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Accepting bitcoin

  • 1.  Accepting bitcoin

    Posted 12-17-2021 12:45 PM
    Would anyone be willing to share an example of their Gift Acceptance Policy segment on accepting gifts of crypto currency?  I'd love to look at how you modeled the language around accepting various types of crypto.

    We use bigcharts.com for establishing the value of publicly traded securities.  Is there a recommended platform for valuing various crypto currencies?



  • 2.  RE: Accepting bitcoin

    Posted 12-17-2021 02:11 PM
    Gwen, I typically just reference the fact that cryptocurrency is accepted without prejudice in the same section as all other forms of security.  You might want to include language similar to closely-held stock for any cryptocurrencies not commonly traded.

    However, I tell my clients to not include this in their GAP until they have already established a financial relationship with a crypto exchange and have acquired a wallet.  Either that or you have formed a partnership with a third-party vendor for executing the acceptance and sale.  If I had to bet, more organizations go that route and pay the 1-2% commission.

    Regardless, you don't want to publicly say you accept crypto without a way to do so.

    As to your question regarding values, I am sure there are many sites.  CoinMarketCap is a good one, I think because it makes it very easy to see historical values:


    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987






  • 3.  RE: Accepting bitcoin

    Posted 12-17-2021 03:43 PM
    Yes, we're looking into various avenues to be able to accept gifts of crypto currency, and if so, how we would need to update our policies to reflect that.

    You mention a 1-2% commission for a third party vendor. We've talked to several vendors, but not one that is solely commission based.  The vendor we liked the most was The Giving Block, but the annual fee seemed cost prohibitive at ~$2,500 + fees, (regardless whether any crypto is exchanged), without having a willing donor in the wings ready to give.  Are there vendors out there we could work with who don't begin charging fees until you have an actual transaction?







  • 4.  RE: Accepting bitcoin

    Posted 12-17-2021 03:49 PM
    Check the archives!  Several Sisters have mentioned going this route and mentioned the 1-2%.  You might also check with your primary bank as they may have a suggestion.

    John H. Taylor 
    919.816.5903 (Cell/Text)

    Big Ideas; Small Keyboard





  • 5.  RE: Accepting bitcoin

    Posted 12-17-2021 03:50 PM
    That was supposed to say listers - not sisters ��

    John H. Taylor 
    919.816.5903 (Cell/Text)

    Big Ideas; Small Keyboard





  • 6.  RE: Accepting bitcoin

    Posted 12-19-2021 10:07 AM
    Gwen, I found this post from Isaac earlier this year.  It was the second time someone voted against Giving Block:

    We did some research in this area recently. We liked Bitpay, it's inexpensive, and in particular, has a value guarantee on liquidation, so that if you choose to instantly move donations into USD, they guarantee that the amount you get is equal to the value of the coin at the time of the transaction. This means that you don't have to record Crypto like stock transactions, since the amount you get is always equal to the amount you give, and there's no need for substantiation of value by hi-low of the market.

    We did not like Giving Block, which is trying to create a donor marketplace for crypto, because it was pretty expensive. But if the network they build gets large enough, it may be worth it!


    Thank you,
    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987







  • 7.  RE: Accepting bitcoin

    Posted 12-20-2021 10:37 AM
    Thanks John - our opinions of Giving Block have not changed, and we still recommend BitPay. Other options include:

    Engiven a donation platform with substantial fees, but also substantial functionality - a Giving Block competitor

    Every.org accepts crypto and regrants it to you, they are a 501c3 and handle compliance and receipting. It's free to you, and only a 1% fee from Coinbase in the background, but they're limited in the currencies they can handle and in the checkout process, so they're a good option for taking the occasional gift, but not for including crypto in your existing checkout experience

    You can also direct donors to Fidelity Charitable, who can facilitate crypto transactions a few ways. A Giving Account is probably the least expensive option. You won't really be accepting crypto, so much as using Fidelity as a giving vehicle. 

    It is my view that very shortly, crypto acceptance through existing platforms and donation carts will be ubiquitous.

    In terms of the Gift Acceptance Policy, I broadly agree with John on how to handle it, but would propose that you review aspects of your GAP and/or investment policy that are especially relevant to crypto, including;
    1. Your policy for holding vs cashing out crypto
    2. Policies for anti-corruption reviews when accepting large crypto assets (and more generally, accepting/rejecting/returning donations from "bad boys")
    3. Specifying currencies you will not accept b/c of environmental impact, or establishing environmental impact as a reason to decline to accept certain crypto assets
    4. Specifying your position regarding anonymous gifts (for large crypto donations this isn't a huge problem, as the tax benefits are kind of the point, but on a policy level it's important to address your position on anonymous crypto)
    ---
    There's a big difference between supporting the use-case of accepting crypto online as part of the set of payment methods you accept for donations that are $3k and under; and between the use-case of accepting major gifts of crypto. Having clarity on your strategy is the key in figuring out how to move forward. Feel free to reach out directly if you have further questions!



    Thank you,
    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:







  • 8.  RE: Accepting bitcoin

    Posted 12-18-2021 10:21 AM
    We are going to use GiveCampus to accept crypto. We are in the process of setting it up.

    ------------------------------
    Therese Morris
    Advancement Data Manager
    St. Paul's School
    Concord, NH United States
    tmorris@sps.edu
    ------------------------------



  • 9.  RE: Accepting bitcoin

    Posted 12-20-2021 02:43 PM
    Have any of you, or do any of you know of any university that said no, we will not accept cryptocurrency and why?

    Rob Saunders
    AVC UNC-Greensboro





  • 10.  RE: Accepting bitcoin

    Posted 12-20-2021 03:03 PM
    I have only encountered one.  And that was because the Business Office thought they had to hold onto the crypto until someone bought it.  They were not aware, at the time, of how easily negotiable they were.

    I have heard a few, "Not right now" responses - but those were only because they had not set up a process for acceptance.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987







  • 11.  RE: Accepting bitcoin

    Posted 12-20-2021 03:05 PM
    I've heard issues with energy usage, fossil fuel needed to mine it.






  • 12.  RE: Accepting bitcoin

    Posted 12-20-2021 03:15 PM
    I'd only heard that to be an issue with dilithium crystals. ��

    Yes, I am aware that this industry consumes considerable energy resources.  Bitcoin more so than many other forms of crypto.  However, I've not run into an institution that refused to accept crypto for that reason.

    BTW, if you are interested in less impactful forms of crypto, here's a good article:


    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987







  • 13.  RE: Accepting bitcoin

    Posted 12-20-2021 04:48 PM
    I saw an interesting environmental impact analysis comparing Bitcoin to USD, https://sites.tufts.edu/digitalplanet/how-green-is-the-greenback-an-analysis-of-the-environmental-costs-of-cash-in-the-united-states/ the upshot of which is that US dollars are 10x more harmful to the environment than Bitcoins.

    The only org I know that refuses to accept Bitcoin (not all crypto), is Greenpeace. 


    Thank you,
    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:







  • 14.  RE: Accepting bitcoin

    Posted 01-14-2022 04:46 PM
    Hi Isaac,
    Thanks for listing out these recommendations and options.  This is probably a very elementary question but with the options that you listed here, is BitPay the only one that would require us to establish our own wallet? 
    Gwen






  • 15.  RE: Accepting bitcoin

    Posted 01-18-2022 05:25 PM
    Gewn, Bitpay does not require a wallet. If you do not have one, your crypto transactions will all be immediately liquidated and settled to the bank account you provide. The other options also do not require wallets.


    Thank you,
    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:







  • 16.  RE: Accepting bitcoin

    Posted 01-21-2022 12:27 PM
    Hi Isaac,
    Yet another follow-up question to your helpful email:

    A member of my team has been advised that we go the route of directing our donors to gift their crypto to a DAF; then request that the DAF issue a grant to us from the proceeds.  It sounds like this might be what you were explaining with the option you list above, referencing Fidelity.  In this case, would the user have to establish a DAF in order to make this gift?  If that's the case, it seems that changes the user experience, assuming the demographic of the "average" crypto donor means they likely don't already have a DAF established, and that adding this step to the giving process makes it less easy for them.  Or am I mistaken?

    My colleague was definitely attracted to this option because they felt it removes any potential risk, exposure, Form 8282 reporting tasks, etc from our plate.  They were less concerned about how it would impact the user experience, which is what I'm wondering about.

    Thanks!






  • 17.  RE: Accepting bitcoin

    Posted 01-24-2022 09:11 PM
    You got it exactly - that's the downside. There are some community foundations that enable this type of transaction without needing to go through establishing a DAF account for the donor, and there's at least one nonprofit that is essentially functioning as a clearinghouse for these types of transactions, but I don't feel comfortable recommending them.

    FYI, the way that Fidelity handles their crypto donations is through an account with Coinbase, who liquidates the coins and returns cash. If it's safe enough for them, maybe that helps make the case for you internally? So long as you're liquidating on receipt, there's not much risk. I can also put you in touch with Fidelity's appraiser, who is a very nice and affordable CPA in Florida. 

    Thank you,
    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:







  • 18.  RE: Accepting bitcoin

    Posted 02-07-2022 12:09 PM
    We had a call with a representative from Bitpay last week, and indeed they seem to be a great route to go for accepting gifts of crypto currency: low risk, low fees, easy to set up.

    I was unsure though of a comment the Bitpay representative made.  He said that we never have to take custody of crypto, Bitpay does that and then settles out to us in USD in the form of an EFT transfer. But they recommend that we treat it as a cash donation. Their transaction report shows both the USD value and the exact crypto description & amount, and they don't issue a tax receipt.  

    Could we treat this as a cash donation?  That doesn't seem accurate.

    Gwen






  • 19.  RE: Accepting bitcoin

    Posted 02-07-2022 01:40 PM
    Hey Gwen,

    No, you can't treat it as a cash donation, and your donors would be extremely unhappy if you did. I suspect what the Bitpay rep was trying to say was that you don't have to treat it as a stock donation, where you record hi-low on the day sold, and you can instead use the actual value at the time of the transaction, as reported by Bitpay.  You issue the tax receipt, but you do not value it - it's an in-kind gift. However, you can, if you wish, use language like 'donation of 1 bitcoin, which was liquidated for $44,317 at the time of the donation,' which is a statement of fact, not an opinion on the value of what was donated. 

    The IRS has not unified all of its statements about crypto, but they have said that the FMV of a crypto transaction is the price paid on a liquid exchange. A donation of property requires an FMV valuation. While there is a rule about how to value stock transactions, that rule has not been extended by the IRS to cryptocurrencies. Thus, the nonprofit has lots of leeway about how to determine an FMV. The actual price at the moment of the transaction on an active and liquid marketplace is a great FMV, and it reduces the administrative burden, so absent some specific rule requiring a nonprofit to do it differently, this is my recommended approach.


    Thank you,
    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now: