As the roster of charitable causes in the age of GoFundMe increases seemingly exponentially, and the need to involve young adults grows more imperative, smart organizations look for reliable new ways to engage new donors.
Jewish Federation of Northern New Jersey, a leader in identifying strategic growth opportunities, recently announced a new forward-looking policy that will make them more accessible to members of the millennial (young adults, ages 24-40) and Gen Z (teens and young adults, ages 20-23) cohorts. Starting in late November, the Jewish Federation started accepting cryptocurrency for contributions.
Bennet Pittel, a junior at George Washington University in Washington, D.C., whose family lives in Norwood, New Jersey, has been involved as a volunteer at the Federation since 2012. He praised this new move and understands its value well; he has been purchasing cryptocurrency since 2018 and currently invests in it.
As Pittel explained to The Jewish Link, “Cryptocurrency is digital currency that is decentralized in every way and not a fiat currency (with a value backed by a central government).” He pointed out that Bitcoin, specifically, is a scarce commodity which adds to their value. In a recent article in Forbes.com by national philanthropy leader Kristen Jaarda, she noted the growth of cryptocurrency: “The market cap for the top 10 cryptocurrencies exceeds $1 trillion and there are over 100 million active cryptocurrency users.”
Pittel said that the Jewish Federation’s new policy is a smart move: “Millennials and Gen Z’ers will get more involved because of the ease of giving. This is due to the ability to avoid capital gains taxes by donating cryptocurrency directly to the Federation, as opposed to selling and donating the proceeds, as well as the ability to write off the current market value of the cryptocurrency at the time of the donation on their taxes.” Pittel plans to contribute cryptocurrency to the Jewish Federation and forecasts that others will as well.
Laura Freeman, marketing director of the Jewish Federation of Northern NJ, shared that according to their research, 49% of millennials have cryptocurrency, so this policy move made a lot of sense. She said that the Jewish Federation will be working with GivingBlock.com, a respected online broker and currency trader, to accept cryptocurrency contributions and to promptly convert them into cash. She added that Federation is also prepared to use their partnership with GivingBlock.com to assist other Jewish nonprofits in their area in accepting cryptocurrency.
Incoming Jewish Federation President Daniel Shlufman explained some of the thinking behind Federation’s decision to accept cryptocurrency. “Jewish Federation has always accepted appreciated stock as payment for donations. Accepting cryptocurrency for donations is really just an extension of that payment option. It also is an acknowledgment of the acceptance of cryptocurrency as a mainstream investment for many of our donors, especially both younger ones and those donors who have portfolios that include a more aggressive investment strategy who may be looking for tax-advantaged ways to lock in some of the large and recent gains.
“There are two significant and unique aspects of cryptocurrency that makes it enticing for both Federation to accept and for the donors to use this to pay their gifts. The first is that over the past two years, the cryptocurrency market has exploded in both market size and value of the various coins. So there are more people who own it now, which makes Jewish Federation of Northern New Jersey’s decision relevant and forward-thinking for a charity, as only two other Federations accept it as of this time.”
Shlufman continued: “Also, anyone who has invested in it more than a year ago (which is the capital gains holding requirement anyway), even if it was a small sum, is holding appreciated assets (depending on which coins they have and exactly when they bought them) of anywhere from three to 100 times their original investment amount in this short period of time. As such, if the donors sell the crypto (as opposed to donating it) there will be large capital gains tax. If they donate the crypto, they will avoid the tax, which will increase the value of each gift by 20% automatically with a full deduction to the donor on the appreciated amount.
“The other unique nature of the cryptocurrency is its extreme volatility,” Shlufman added. “Since it is now at its highest point ever, donors have the opportunity to both (i) save on the capital gains taxes as noted above but also, (ii) take part of their very large gains, before there is an inevitable correction in this market and make a donation, potentially a bigger one. Now the owners of this currency can share the upside of this tremendous appreciation with Jewish Federation as well as avoid any possible future downturns in this market on the money that gets donated.”
“Federation’s overall mission is to meet the community where they are,” said Jason Shames, CEO of Jewish Federation of Northern NJ. “This is why we have programs and services for community members of all ages. Accepting cryptocurrency for donations is an extension of that. Cryptocurrency has clearly become a viable form of currency that is widely accepted in the world of philanthropy, and I am proud that Federation is establishing itself as a leader in this arena. Accepting crypto will be very meaningful to our younger donors as well as donors who have a diverse and broad financial portfolio.”
For more information on Jewish Federation of Northern NJ, see: www.jfnnj.org.
Harry Glazer welcomes feedback on his news coverage and suggestions for future stories. He can be reached at [email protected]