‘Charity begins at home but should not end there.’ This old Scottish proverb is still relevant today as it talks about the many benefits of charitable giving. Today, we talk about ‘cryptophilanthropy’ and how the crypto community is giving back.
How the crypto community is giving back
The crypto community has been making headlines in international media with charitable donations. One of the most noteworthy was when altcoin Ripple (XRP) donated $29 million worth of XRP tokens to public schools in the United States. The announcement was made in March this year and is the biggest cryptocurrency gift to date to one charity. The funds will be used to get classroom materials for 28 000 teachers in these public schools.
According to a report by Fidelity Charitable, an arm of Fidelity Investment Bank, they received almost $70 million worth of Bitcoin and altcoins during 2017. The report says that it is ten times more than what was contributed during 2016. In 2016, about $7 million was received from the crypto community. The Fidelity Charitable consists of 255 000 non-profitable organization. Read the full report here.
Benefit for crypto holders
Besides the heart-warming feeling of making a difference in another’s life, there is one other advantage to donating cryptocurrencies – Tax incentive. This can be used as a way for crypto investors to reduce the amount they owe to the tax man. In the US, crypto investors are taxed based on ordinary income if they sold a coin in less than a year. If they sell a coin after a longer period, they are subjected to lower capital gains rate. Donating cryptos to charity is one way to eliminate capital gains taxes on the appreciation.
How charities can benefit from blockchain tech and smart contracts
It is advisable for charity organizations to look into implementing blockchain technology in order to receive donations.
- Implementing blockchain technology will make the process of donating and receiving donations transparent. Donators can rest easy knowing that the charity received the donation as it was intended.
- Making and receiving donations via a blockchain reduces transaction costs to basically next to nothing. Charities and donators won’t have to worry about expensive bank fees.
- Charities will open their doors to a new kind of clientele. Clearly, the crypto community is not stingy and is more than willing to donate to a worthy cause.
- Even smart contracts can be most beneficial to charities. A clause can be worked into the smart contract that stipulates that if a company met a certain goal, that a donation will be made to a specific charity or a percentage of the profits. Also, smart contracts can be used to determine which worthy causes should receive donations. This will be done by means of analysis and needs assessments. In so doing, funds will go towards organizations who really need it.
There are specific projects or tokens with charity in mind. One such is Donationcoin that promises to be a modern way to donate. This token allows investors to donate to charities. With its blockchain tech, all donations are recorded onto an open ledger. This is great as it allows one to verify your donation and ensure it was indeed received by the intended charitable organization. It also cuts out any admin fees from a so-called ‘middle man’. Everything you donate will go towards the worthy cause. Another benefit is that it costs very little to send and receive Donationcoin and transactions are instant. The token is listed on Cryptopia and costs $0.0012 according to Coinmarketcap.
Another coin, Giftcoin which will be launched soon, has the same idea as Donationcoin. By means of the blockchain ledger, one can track your donation and ensure it goes to the intended recipient. All transactions are free but the platform will charge $1 to convert fiat to Giftcoin tokens. Giftcoin will be collaborating with Charity Checkout that has more than 2 000 registered charities. For more info, visit their website.
Worthy charities that accept cryptos
There is a growing number of charities that are accepting cryptocurrency donations. One such is a project called The Water Project. It uses funds to build wells and supply clean water to impoverished communities in Africa, including South Africa. Another organization that gladly accepts crypto donations is the Tunapanda. The institution works in East Africa and is focused on giving technical, profession and business training services for young people in an effort to resolve various local and global challenges. This organization accepts Bitcoin donations.
For a list of other charities that also accept cryptocurrencies, click here.
Did you know that Bitmart sponsors various local organizations? Click here to go to our Corporate Social Investment page.
In conclusion, the possibilities of blockchain technology are endless but it is only as strong or as good as the community supporting/implementing it.