In current cryptocurrency news, more and more people are curious about donating bitcoin to charity. The fact is that it is possible to donate bitcoin as well as other types of cryptocurrencies to charity just as you would stock or other property. However, donating cryptocurrency may be slightly more complicated.
How To Donate
Because setting up a digital wallet can be somewhat complex, most charities cannot accept cryptocurrency donations directly. If a donor sets up the wallet and retains the keys, it may not be considered a donation. Instead, the charity will accept donations through a donor-advised fund or a third-party processor.
The third-party processor will facilitate the donations to charities for a small fee. The donation will be converted to cash on the charity’s behalf.
The donor-advised fund will accept the donation and convert the cryptocurrency to cash and then invest it. With this option, the donor will be able to claim the charitable tax deduction immediately and then recommend charities that are eligible to receive support at a later time.
Donor-advised funds are considered to be public charities. Therefore, this option could potentially be a tax-efficient solution to accepting cryptocurrency contributions. Typically, the funds will have the expertise and resources for receiving, processing, evaluating, and liquidating the non-cash assets.
Keep in mind, however, that donations of appreciated non-cash assets may involve advanced planning and complicated tax analysis. You need to also be aware that all donations sent to a donor-advised fund are irrevocable. Speak with your legal advisor or tax advisor before you proceed if you are unsure if it is the right move for you.
