If you haven’t noticed, the crypto universe has been creeping up slowly and is starting to engage us in ways that were heretofore unknown to many of us. Suddenly, crypto seems to be everywhere. Haven’t you noticed?
What grabbed my attention recently was a front-page headline on New Jersey’s Art of Living at The Jewish Home Family, a newsletter by The Jewish Home Foundation at Rockleigh. An eye-catching headline screamed: “Now Accepting Crypto Donations” with the subheading “Jewish Home Foundation Now Accepts Cryptocurrency.” Wow!
The article on page 1 of that newsletter quotes the Jewish Home Foundation Board president as follows: “Cryptocurrency is a new reality in the world of finance and is growing rapidly in fundraising, as well.” He continued, “Just as we strive to provide the best and most innovative care to our elders, our fundraising efforts also reflect that drive to offer the best-in-class services to our donors.” Wow x 2!
And then, a few weeks later, I spotted an ad by the Jewish Federation of Northern New Jersey in the March 24 issue of The Jewish Link of New Jersey and its headline screamed: “Go with Crypto—Cryptocurrency donations will be matched dollar-for-dollar.” Wow x 3!
I could carry on with more such examples, but there is one I really must share. I walked into my dog groomers’ salon and prominent on the reception desk was a big sign: “Now accepting Crypto!” Wow x 4!
What’s going on?
In a discussion with the owner of the salon, he told me that he began to offer this option at the beginning of 2022 and guess what? Many clients are paying him in cryptocurrency. The difference between his proprietary establishment and nonprofits is that he is willing to “let the cryptocurrency ride,” even though it’s a volatile currency. He said “I’m a gambler and I have seen in this era of inflation major increases in my crypto.” Nonprofits, on the other hand, may pay an exit fee of 1% or more to liquidate the crypto, no different than stocks that are donated to them. But they don’t dare play with donor monies.
FreeWill, a privately held company, says it “builds technology to make the largest and most impactful charitable donations easier for donors to give and simpler for nonprofit organizations to receive.” Patrick Schmitt, the co-CEO, indicated in a recent circular about a webinar he led that “Cryptocurrencies are booming in popularity, with the total value of all crypto recently passing the $2 trillion mark. (Forbes magazine April/May issue claims $3 trillion.) And as crypto is used and invested in more every day, it’s becoming even more important for nonprofits and fundraising.”
Continued Schmitt: “The good news is that crypto owners are even more generous than the average investor. Nearly half of them donated over $1,000 to charity in 2020 (compared to a third of all investors) and one in three have donated crypto assets to charity.” He concluded: “For nonprofits that want to reach younger, charitable generations, crypto is one of the best avenues to do so. Yet, many fundraisers are still struggling to understand what crypto is, what it means for philanthropy, and how to secure these gifts.”
The largest trade association of nonprofit fundraisers in North America is the Association of Professional Fundraisers (AFP). Among seminar offerings this year was an educational program in mid-April for its membership called “Cryptocurrency.” It’s everywhere. A recent full page in Entrepreneur magazine, a monthly pitched to entrepreneurial investors, advertised the Cryptoworldcon in Miami at the beginning of April. The conference and trade show featured 14 speakers ranging from Jordan Belfort, the “Wolf of Wall Street” to various crypto experts and even patent and trademark attorneys. The January 2022 issue of Forbes promoted the same event.
Crypto madness is permeating society in ways never before imagined. And the nonprofit world needs to go about this carefully before it jumps on the crypto wagon. A story in the December 13, 2021 issue of Forbes carried a cover story titled “The Croesus of Crypto.” Croesus’ name is known for the saying “rich as Croesus,” meaning filthy rich. He was said to have derived his wealth from King Midas—you know, the guy with the golden touch. The story highlights the co-founder of FTX, a cryptocurrency exchange co-founded by Sam Bankman-Fried, who built a $22.5 billion fortune before his 30th birthday by profiting off the crypto frenzy. Except for Mark Zuckerberg, no one in history has gotten so rich so young. He claims he “wants his wealth to survive long enough to give it all away.” Are you standing in line yet?
Beware the hype, but do pay close attention to the growth of cryptocurrencies here and elsewhere. A headline in the Financial Post on September 8, 2021 shouts out: “Cryptocurrencies are fast becoming a fact of daily life in developing countries.” And why not? Their currencies are often unstable or failing. For example, in El Salvador, “the small central American nation became the first in the world to make bitcoin legal tender, meaning merchants from car dealers to coffee shops will be obliged to accept it as payment.” In fact, a Starbucks store in San Salvador has a designated “bitcoin register” for sales. Expect crypto ATMs to pop up in supermarkets, pharmacies and convenience stores.
According to Chainanalysis, a leading data company, it “ranks Vietnam first for crypto adoption worldwide—one of 19 emerging and frontier markets in its top 20, with only the U.S. among advanced economies making an appearance at number eight in 2021.” UsefulTulips.org tracks the use of cryptocurrency in the developing world. It relates that “sub-Saharan Africa has overtaken North America to become the geographical region with the highest volume of this kind of crypto activity.”
So, what does the future hold for cryptocurrency and nonprofit fundraising? It seems this will be the trend and not a fad. A February 10, 2022 story in The NonProfit Times declares that crypto donations skyrocketed in 2021. It states: “The annual volume of crypto donations jumped from $4.2 million in 2020 to $69.6 million in 2021, an increase of 1,558%, according to the annual report. The average crypto donation was $10,455, up 236% from $3,109 in 2020. On average, nonprofits received $69,644 in crypto donations in 2021, via The Giving Block, an increase of 66% from the average $44,000 in 2020.” The Giving Block is a Washington, D.C.-based firm that helps nonprofits accept donations of cryptocurrency.
We are barely skimming the surface of this issue in this article. We still have much to learn. My best recommendation to nonprofits is to carefully develop policies and procedures on how to handle crypto donations. Otherwise, you may fall prey to the old joke (in its new form) of how do you make a small fortune with cryptocurrency? Start with a large fortune.
Norman B. Gildin is the author of the recently released book on nonprofit fundraising “Learn From My Experiences.” He is the president of Strategic Fundraising Group whose singular mission is to assist nonprofits raise critical funds for their organization. His website is at www.normangildin.com.
