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Why the ASU Foundation now accepts cryptocurrency donations — and believes others will have to join them
by Troy Hill, ASU Lodestar Center for Philanthropy and Nonprofit Innovation
April 5, 2022
Last year, the ASU Foundation made the decision to accept donations in the form of cryptocurrency, joining the trend of nonprofits and philanthropic organizations that have started doing the same. The reason for this: demand.
“Alumni wanted to donate crypto,” said Daniel McAuley, a member of the Next Generation Council of the ASU Foundation. “So if your job is to maximize donations, then you should do your best to accept those donations in whatever format people want to give them to you.”
McAuley pointed out that the foundation and many other philanthropic organizations accept donations in nonliquid forms, such as artwork or stocks, so it only made sense to accept crypto as another option.
He also said that as crypto continues to grow in popularity, nonprofits will “have to” start accepting crypto donations.
“It doesn't really matter if nonprofits should [accept crypto] or they ought to - they have to if they want to get those dollars,” McAuley said. “If [donors] have crypto and they want to donate and you don't take it, those dollars are going somewhere else.”
Dragan Boscovic, who leads ASU's Blockchain Research Lab, said blockchain technology, and as an extension, cryptocurrency, is so important because it is what he calls “the third wave of the internet revolution.”
The first wave provided access to information on static early websites, while the second was about giving people the ability to interact, create and share through social networks, games, web apps, collaborative documents and more. The second wave crested with massive tech companies like Google and Facebook that provide online services to users.
The third wave of the internet revolution adds an ownership and identity layer to the web, which is where blockchains come in. Blockchains are decentralized databases that record transactions, like an immutable virtual ledger. For example, a blockchain can record who sold a certain amount of digital currency or a virtual good, how much it sold for, when, and who now owns it. This is all done through a global, decentralized network of computers that no single entity controls. According to the research lab, "This means the blockchain cannot be surreptitiously edited or changed. Once the transaction is encoded in the blockchain and becomes part of the network, the parties cannot reverse or alter it without mutual agreement."
The Bitcoin network, created in 2009, is the most famous example of blockchain technology. Its BTC cryptocurrency had little value early on – a coin holder famously paid 10,000 bitcoins for pizza in 2010 – but one bitcoin is now worth over $40,000, minting many crypto millionaires (and future philanthropists) along the way. Other blockchains later sprung up to power innovations like decentralized finance, play-to-earn games and NFTs.
Boscovic said this technology helps nonprofits and other organizations not only stay relevant, but it keeps a transparent record of transactions they engage in. Every blockchain transaction is publicly viewable.
So what does all of this mean for the average nonprofit?
Trees for the Future, an environmental nonprofit, had a similar question. They started accepting cryptocurrencies in 2019, and at first only received a couple thousand dollars over the course of the year. However, two years later and the funding from crypto donations had grown to a quarter of their $2 million budget thanks to a new, clear strategy, they told the Chronicle of Philanthropy.
Nonprofits and philanthropic organizations can also potentially net more by accepting cryptocurrency directly, rather than accepting cash from a donor who needed to sell their crypto first and subsequently pay capital gains taxes.
The idea of engaging with cryptocurrencies or anything to do with a blockchain can be overwhelmingly intimidating — but it doesn’t have to be.
McAuley said the simplest way is to start working with a reputable third-party organization that enables the donation of crypto. These organizations also often help with tax reporting of the transactions and other details in this new space.
“If the current platform that you're using for other donations doesn't support all the crypto stuff, then you need to go and add a crypto-specific vendor. They handle everything for you,” McAuley said. “Even if you're a smaller nonprofit, go and find someone who knows what they're doing and let them handle it for you.”
Samuel Michalove, the director of investment strategies and portfolio management at ASU Enterprise Partners, highlighted the importance of educating your staff on cryptocurrencies and blockchains and getting them comfortable with the process of using it.
“It's kind of a new and novel idea,” Michalove said. “So making sure that, not only we’re comfortable with it, but making sure that our donor officers that are interfacing with those individuals publicly are comfortable discussing it and helping educate others.”
Want to learn more about cryptocurrency in the nonprofit sector, from virtual wallets to environmental impacts? Read our blog post on what you need to know.