Options for Receiving Cryptocurrency

Many brokerage firms are not yet equipped to hold cryptocurrency on behalf of clients.  To accept gifts of cryptocurrency, nonprofits may consider options such as the ones below.  Please note that these options differ in which specific cryptocurrencies they accept, and it is recommended to confirm in advance that an option can accept the desired gift.

For gifts in excess of $5,000, the IRS requires a qualified appraisal.  Charitable Solutions, LLC is equipped to provide qualified appraisals and currently charges a $600 appraisal fee.

• The Giving Block:  The Giving Block (TGB) is an online platform that enables charities to accept and liquidate gifts of cryptocurrency.  A wide variety of cryptocurrencies is supported.  The company can provide marketing and technology support.  TGB’s service also includes a listing on its own website and a giving widget for the charity’s website.  TGB offers two primary levels of service/support.  For its services, TGB charges an annual base fee ($2,500 or $5,000, depending on the service package) plus a 5% fee on gifts received.

• Schwab Charitable:  Charles Schwab has an affiliated 501(c)(3) entity that offers a donor advised fund (DAF) program.  Donors may establish a DAF with Schwab Charitable and contribute the cryptocurrency.  The cryptocurrency can then be liquidated, and then donor can direct that the cash proceeds be granted to another charity.  Schwab Charitable supports only a limited number of cryptocurrencies, and an exception must be obtained for cryptocurrency contributions of less than $50,000.  In addition to Schwab Charitable’s standard DAF administration fees, a fee of 1% applies to gifts of cryptocurrency.  These fees are borne by the DAF.

• BitPay or PayPal:  BitPay and PayPal are companies equipped to process cryptocurrency transactions in a similar fashion to the processing of credit card transactions.  For example, BitPay can process cryptocurrency transactions through a link on the charity’s website.  Payments are remitted to the charity as dollars in a merchant banking account.  Typically there is a 1% transaction fee associated with the payment/donation.  This format allows for very limited engagement on the part of the charity and simplifies receipting.  However, at this time few cryptocurrencies are accepted (primarily Bitcoin).

• Digital Wallet:  Cryptocurrency exchanges such as Gemini, Kraken, and Coinbase allow charities to establish digital wallets.  Digital wallets have similarities to stock gift accounts.  The charity can provide account information to donors for transfers into the charity’s account.  Digital wallets give the charity flexibility to either hold or liquidate the cryptocurrency gift.  However, the charity also assumes the accompanying risks of custody, volatility, liquidation, etc.  Digital wallet transaction costs vary.

Additional material regarding accepting cryptocurrency gifts may be found on the ECFA website.

Learn more about Cornerstone Management’s services: OCIO, Planned Giving, Gift and Estate Consulting, and Asset Management Consulting services.