As the adoption of cryptocurrencies continues to rise, a growing number of charitable organisations are embracing digital assets as a fundraising tool. Tech-savvy donors are also beginning to recognize the advantages of giving crypto over cash.
The Appeal of Crypto Philanthropy
Crypto philanthropy offers global inclusivity, overcoming geographical constraints and democratising giving across borders. Powered by blockchain technology, cryptocurrencies ensure transparency via publicly logged transactions that build trust between donors and nonprofits. This transparency enables contributors to verify the real-time impact of their donations. Moreover, crypto philanthropy often involves significant tax advantages, such as capital gains tax exemptions for cryptocurrency donations and deductions from the donor’s overall gross income. Offering crypto donation options often serves as a powerful way for nonprofits to bring donors on board.
Increasing Number of Nonprofits Accepting Crypto
The growth of crypto philanthropy is evident in the increasing number of nonprofits embracing cryptocurrencies as a fundraising tool. In 2022, more organisations than ever joined platforms like The Giving Block, a leading crypto philanthropy platform. This surge in participation reflects growing interest and trust in crypto giving. Nonprofits of all sizes, from grassroots initiatives to established charitable organisations, are recognizing the potential of cryptocurrencies to drive their mission-driven initiatives forward.
Crypto Philanthropy’s Outperformance
When comparing the rise of crypto philanthropy to overall crypto market dynamics, it becomes clear that crypto giving has consistently outpaced price growth. The Crypto Philanthropy Adoption Index (CPAI), which measures the total value of crypto donations compared to the average price of Bitcoin over time, demonstrates this trend. In 2022, crypto donors collectively gave US $172 for every dollar in Bitcoin’s market value, indicating a 41% increase compared to the previous year. This outperformance showcases the resilience and potential of crypto philanthropy.
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Forecasting the Growth of Crypto Philanthropy
Based on historical data and trends, experts forecast significant growth in crypto philanthropy over the next decade. The Crypto Philanthropy Adoption Index predicts that by November 2032, crypto donations could drive US $10 billion to nonprofits. This projection, based on the expected rise in overall crypto market capitalisation, highlights the increasing influence of cryptocurrencies in the realm of charitable giving. As the acceptance and adoption of cryptocurrencies continue to expand, crypto philanthropy will likely play a significant role in shaping the future of philanthropy.
Stablecoin Donations on the Rise
As market uncertainty persists, stablecoins have gained popularity as a donation method within crypto philanthropy. Stable-value cryptocurrencies, such as USD Coin (USDC), have become the most donated cryptocurrencies, accounting for a significant portion of donation volume. Stablecoins offer stability in value, making them an attractive option for donors seeking to contribute without being impacted by the volatility of other cryptocurrencies like Bitcoin or Ethereum.
The Rise of Web3 Philanthropy
The growth of crypto philanthropy extends beyond traditional cryptocurrencies and includes emerging trends such as NFT philanthropy and decentralised autonomous organisation (DAO) philanthropy. These innovative approaches to giving have gained traction, highlighting the versatility and adaptability of crypto philanthropy. The Web3 community, consisting of individuals passionate about blockchain technology and decentralised platforms, has come together during crises to make a meaningful impact through crypto donations.
Leading Nonprofits Embracing Crypto
The acceptance of cryptocurrencies by leading nonprofits is another significant trend in the realm of crypto philanthropy. Almost half of Forbes’ list of “America’s 100 Top Charities of 2022” now accept cryptocurrency donations, a substantial increase compared to previous years. Many of these crypto-friendly charities utilise platforms like The Giving Block to facilitate their crypto fundraising efforts. This growing acceptance of cryptocurrencies by prominent nonprofits demonstrates the increasing recognition of their value and potential contributions to the charitable sector.
Tax Literacy in Crypto Giving
Tax incentives and benefits associated with crypto donations have been instrumental in driving the growth of crypto philanthropy. Donors are often motivated to choose crypto over cash due to potential tax advantages appealing to the digitally native base of cryptocurrency users. As crypto remains one of the top-performing assets of the decade, more individuals are turning to online platforms to explore the option of giving crypto instead of traditional assets like stocks. This trend highlights the importance of tax literacy in encouraging more donors to embrace crypto philanthropy.
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