May 26, 2022

As the war between Russia and Ukraine continues, cryptocurrency has become an essential tool for foreign donors to support Ukraine. In this context, the success of crypto fundraising campaigns reflects this year’s broader trend of crypto holders giving away their coins to support charities.

Charitable organizations around the world are asking for donations in cryptocurrencies to help Ukraine. This is reported by the popular platform for providing cryptocurrency Endowment. raised over $2 million For charities that have supported Ukraine since the start of the war at the end of February. Another non-commercial crypto platform The Giving Block. Already raised $1.5 million Yesterday announced a campaign to raise $20 million in crypto for its Ukraine Emergency Response Fund, in crypto donations, and to support various established nonprofits, including United Way Worldwide and Save the Children. Campaign webpageI

However, these are not the only non-profit organizations that want to use cryptocurrency as a donation tool. According to one source, the Ukrainian government has already raised more than $54 million in bitcoin, ethereum, tether, polcadot and other cryptocurrencies, mostly to fund its military. new website Details of partnerships with several major crypto exchanges. The website states that the Ministry of Digital Transformation of the government of Ukraine is the leader in attracting donations through cryptocurrencies, and new partner companies will help convert these donations into fiat currency and send them to the central bank of Ukraine. ,

While the invasion of Ukraine certainly served as a catalyst for donors to give away cryptocurrency, the mechanism has become extremely popular over the past year with donations of all kinds.

The foundation, which allows cryptocurrency donations to any 501(c)3 non-profit organization in the US, increased donations on its platform 100-fold from $253,000 to $28 million last year, the company said. More than $69 million was donated in 2021, up 1,558 percent from the previous year, according to Giving Block’s annual report.

All of this begs the question: why did donors choose to give crypto rather than cash?

James Duffy, co-founder and CEO of The Giving Block, told gaming-updates that tax breaks are the main motivator.

“If you are someone who wants to do charity work and you have a valuable cryptocurrency, then a valuable cryptocurrency is the most profitable way for you to do it,” said Duffy.

For US donors, there is a significant difference between giving crypto to an established 501(c)3 organization and donating to another cause, such as a foreign government in the case of Ukraine. The former often gives the payer an attractive tax advantage, while the latter does not.

Donating cash to a legally recognized non-profit organization qualifies as a tax deduction for donors, allowing them to reduce the amount of taxes they pay to charity. Donating assets like cryptocurrencies or stocks can be even more rewarding than giving cash because it guarantees Another important tax incentive apart from depreciation.

Typically, if cryptocurrency holders sell their coins after a rise in value in order to make a profit, they must pay up to 37% of that profit in the form of capital gains tax. If they donate coins instead, they usually don’t have to pay capital gains tax. The double tax incentive helps explain why cryptocurrency holders, who typically want to hold as much digital currency as possible – in the hope that it will continue to rise in value – end up donating it instead of actually owning it. cash.

Donor funds are a popular means of donating assets – they allow individuals to receive an immediate tax deduction when they deposit cryptocurrencies, other assets, or cash into a specific account, which can increase in value over time. The account holder can ultimately use the funds in the non-profit account as they see fit, and they do not have to spend all the capital at once. Charitable foundations Fidelity, Endowments, and The Giving Block offer donor funds that can accept cryptocurrency.

Duffy said that while tax incentives may make it easier for donors to get involved in crypto, it is not the only driving force behind cryptophilanthropy. cryptocurrency donors in general more likely He said he donates more than donors who give shares or cash.

“If you are into crypto, especially new to crypto, you are probably interested in being on the cutting edge and want to be part of something that is changing the world,” Duffy said.

As with most trends in the crypto world, a sense of identity and community is central to encouraging participation. Smart charities are taking advantage of this cultural phenomenon, though most of them convert donated crypto to fiat before applying it.

“Any non-profit organization that creates space for cryptocurrency users is superior to others,” Duffy said.

While some large non-profit organizations such as Save the Children have been able to create cryptocurrency donation programs given their resources and scale, many medium and small charities have not taken advantage of this option. Cryptocurrency donations are a small part of charitable donations in general – only donations come from the United States. The total amount is estimated at more than $470 billion. According to Giving USA, the number of donors in 2020

Non-profit organizations may be hesitant to intervene due to concerns about the connection of cryptocurrencies to scams and scams. it was noticed regulators, including U.S. Securities and Exchange Commission Chairman Gary Gensler. Others do not have the technology or infrastructure to successfully support accepting donations in cryptocurrencies.

Small non-profits without a strong online presence sometimes think that adopting cryptocurrency might be a “lottery ticket” for them, Duffy said. He cautioned against this kind of thinking, stating that non-profit organizations without an online presence should “stick to the basics” before creating crypto integration.

According to the annual reports of both groups, Ethereum was the most popular cryptocurrency used for donations on the Endowment and Giving Block platforms last year. Last year, it overtook other cryptocurrencies to become the most popular cryptocurrency on both platforms, beating previous favorites, Bitcoin and Chainlink.

However, cryptocurrency donations were not limited to coins – NFT charitable projects were also gaining popularity among donors. For example, popular NFT artist Pplpleasr used the donation platform to donate the proceeds of his art to the Stand With Asian Community Fund. According to the two companies’ annual reports, The Endowment and The Giving Block alone received about $20 million in combined NFT donations on their platforms.

NFTs, in particular, can unlock long-term donation flows for nonprofits. The Solana-based NFT marketplace Metaplex allows creators on its platform to support charities with regular royalty payments through their NFT sales by integrating with the launch of the Change donation API.

The creators of Web3 see the NFT donation as an opportunity to “leave a legacy with their work,” co-founder Sonia Nigam told gaming-updates.

“This creator is about utility, not traditional philanthropy. Smart contract technology allows the effect to remain in the product and then be transferred forever,” Nigam said.

“We will see how the NFT collection will be launched and they will set a goal, [for example] 2% of all secondary sales go to the lifelong fight against climate change. Now, with every resale, the manufacturer’s original intent is never lost, which is what they really care about. And for nonprofits, opening recurring donation channels is always the number one goal.”

While crypto donations have gained popularity over the past year, a quick fundraiser to support Ukraine, especially this month, could act as a catalyst for the crypto community to support other causes.

Vitalik Buterin on gaming-updates (Ethereum Foundation) Disrupt SF 2017

Russian-born Ethereum co-founder Vitalik Buterin recently talked about the potential unleashed by recent campaigns to support the country. conversation on twitter Last week, it was organized by the team of crypto investor Kathy Hawn.

“I think that many people who are really important [the blockchain and crypto space] are in space because they want to support freedom, support more democratic ways of organizing, and generally support people’s ability to live their personal and financial lives in a mostly peaceful way,” Buterin said.

According to him, violations of these rights in Ukraine have attracted the attention of the crypto community, which is part of raising awareness of the fact that many people working on large crypto projects are Ukrainians themselves.

The success of the cryptocurrency donation campaigns in support of Ukraine has shown that cryptocurrency “can be a very good way to raise money very quickly,” Buterin said.

Leave a Reply

Your email address will not be published.