Cryptocurrency and Philanthropy - Unlocking New Models of Giving
by Krista Pawley, Co-Founder, Head of Reputation and Impact, SingularityU Canada
After the shopping blitz on Black Friday and Cyber Monday, this Tuesday, December 3, marks Giving Tuesday, the movement dedicated to giving back and supporting charities and non-profits. And while thousands of charities around the world will use this opportunity to encourage donations, only 2 per cent of them accept cryptocurrencies – a huge miss given the untapped giving potential.
In Canada, adoption of cryptocurrency has grown significantly, with past or present ownership increasing from 3 percent in 2016 to ~9 per cent, and general awareness of bitcoin at a high of 89 per cent (in brief, bitcoin is the digital currency that utilizes cryptocurrency, which is the technology that acts as a medium for facilitating the conduct of various safe and secure financial transactions).
While some of the largest nonprofit organizations in the world, including the United Way and The Red Cross accept bitcoin donations, cryptocurrency donations are only accepted by 2 per cent of nonprofit organizations in the U.S., Canada and Europe. By focusing their efforts on traditional donation methods, many charities are missing a largely untapped market, where an enormous opportunity awaits.
SingularityU Canada Blockchain Faculty Anne Connelly prepared a report on the status of cryptocurrency donation programs at Canadian charities. Released on November 28, The Landscape of Cryptocurrency Donation Programs: Only 4% of Canadian Charities are Capturing This Lucrative Donor Market, contrasts interview results with Canadian charities against a survey sent concurrently to Canadian cryptocurrency holders to determine their giving preferences.
“The goal [of this project] was to show the gap between the volume of Canadians who own cryptocurrencies and would be willing to donate them, compared to the number of charities that accept them,” Connelly said.
Of the 163 Canadian charities contacted for this project (~4 per cent), responses were received from 115, with seven of them having a cryptocurrency program of some type. Yet perhaps the most meaningful takeaway is that, as a result of Connelly’s inquires, 24 charities expressed interest in setting up a program, if they did not already have one, which goes to show that there are a number of organizations that will participate, if prompted to.
The survey shared with the Canadian cryptocurrency community received 48 responses. Of those respondents, 90 per cent had previously donated to a charity using Canadian dollars, and 44 per cent were more likely to donate to a charity that had a cryptocurrency program, versus one that did not. Part of this, Connelly explained, is a reflection on the charity’s innovative mindset, and the notion that if they had a program, they would likely be more innovative across all aspects of their business, not just their fundraising programs.
Connelly holds that this group is the fastest growing donor segment in Canada, and one that will be even larger in the years to come. This community has a number of wealthy donor prospects (with five Canadians on Forbes’ Top 15 Richest People in Crypto list), yet few organizations that can cater to their needs.
As cryptocurrency donors differ greatly from traditional major donors, social-profits need to adopt a different strategy when approaching them, she noted.
This is because some early adopters of cryptocurrency are interested in the philosophy behind the organizations they support, including their approach to freedom of access to financial services. Crypto donors are not only interested in the fact that a charity accepts cryptocurrency, but also that the charity believes in many of the principles behind it.
A regulatory barrier also stands in the way of crypto-giving. Current Canadian capital gains tax regulations do not allow individuals to make a donation of cryptocurrency without paying capital gains tax. If the Federal Government wants to unlock this treasure trove of donations, regulatory changes need to be made.
The numbers and intent are there: Canadians are philanthropic, with those above the age of 15 (~23.8 million) donating to charitable and nonprofit organizations, and the average Canadian donating 0.53 per cent of their income each year.
Cryptocurrency holders have much to give, yet Canadian charities are largely overlooking this community. Ahead of the holiday season, charities should consider the inclusiveness of their outreach strategies, and understand the positive impact that may be made by embracing the changing donor landscape.