Gift acceptance: three considerations for cryptoassets

The Bitcoin network first came into existence nearly 13 years ago, and for most of us that was the first time hearing of cryptocurrency. According to Coinmarketcap.com, as of Dec. 14, 2021, the global crypto market cap is over $2.5 trillion. With cryptoassets continuing to make headlines, not-for-profit organizations face a growing number of donors seeking ways to support charities by donating cryptoassets.

Not-for-profit organizations should consider the following when accepting gifts of cryptoassets:

1. A gift acceptance policy
2. Processing/accepting gifts of cryptoassets
3. Financial and tax reporting requirements

Gift acceptance policy

An appropriate policy defining the type of gifts you will accept allows for transparency to your donors and avoids difficult conversations late in the gift acceptance process. The gift acceptance policy should clearly state whether you accept gifts of cryptoassets and the parameters for acceptance. Given the volatility of cryptoassets, best practice is to include a policy that immediately liquidates these assets upon receipt. The American Institute of Certified Public Accountants (AICPA) published guidelines in its article “Bitcoin basics for NFPs: Accepting and valuing cryptoasset gifts” that provides the following example as a starting point:

“The organization may accept gifts of cryptoassets and other forms of digital assets after due diligence is performed to determine that the asset is able to be transferred and liquidated.”

If you decide not to accept gifts of cryptoassets, the gift acceptance policy should clearly state that as well.

Processing/accepting crypto gifts

Once you determine you will accept gifts of cryptoassets, you should evaluate an appropriate platform to accept these gifts.

Given the risk and uncertainty of cryptoassets, most not-for-profit organizations do not want to accept this asset class directly but rather utilize a third-party payment processor to accept the cryptoassets on their behalf or direct donors to a donor-advised fund (DAF) sponsor. 

Third-party payment processors, such as The Giving Block or Engiven, have made it easy to accept, liquidate and transfer the funds to a charity’s account. Directing donors to a DAF that accepts crypto, such as Fidelity Charitable or Schwab Charitable, works similarly.