The pros and cons of cryptocurrency donations
The world of cryptocurrency is growing rapidly. But should your organisation adopt it as a method of receiving donations?
Before we can answer that question, let’s look at what cryptocurrency is.
The financial website eToro explains it as ‘a form of electronic money that exists online without any bank or government control, instead working on a peer-to-peer basis.’
A number of charities, such as Save the Children and Helping Households Under Great Stress (HHUGS), have started accepting cryptocurrency donations.
The benefits
1. It’s international
Donations made through cryptocurrencies can arrive from anywhere in the world. And they incur much lower fees than other forms of international currency. If a large chunk of your donor base is overseas, offering them the option to donate via cryptocurrency will ensure you receive a higher percentage of their money.
2. There’s potential for high-value donations
The Children’s Heart Unit Fund received over £100,000 in cryptocurrency donations in the course of a year, with a whopping £70,000 coming from just one donor.
3. It’s easy to set up
You don’t need to be a tech wizard to get set up. Fundsurfer has created an easy-to-follow guide, which you can view here.
The drawbacks
1. Its value is unstable
In an article for The Independent, the Vice President of Fidelity Charitable - an American organisation that helps people support charitie through investments – says, ‘you can have a situation where somebody donates cryptocurrency, and if we don’t sell it right away, it could lose 20% of its value in a day.’
2. It’s bad for the environment
The blockchains which cryptocurrencies rely on to function use a lot of non-renewable energy.
Bitcoin - the most popular cryptocurrency - uses more electricity to function than the entire country of Norway, according to the Cambridge Bitcoin Electricity Consumption Index.
The environmental impact turns some people off - particularly people invested in sustainability and environmental causes.
3. It’s hard to conduct due diligence
The UK Charity Commission advises charities to perform due diligence to avoid accepting donations of proceeds from criminal activities, but their advice doesn’t cover cryptocurrency - yet.
The Commission is figuring out how to deal with it, so it’s worth doing a comprehensive risk assessment before jumping in.
Looking for a cryptocurrency-savvy fundraiser to join your team? We can help. Call us on 0203 750 3111 to find out more.