Crypto Philanthropy’s Driving Factors: What Donor-Advised Fund Programs Need to Know

Investing in and trading cryptocurrencies has become more than just a trend that’s popular among Millennials. The term “crypto” is now a household word that is associated with sports team sponsorships, celebrity endorsements, digital art and, of course, finance. But you might not know that crypto has also become a component of the charitable fundraising ecosystem. 

While most people don’t get into crypto to give it away, many come to crypto with a sense of idealism, a hope that crypto can better the world—either by proposing modern alternatives to established financial systems, or by providing economic empowerment opportunities to the masses. The practice of Crypto Philanthropy, or donating cryptocurrency to support charitable causes, is a logical extension of the ethos driving millions to start investing in Bitcoin, Dogecoin, and other crypto assets. 

With several trends pushing the mainstream toward crypto adoption, we anticipate seeing a rise in cryptocurrency donations. Read on to learn about the key factors creating a groundswell of new crypto donors and crypto-friendly nonprofits, and several ways that our partner, The Giving Block, is helping to leverage the momentum for good: 

Trend #1: Increasing Market Cap and User Growth

The cryptocurrency user base is growing at an incredible pace. Earlier this year, the number of crypto users doubled from 103 to 206 million in just six months. With a current total now above 220 million, it won’t be long before the overall headcount reaches 1 billion users. What attracts these users is a sense that they can get a better return on investment by trading crypto versus traditional stocks and assets. 

Though crypto assets have a reputation for volatility, many traders are blending short-term strategies with long-term projections, expecting an increase in value over time. Earlier this month, the global crypto market cap hit $3 trillion for the first time, fueled largely by the appreciation of assets like Bitcoin and Ether. 

Given the anticipated growth of crypto trading, here’s what the future could hold:

  • A larger pool of potential crypto users means more individuals with expendable income 
  • Greater diversity of high-performing crypto assets means more opportunities to “invest early”
  • Higher valuation of crypto assets suggests an increasing average donation size for nonprofits and DAF programs 

Trend #2: Crypto Users Becoming Crypto Donors

As new crypto users make gains on their investments, they realize that they owe taxes on their crypto. Gradually, these investors are discovering that by donating crypto to charities, they can greatly reduce or even eliminate their capital gains tax liabilities. Taxes aside, many simply enjoy bettering the world by donating cryptocurrency to a charity. The trouble is that many crypto users don’t know how to identify and vet charities that accept crypto donations, or simply don’t have the time to set aside hours for research.

By creating 15 new Cause Funds, The Giving Block is helping speed up the time it takes for crypto users to become crypto donors. The Cause Funds are set up to distribute donations equally to multiple nonprofit organizations focused on similar goals. This approach reduces friction in the crypto giving experience by reducing the time required to research charities. With Cause Funds, users can search by cause areas such as animals, education, and food and water, and make a gift to all the charities within each cause with a single transaction. 

As the trend of crypto giving increases, DAF programs should keep in mind that crypto users are:

  • Using crypto philanthropy as part of their tax reduction strategy
  • Becoming more familiar with crypto philanthropy giving options
  • Developing a growing interest in supporting several causes

Trend #3: Nonprofits Accepting Crypto

Over the past few years, crypto philanthropy has become an established form of giving for crypto users. By the same token, it is also a growing revenue stream for the nonprofits receiving these donations. Once several early-to-adopt organizations found success fundraising crypto, it was only a matter of time before others joined the party. 

Working with hundreds of nonprofits, The Giving Block launched The Crypto Adoption Fund to keep the trend going. Every month, the fund distributes evenly to every US-based charitable organization using The Giving Block as their crypto fundraising solution. Donors who give to the fund help to even the playing field for smaller nonprofits without instant name recognition. 

For DAF programs, it’s important to note that nonprofits are:

  • Increasingly interested in cryptocurrency donations as a new revenue stream
  • Viewing the crypto community as a sustainable donor base
  • Remaining committed to crypto fundraising because of their success, in part through initiatives like the Crypto Adoption Fund

For Crypto Fundraising, The Future Looks Bright

In the worlds of finance, investing and philanthropy, cryptocurrency was once on the fringes. Today crypto not only has a seat at the table, it has become one of the most exciting, and fast-growing trends in fundraising. 

As crypto investors become more aware of their power to better the world through charitable giving, they will seek ways to maximize the impact of their donations. Through advertising and other outreach strategies, DAF programs can attract crypto donors by aligning themselves with their priorities and by better understanding the current cryptocurrency landscape. Together, they can make lasting change through charity.