bring new wealth into the sector.  There are not yet many charities using crypto fundraising platforms to accept cryptocurrency donations, so potentially a real opportunity for those who do.

How To Choose The Best Crypto Fundraising Donation Platform

Things to consider or to ask potential providers when choosing a crypto fundraising donation platform:

  • What are the total costs, including any fees or transaction charges.
  • Does it provide the reports and information you need to manage, report and account for your cryptocurrency?
  • Does it provide the crypto and fiat currencies, such as sterling, that you want?
  • What support, such as a help centre, online resources and/or chat service is provided to help you?
  • What support is provided to promote and make your charity visible to potential donors?
  • Does the platform comply fully with relevant UK legislation, including data protection and taxation?
  • Is the platform well established, secure and respected?
    • For example, how long has it been established, do large capable charities use it and has there been any (reasonable) online criticism or concerns raised?

Well Known Crypto Fundraising Platforms

Crypto fundraising is still new and there are not yet a significant number of crypto fundraising platforms.  Here are some of the best known crypto donation platforms.

Typically, these platforms process cryptocurrency donations on a charity’s behalf, converting it to fiat currency before transferring it to the charity.  Alternatively, a charity might have its own crypto-wallet, so it holds cryptocurrency itself.  Note - I found these using Internet research, have not used these myself and their inclusion does not represent either a recommendation, nor endorsement.

Crypto Fundraising Donations

The Financial Conduct Authority (FCA) estimates that in the UK 2.3m people hold crypto currency, and NatWest has claimed that some 20% of its 19 million customers hold cryptocurrency.

In its 2021 annual report, the crypto fundraising platform the Giving Block recorded an average cryptocurrency donation of more than $10,000, and claimed the average value of a crypto donation was 82 times greater than an online cash donation. There is also the now famous case of a Scottish animal charity, which received a cryptocurrency donation of £90,000.

Crypto fundraising donations often support similar causes to normal donations.  Crypto donors to charity are motivated by the same things we all are and just choose to donate in a different way.  However, their demographic is very different.  It’s been estimated that the per capita income of crypto investors ($111,000 in the US) is higher than average.  And their age tends to be lower than those donating traditionally (38 years old vs 64 years old).

It seems likely that this is not primarily existing donors changing the way in which they donate but at least partly new wealth flowing into the charity sector.

CRYPTO FUNDRAISING - BENEFITS AND RISKS

To help you assess if crypto fundraising is right for your charity, we've assessed the benefits, risks and limitations is using it.

Benefits of Charity Crypto Fundraising

Crypto fundraising isn't for every charity but, for those who do, there is real potential to secure more donations.

  • New income stream - with fundraising hugely challenging crypto fundraising offers a potentially very useful and, probably, growing new source of donations.
  • New donors - the per capita income of crypto investors is higher than the average individual, even though the average age of crypto investors is lower than those donating traditionally.
  • Lower costs - dealing with cryptocurrency transactions is far more cost-effective than dealing with traditional currency, which require banks and other third-party financial firms that charge fees. There are other cost savings, too. Cryptocurrencies are not tied to geography so currency conversion costs are not needed.
  • Greater transparency - cryptocurrencies use blockchain, which makes it easy for those in the chain to see when changes are made, and currency transactions can be traced. For example, a donor making a gift can see through the block chain how that money is being used at any time. This works to increase public trust in charities.
  • Third party reliance - cryptocurrencies bypass traditional financial infrastructure. As a result, crypto fundraising donations can be used to get financial aid into areas that would otherwise be difficult to reach.

Charity Crypto Fundraising Risks

There are significant risks associated with crypto fundraising that charities must be mindful of and manage.

  • High volatility - which means the value can change very quickly.
  • Potential for data protection non-compliance – see below.
  • Potential fraud or theft by hackers.
    • Online/hot wallets are more susceptible to hacking attempts whereas cold wallets are not connected to the internet, and as a result can be more secure.
    • Hardware wallets are physical so are dramatically less likely to be hacked, but of course, can be damaged or lost.
  • The lack of protection compared to traditional currencies or financial products.
    • Crypto assets are largely unregulated, so it’s very unlikely there would be access to the Financial Services Compensation Scheme (FSCS) or the Financial Conduct Authority (FCA) if something goes wrong.
  • That laws on crypto assets vary between countries.
    • Crypto assets are banned in some countries and others have complex regulatory requirements.
  • The difficulty in tracing donors because donations of crypto assets can be made anonymously.

Charity Crypto Fundraising Donations - Tax

  • HMRC does not consider crypto assets to be currency or money, so crypto donations will not be eligible for Gift Aid - HMRC Gift Aid Chapter 3.4.1.
  • If crypto assets are converted to ‘money’ then the converted ‘money’ can be donated to charity under the Gift Aid scheme, subject to normal qualifying conditions applying.
  • The donor must convert crypto assets into ‘money’ before donating it to the charity and should bear in mind any personal Capital Gains Tax implications.

HOW TO SET UP CRYPTO FUNDRAISING

  • Carry out an assessment of the scope to secure and grow crypto asset donations compared to the set-up and ongoing financial and non-financial costs and associated risks.
  • Assess the various crypto platforms and different types of crypto assets to determine which.
    • Best meets the charity’s needs and.
    • Complies fully with essential legal and regulatory requirements, such those for taxation and data protection.
  • Carry out a cost/benefit analysis on holding donations in a crypto wallet versus converting them to a traditional currency.
  • If our charity will receive donations directly into a crypto wallet, ensure the platform to be used is compliant with UK regulations and registered with the FCA for anti-money laundering and counterterrorism, as required.
  • Ensure that finance and fundraising follow and make donors aware of the HMRC guidance on the taxation of crypto assets.
  • We will ensure that donors are given relevant information at the point of donation and that our privacy notice adequately covers the processing of donors’ personal information.
  • We will keep accurate records showing money received and spent, as well as the assets and liabilities and value cryptocurrency assets at the end of each financial year-end based on their fair value.
    • That is, the value for which the charity could dispose of the asset.

CRYPTO FUNDRAISING REGULATION

Here is the crypto information we've managed to source that's been published by regulators and others.

Crypto Currency & Blockchain Regulatory Guidance

There doesn't seem to be all that much regulatory guidance on crypto fundraising but here's what I managed to find.

Crypto Fundraising Data Protection Challenges For Your Charity

The application of data protection law in crypto and blockchain systems, where control is both decentralised and distributed and where personal data is often permanently embedded in public transaction records, raises important issues for transparency and the exercise of information rights in crypto fundraising, amongst other things. We will either take appropriate action to ensure we remain data protection compliant or not use such systems.

  • Where block chain transaction use pseudonymised data, the identity of a person can be determined by using additional information.
  • In cases where personal data is on the blockchain (i.e., where it is reasonably likely for individuals to be identified or identifiable), the permanency of data on the ledger raises potential concerns for compliance with data protection law and the exercise of individual rights such as rectification and erasure.
  • Decentralised Autonomous Organisations (DAO) are entities with no central governing body that use the blockchain to distribute decision-making power across token holders raising issues over who is accountable for processing personal data.

Useful Links - Charity Crypto Fundraising

Charity Crypto Fundraising and Donation FAQs

  • What is crypto fundraising?  Crypto fundraising is a form of charity fundraising that seeks crypto currency donations, usually via a crypto donation platform.  It has numerous advantages over more traditional fundraising but also has risks you need to be aware of and is not something to undertake without having sought appropriate advice.
  • What's a crypto fundraising platform?  A crypto fundraising platform, sometimes called a crypto donation or blockchain platform, processes cryptocurrency donations on a charity's behalf, converting it to fiat currency before transferring it to the charity. Alternatively, a charity might have its own crypto wallet, so it holds cryptocurrency itself.
  • What is blockchain?  Blockchain is a digital ledger. It records who owns each crypto asset and when they are transferred.
  • What are crypto assets?  Crypto assets are digital representations of value or rights that use blockchain technology. Crypto assets include cryptocurrencies and non-fungible tokens (NFTs).
  • What is cryptocurrency?  Cryptocurrency is a digital, or virtual, currency that you can trade or use to buy and sell things, which is stored online on a blockchain.
  • What is crypto philanthropy?  Crypto philanthropy is making fundraising donations in the form of cryptocurrencies (instead of via traditional cash payments) to support charitable causes.
  • What's a crypto wallet?  A crypto wallet stores your private keys, keeping your crypto safe and accessible and allows you to send, receive, and spend cryptocurrencies.
  • What's a Decentralised Autonomous Organisation (DAO)?  A DAO is entity with no central governing body that uses blockchain to distribute decision-making power across token holders.
  • What is fiat currency.  Fiat currency is legal tender whose value is tied to a government-issued currency, like the U.S. dollar or £ sterling in the UK.
  • What are non-fungible tokens (NFTs)?  NFTs are digital assets that link ownership to unique physical or digital items, such as works of art, real estate, music, or videos. ‘Non-fungible’ means they are unique and not replaceable. NFTs are also stored on a blockchain.
  • What is a stable coin?  A stable coin is a cryptocurrency whose value is linked to stable assets like the US Dollar or gold. Theoretically this makes the price less volatile.

Free Support For All Your Fundraising

Use Funding Finder, to find a huge range of grants and Help Finder to find lots of free fundraising support and also companies that make product/financial donations. There's also Data Finder, plus 8 online health checks, 100+downloadable funder lists and the Quality Mark.

This Resource Doesn't Constitute Professional Opinion

I am not an accountant, nor a lawyer and no advice can be applicable to all organisations, in all circumstances, so this resource is no more than a guide to understanding.  I've summarised the regulatory guidance and augmented this with my own experience and Internet research, but I am not competent to provide professional advice.  I have included links to the source guidance to enable you to check this yourself and, if you think you might need professional advice, use Help Finder to find pro bono support.

Register Now
We are very grateful to the organisations below for the funding and pro bono support they generously provide.

With 40,000 members, growing by 2000 a month, we are the largest and fastest growing UK charity community. How We Help Charities

View our Infographic

Charity Excellence Framework CIO

14 Blackmore Gate
Buckland
Buckinghamshire
United Kingdom
HP22 5JT
charity number: 1195568
Copyrights © 2016 - 2024 All Rights Reserved by Alumna Ltd.
Terms & ConditionsPrivacy Statement
Website by DJMWeb.co
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram