The mainstream acceptance of cryptocurrencies has recently become a hot issue. People consider digital currency (or crypto) as a way to participate in commerce without the authority of the government, which means that its value may remain steady in any circumstance, including during periods of political unrest.
Donating with cryptocurrency is also becoming increasingly popular. According to The Giving Block, a popular donation platform, more than $200 million in bitcoin is donated to non-profit organizations each year.
Nowadays, a large number of non-profit organizations accept cryptocurrencies. There are numerous advantages to donating in cryptocurrency rather than fiat currency. We’ll go over the five most crucial advantages of donating cryptocurrency to charitable or non-profit organizations in this article.
The use of cryptocurrency for charitable purposes has become increasingly popular in recent months.
Each year, more than $200 million is donated to non-profit organizations through cryptocurrency, according to The Giving Block.
Cryptocurrencies are popular because they provide transparency, speedier transactions, increased security, and tax efficiency.
Benefits of donating using cryptocurrencies
1. Optimizing tax efficiency
Some transactions are taxable, while others are not, according to the Internal Revenue Service. As a result, trading bitcoin for cash or items to donate to a non-profit organization is taxable, which means you will be taxed on the money you receive.
For example, if a man has $500 in crypto and sells it to earn cash to gift to a charitable organization, he will be taxed on the transaction, reducing the amount donated. As a result, rather than selling bitcoin to give, it’s much better to donate the cryptocurrency itself because, according to the IRS, it’s a tax-free transaction.
2. Low transaction cost and high speed
The costs of receiving a bitcoin donation would be lower than those of accepting a credit or charge card donation. For example, the total costs on Mastercard swaps could range from 2.2 percent to 7.5 percent.
3. It encourages transparency
Because the blockchain record is public, cryptocurrency donations are more transparent than previous methods. Furthermore, unlike traditional cash systems, which involve third parties to screen exchanges, cash mobility is more clear and transparent.
Cryptocurrency makes use of blockchain technology, which records all transactions without the intervention of third parties. On a blockchain, all transactions are permanently recorded and cannot be altered.
This means that donations may be traced and followed at any time, which can assist contributors in monitoring the organization’s usage of their contributions. Furthermore, because transactions on the public blockchain can be monitored by anybody, it can be utilized to prevent any type of donation mishandling.
4. Promotion of crypto circulation
One strategy to promote and expand cryptocurrency circulation is to donate cryptocurrency to a non-profit organization. The more crypto donations made, the more people become aware of the asset class.
Donating with cryptocurrency promotes the liquidity and use of cryptocurrencies. With this in place, the value of bitcoin will climb because it is very susceptible to increases in demand.
5. Giving in bigger amount of funds
When contributing in bitcoin, people are more likely to give more than when giving in cash or other forms of currency. You will be taxed if you sell your cryptocurrency, as previously stated.
As a result, if you intend to sell the cryptocurrency and donate the earnings, you will be providing less than the actual value of the cryptocurrency due to the tax intervention, which will reduce the amount of money you are obliged to provide.
The non-profit organization would have to pay more to cash it out, but its expenses would still be lower if they were deducted from the amount supplied. Another key aspect of crypto is that it appreciates over time, and by contributing it to a non-profit organization, you are giving them the possibility to have more than you gave them in the future due to its value.