With Bitcoin gaining traction worldwide, charities have been seeing donations of the alternate currency skyrocket in recent years. Its use aims to streamline and cut costs for people trying to fund causes they care about.
Charity Begins…With Bitcoin?
As with all new technologies, Bitcoin’s rise in both price and adoption rate is causing industries to find niche uses for cryptocurrencies in ways previously unthought of. One of these niches is charitable giving. Charities around the world are able to revolutionize how they can accept funds from patrons willing to support their cause, and many are already moving towards integrating support for Bitcoin in their current systems.
World renowned charities such as the American Red Cross and Save The Children, set up right after the First World War to protect children in warring nations, have been benefiting from Bitcoin donations for years, having accepted Bitcoin since 2014. Partnering with payment processing companies such as BitPay further legitimizes Bitcoin’s effectiveness in this industry and entices other companies to accept it to fund their causes.
According to Fidelity Charitable, a donor-advised fund and the United States’ second-largest grantmaker, people gave a record-breaking $796 million in noncash assets last year. This includes Bitcoin as well as other alternate cryptocurrencies (altcoins).
The Benefits of Bitcoin-based Giving
Using traditional means of charitable giving, fees and taxes can quickly whittle away much of a donation. This means that only a portion of the giver’s donation will actually go towards their supported charity. Let’s use PayPal as an example. Every time a donor uses PayPal to make a donation, the payment processor automatically takes 2.2% along with a $0.30 fee whenever a donation is made.
So if you were to donate $100 to your favorite cause using PayPal, the charity would actually receive $97.50. That may not sound like a lot from the standpoint of an individual donation, but over the course of hundreds – if not thousands – of donations, it can really add up.
Bitcoin solves this problem because there are no payment processing fees associated with donating the cryptocurrency. If you donate 0.25 BTC to a charity, they will receive the full amount of bitcoin.
Another issue with most current donation models is the difficulty of cross-border donations. Generally speaking, a charity is limited to accepting donations in their home currency. This inability to accept donations from other countries can severely limit the pool of potential donors.
The current alternative is using a service to convert your money to the charity’s local currency, however, that incurs its own set of fees and taxes, often to the point where sometimes only half of what you originally gave reaches people in need.
Because Bitcoin is classified as an asset by most countries rather than a currency, donations using the cryptocurrency are not restricted by borders. Donors can give using bitcoin and the charities can then convert the donation to their countries’ home currency without paying any currency exchange fees.
Bitcoin donations also provide a level of anonymity for anyone who wishes to hide their identity. While this isn’t always wanted, for those who do not want to reveal who they are it allows more options for people looking to make a charitable contribution.
Do you think crypto-payments will take over as the primary form of donations for charities? Let us know in the comments below!
Images courtesy of American Red Cross, AdobeStock