Should Nonprofit Organizations Pursue Digital Currencies as a New Resource Development Opportunity?
The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.
By Sharif Shamroukh
September 25, 2021
Since the current pandemic started to affect all aspects of life, there has been an increase in reliance on virtual transactions. This includes ordering merchandise, virtual conferences and business meetings and even more opportunities to work from home and utilize virtual technologies to complete personal, work and educational duties. With all these new developments throughout a year and a half, residents of this planet started to live a new norm of life. The feeling of making virtual life more convenient became the main concern for every individual to keep our necessities and demands flowing as if we were physically present.
In the business, government and philanthropy sectors, reliance on virtual solutions increased dramatically to meet each entity’s needs. Nonprofit organizations, in particular, are no different in terms of moving towards more practical solutions for virtual presence. The pandemic created a new normal that every individual and entity needed to adapt to in order to keep official practices. The need was not limited to applying solutions for organizations’ services and meeting their clients’ needs; it also applied to how nonprofits gather contributions. The nonprofit sector relies primarily on contributions from various sources, including but not limited to individual donors who provided more than two-thirds of the total giving to charitable organizations, according to the Giving U.S.A. Foundation report for the year 2020.
Consequently, making online transactions increased to meet heavier reliance on the online world. Cryptocurrencies came into thought as a practical method to pay for and receive funds. A quick look at the figures of the crypto currencies’ Market Cap changes shows that since the beginning of 2019, the cryptocurrencies Market Cap has quintupled (It was over $400 billion in 2019, and today ranging around $2 trillion).
Moreover, it is essential to mention that cryptocurrencies have been used at gas stations, some hotels, and restaurants, for paying the dues of employees’ work at some local companies and at ATMs for digital currencies, which began to spread in many commercial centers. However, when someone reads through this specific market share or the value of virtual currencies in the market and realizes that it has this level of investments being circulated, interested individuals or organizations would start thinking of proper ways to have a slice of this crypto pie. Before making such a decision, one should learn more about this trend and decide whether it helps nonprofit organizations benefit from accepting this kind of currency.
First, let me highlight that one of the most famous crypto currencies’ moguls, the Russian-Canadian programmer and writer Vetalik Buterin, who is best known as one of the co-founders of Ethereum, donated over $1 billion worth of crypto coins to the India Covid Relief Fund, amongst other charities. Also, there are several nonprofit organizations created by the crypto communities to provide services and advocacy to various causes.
Second, government agencies in the United States and some other countries treat crypto as a recognized sort of investment. For example, the IRS treats cryptocurrencies as personal property and grants the donors of this property the same status that they give to in-kind contributions. Therefore, the donors may claim any contributions of cryptocurrencies that they make to their preferred charities as tax-deductible contributions, which hints to convince the individual donors to consider making their contributions through their cryptocurrencies. In addition, the tax-deductible will be equal to the fair market value of the donated crypto, besides other benefits to the donors that the IRS set.
Third, dealing with cryptocurrencies is all virtual, which means that those who are most considered tech-savvy and rely on online business to perform the majority of their activities will most likely consider contributing through cryptocurrencies that they own.
Fourth, when nonprofit organizations consider accepting crypto donations, they open their doors to the global communities. International gifts become easier and cross all boundaries, and also process all transactions instantly. This by itself is an excellent opportunity to expand the donor base for any nonprofit organization.
As a final thought, it became evident that digital currencies have increased their presence in various businesses, and this is expected to spread more. At the same time, governments worldwide started regulating trading cryptocurrency and its use, which makes this kind of currency more legitimate for the business world. Officials from the U.S. Federal Reserve stated a few weeks ago that they tend to find an appropriate formula to legalize dealing with digital currencies, which means that the near future will have more room for utilizing cryptocurrencies. Also, Britain is moving at the same pace to find a legal formula to accommodate the official circulation of digital currencies, according to a British Authority statement.
So, would this be convincing enough for nonprofit organizations to list cryptocurrencies as part of their diverse approach to increase their resource developments? The future will bring more about this trend, and nonprofits should be ready to claim their share of this increased move towards virtual phenomena.
Author: Dr. Sharif Shamroukh is a Senior Lecturer at the American Institute for Philanthropy Advancement, and frequently writes about various public policy issues. Also, Dr. Shamroukh provides consulting services to nonprofit organizations covering a wide range of topics that help achieve their missions.
Contact Dr. Shamroukh via e-mail: [email protected] or Facebook / LinkedIn / Twitter @DrShamroukh
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Should Nonprofit Organizations Pursue Digital Currencies as a New Resource Development Opportunity?
The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.
By Sharif Shamroukh
September 25, 2021
Since the current pandemic started to affect all aspects of life, there has been an increase in reliance on virtual transactions. This includes ordering merchandise, virtual conferences and business meetings and even more opportunities to work from home and utilize virtual technologies to complete personal, work and educational duties. With all these new developments throughout a year and a half, residents of this planet started to live a new norm of life. The feeling of making virtual life more convenient became the main concern for every individual to keep our necessities and demands flowing as if we were physically present.
In the business, government and philanthropy sectors, reliance on virtual solutions increased dramatically to meet each entity’s needs. Nonprofit organizations, in particular, are no different in terms of moving towards more practical solutions for virtual presence. The pandemic created a new normal that every individual and entity needed to adapt to in order to keep official practices. The need was not limited to applying solutions for organizations’ services and meeting their clients’ needs; it also applied to how nonprofits gather contributions. The nonprofit sector relies primarily on contributions from various sources, including but not limited to individual donors who provided more than two-thirds of the total giving to charitable organizations, according to the Giving U.S.A. Foundation report for the year 2020.
Consequently, making online transactions increased to meet heavier reliance on the online world. Cryptocurrencies came into thought as a practical method to pay for and receive funds. A quick look at the figures of the crypto currencies’ Market Cap changes shows that since the beginning of 2019, the cryptocurrencies Market Cap has quintupled (It was over $400 billion in 2019, and today ranging around $2 trillion).
Moreover, it is essential to mention that cryptocurrencies have been used at gas stations, some hotels, and restaurants, for paying the dues of employees’ work at some local companies and at ATMs for digital currencies, which began to spread in many commercial centers. However, when someone reads through this specific market share or the value of virtual currencies in the market and realizes that it has this level of investments being circulated, interested individuals or organizations would start thinking of proper ways to have a slice of this crypto pie. Before making such a decision, one should learn more about this trend and decide whether it helps nonprofit organizations benefit from accepting this kind of currency.
First, let me highlight that one of the most famous crypto currencies’ moguls, the Russian-Canadian programmer and writer Vetalik Buterin, who is best known as one of the co-founders of Ethereum, donated over $1 billion worth of crypto coins to the India Covid Relief Fund, amongst other charities. Also, there are several nonprofit organizations created by the crypto communities to provide services and advocacy to various causes.
Second, government agencies in the United States and some other countries treat crypto as a recognized sort of investment. For example, the IRS treats cryptocurrencies as personal property and grants the donors of this property the same status that they give to in-kind contributions. Therefore, the donors may claim any contributions of cryptocurrencies that they make to their preferred charities as tax-deductible contributions, which hints to convince the individual donors to consider making their contributions through their cryptocurrencies. In addition, the tax-deductible will be equal to the fair market value of the donated crypto, besides other benefits to the donors that the IRS set.
Third, dealing with cryptocurrencies is all virtual, which means that those who are most considered tech-savvy and rely on online business to perform the majority of their activities will most likely consider contributing through cryptocurrencies that they own.
Fourth, when nonprofit organizations consider accepting crypto donations, they open their doors to the global communities. International gifts become easier and cross all boundaries, and also process all transactions instantly. This by itself is an excellent opportunity to expand the donor base for any nonprofit organization.
As a final thought, it became evident that digital currencies have increased their presence in various businesses, and this is expected to spread more. At the same time, governments worldwide started regulating trading cryptocurrency and its use, which makes this kind of currency more legitimate for the business world. Officials from the U.S. Federal Reserve stated a few weeks ago that they tend to find an appropriate formula to legalize dealing with digital currencies, which means that the near future will have more room for utilizing cryptocurrencies. Also, Britain is moving at the same pace to find a legal formula to accommodate the official circulation of digital currencies, according to a British Authority statement.
So, would this be convincing enough for nonprofit organizations to list cryptocurrencies as part of their diverse approach to increase their resource developments? The future will bring more about this trend, and nonprofits should be ready to claim their share of this increased move towards virtual phenomena.
Author: Dr. Sharif Shamroukh is a Senior Lecturer at the American Institute for Philanthropy Advancement, and frequently writes about various public policy issues. Also, Dr. Shamroukh provides consulting services to nonprofit organizations covering a wide range of topics that help achieve their missions.
Contact Dr. Shamroukh via e-mail: [email protected] or Facebook / LinkedIn / Twitter @DrShamroukh
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