Donate Bitcoin, Ethereum and other Cryptocurrencies To Help Children In Poverty

Cryptocurrency is also known as virtual currency or crypto. It is virtual or digital money in the form of tokens or coins. Designed as an alternative to sovereign fiat currency, cryptocurrencies can also be traded, bought and sold on exchanges with U.S. dollars and other traditional currencies.

Records of cryptocurrency transactions are kept in public, digital ledgers called blockchains. In essence, a blockchain is a group of people, called miners, who lend their computing power to verify other users’ transactions so that the same token or coin isn’t spent twice.

Most people think of Bitcoin when they hear the word Crypto, but thousands of other cryptocurrencies, such as Ethereum (ETH), Litecoin (LTC) and Dogecoin (DOGE) exist.

Bitcoin, launched in 2009, is the original cryptocurrency and the most widely used. It was designed with a finite supply of tokens/coins. Bitcoin Cash (BCH) is a new version of Bitcoin that features a faster verification process.

Several thousand digital currencies other than Bitcoin now exist. Collectively, they are called altcoin (alternatives to Bitcoin), and most have been developed to improve upon Bitcoin in some way.

Some altcoins use a different process to produce and validate transactions. Others might offer new features or an advantage like lower price volatility. Gemini Dollar (GUSD) is an example of a stablecoin, a class of cryptocurrency that attempts to offer price stability by pegging its value to the US dollar.

Many altcoins have little to no following or trading volume, but some, like Dogecoin (DOGE) and Ethereum (ETH), are immensely popular.

The value of cryptocurrencies changes daily. The crypto with the largest market capitalizations lately includes: Bitcoin (BTC), Ethereum (ETH), Cardano (ADA), Binance Coin (BNB), Tether, Solana, XRP, Dogecoin (DOGE), Polkadot (DOT), USD (USDC).

Donating cryptocurrency to nonprofits has several advantages. It’s a convenient and secure way to give to your favorite causes and help change lives. To donate cryptocurrency to Compassion, follow the steps in the form above and your donation will be complete in just a few minutes.

As with any other donation type, donating crypto qualifies you for the tax benefits associated with a charitable contribution.

Donating cryptocurrency is also one of the most tax-efficient ways to support a nonprofit. Since the IRS considers cryptocurrency to be a noncash asset, a direct charitable donation is a non-taxable event. In other words, you avoid paying the capital gains tax you would incur if you sold your cryptocurrency for more than you bought it.

Avoiding the capital gains tax through a direct donation also means that your gift to the receiving nonprofit is maximized. With Compassion, that translates into more help for children in need!

Thousands of charities across the world accept Bitcoin and other cryptocurrency donations. The easiest way to confirm whether your organization of choice accepts cryptocurrency donations (and which cryptocurrencies they accept) is to contact them directly.

Many cryptocurrency donation processing platforms, such as Engiven, The Giving Block and many Donor Advised Funds (DAFs), provide a list of nonprofit partners they currently work with. Engiven is the processing platform Compassion uses (see next FAQ ).

The Engiven platform is the software Compassion uses to process cryptocurrency donations. Engiven enables nonprofits like Compassion to securely receive cryptocurrency donations. Then those donations are exchanged for usable currency, such as US dollars.

Learn more about Engiven.

While Bitcoin is the largest and most widely accepted cryptocurrency, most charities who accept cryptocurrency donations work with a vendor to process them and can consequently accept dozens of different crypto donations.

Compassion works with Engiven to accept 39 of the most prevalent cryptocurrencies.

Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Litecoin (LTC), Zcash (ZEC), ChainLink (LINK), Orchid (OXT), Dai (DAI), Basic Attention Token (BAT), Amp (AMP), Compound (COMP), PAX Gold (PAXG), Ox (ZRX), Balancer (BAL), Curve (CRV), Decentraland (MANA), Kyber Network (KNC), Maker (MKR), Ren (REN), Storj (STORJ), Synthetix (SNX), UMA (UMA), Uniswap (UNI), Yearn.Finance (YFI), Aave (AAVE), Filecoin (FIL), Enjin Coin (ENJ), Bancor Network Token (BNT), 1inch (1INCH), Skale (SKL), The Graph (GRT), Loopring (LRC), Sandbox (SAND), Somnium Space (CUBE), BarnBridge (BOND), Sushi Swap (SUSHI), Injective Protocol (INJ), Livepeer (LPT), Dogecoin (DOGE)

Yes. It is lawful for a nonprofit to accept donations in the form of cryptocurrency. In March 2014, the IRS ruled that cryptocurrency is treated as property (or a non-cash asset) for tax purposes (IRS Notice 2014-21).

Engiven will immediately exchange your donated cryptocurrency for US Dollars at the current exchange rate. Then the proceeds will be deposited into Compassion’s bank account. Because Compassion does not directly trade in cryptocurrency, the organization will not hold any donated cryptocurrency for a potential rise in value.

Donors who provide an e-mail address will receive a PDF receipt from the Engiven platform. The receipt will include the type and number of coins donated, the date and time of the donation, the Compassion fund given to and other details.

A formal year-end tax receipt will also be available for download from Compassion’s website to donors who provide their name and e-mail address. It will detail crypto donations along with donations of any other type made to Compassion during that calendar year. Donors will be notified by e-mail when the year-end tax receipt is available, typically by mid-February.

A formal year-end tax receipt cannot be made available to donors who choose to give anonymously because the IRS requires each receipt to be made out to a named individual or company with a tax ID number.

Yes. Your tax deduction will be equal to the fair market value of the donated cryptocurrency as determined by a qualified appraisal (see next FAQ).

Since nonprofits are exempt from paying capital gains tax on the sale of assets, the full value of your cryptocurrency donation, along with your tax deduction, stays intact.

For example, suppose you purchase cryptocurrency for $3,000. Then, by the time you make a donation, your crypto valuation is $11,000. Since your direct donation is a non-taxable event, the nonprofit receives the full value of your donation — $11,000.

On the other hand, if you sold that cryptocurrency now valued at $11,000, you would pay $1,904 in capital gains tax (assuming a federal tax rate of 23.8% and no state or local taxes). Your donation of the after-tax proceeds would then be only $9,096.

For U.S. tax purposes, virtual currency transactions must be reported by the taxpayer, in U.S. dollars, at the fair market value on the date of the donation. If a virtual currency is listed on an exchange and the exchange rate is established by market supply and demand, the fair market value of the virtual currency is determined by converting the virtual currency into U.S. dollars at the exchange rate in a reasonable manner that is consistently applied.

As with credit card vendors, cryptocurrency processing vendors (in Compassion's case, Engiven), differ in their fees. However, in most cases the fees associated with accepting and converting cryptocurrency are similar to those associated with processing credit card donations.

#CryptoGivingTuesday, held annually in conjunction with GivingTuesday, is an opportunity to get involved in the largest occurrence of crypto fundraising and giving throughout the year. Established in 2019, the 2021 Crypto GivingTuesday saw a ten-fold increase in nonprofit participation compared to 2020.

#NFTuesday is another opportunity to donate crypto to charity. #NFTuesday is a celebration of the NFT community's desire to support nonprofits by donating the proceeds of auction projects to charity.

A Non-Fungible Token (NFT) is a digital file, often a photo, video or audio, that uses the cryptocurrency block chain to give proof of ownership. NFTs can be bought or sold on platforms like OpenSea and Rarible. Like virtual baseball cards, each one is unique and traceable. One draw to owning a NFT is the expectation that the value will go up over the long-term.

Currently, NFTs cannot be donated directly to Compassion. However, the proceeds of a NFT sold at auction can be donated like any other crypto donation.

HODL is a commonly used term in the crypto community that means Hold On for Dear Life. It is a popular way to express the desire to retain crypto investments for the long term.