Even as digital asset markets cratered this summer, potentially reducing their flow to charities, some well-established charitable organizations are forging ahead with projects to connect with crypto investors and use blockchain technology to enhance donor services.
When thinking about what organizations are likely to embrace emerging technologies, the Roman Catholic Archdiocese of DC probably doesn’t spring to mind. Nevertheless, the Church has partnered with Engiven, a crypto donation service company, in an effort to fundraise and engage with the blockchain community.
And perhaps more notably, Heifer International, a 78-year-old nonprofit in the international development space that supports families working to meet their basic needs, recently acquired assets from the BitGive Foundation that may serve as a model for other charities seeking to increase donor engagement. One service included in the acquisition is GiveTrack, which runs on blockchain technology and allows donors to see the impact of their gifts in real time, something that would be more difficult without its innovative technology.
While some nonprofits move forward with projects in the crypto space or find ways to accept digital asset donations, there are still obstacles digital asset donors must navigate and whether many members of Congress realize it or not, policymakers in Washington have the power to make gifting digital assets easier and settle the debate on how they should be taxed.
One obstacle that stands out is the burdensome appraisal requirement for digital asset gifts over $5,000. Gifts of similar assets such as stocks or bonds don’t carry this requirement, and there’s a bill in Congress that would bring digital assets in line with other assets that don’t need qualified appraisals. And definitive guidance on how emerging crypto assets like NFTs may be taxed is still forthcoming, further complicating matters.
If potential donors don’t know how digital assets could be taxed in the coming years, they might also not know how gifting crypto to nonprofits will affect their tax bills. Indeed, according to Fidelity, over one in four crypto investors aren’t sure if selling digital assets triggers a taxable event in the US, and over half aren’t sure whether crypto assets can be donated to charities.
Despite these challenges, Heifer International and the Catholic Archdiocese of DC seem to be betting that digital assets can be incorporated into a nonprofit’s development plans. We call on policymakers in Washington to provide policy guidance for these organizations and the communities they serve by implementing clear rules for digital assets and resolving some of the outstanding issues that may be frustrating the burgeoning crypto-philanthropy space.