Benefits of Bitcoin Donations5 min read

April 21, 2021 4 min read


Benefits of Bitcoin Donations5 min read

Reading Time: 4 minutes

As the price of Bitcoin continues to drive up some Bitcoin holders may be considering donating part of their gains to a charity or cause of choice. In this post, we will be discussing the benefits of Bitcoin donations:

  • Supporting causes that would otherwise be unreachable
  • Tax benefits of donating Bitcoin
  • Encouraging the adoption of Bitcoin
  • Adding a better method of payment
  • Accessing a new segment of donors
  • Receiving donations from across the globe
  • Spreading awareness of Bitcoin among donors and stakeholders

Bitcoin donations support causes that would otherwise be unreachable

One of the benefits of Bitcoin is its censorship resistance. Without any central authority to dictate who can and can’t use Bitcoin, it has proven to be the currency of choice for many individuals and organizations who have been left out of traditional payment methods. One of the best examples is the whistle-blower nonprofit Wikileaks, which was blocked from receiving cash transfers by Visa, Mastercard, Paypal, and other payment processors for publishing classified U.S. State Department documents. Without Bitcoin donations, Wikileaks may not have been able to continue operating. One of the key

Tax benefits of Bitcoin Donations

In the US, 501(c)(3) charities can retain the full value of Bitcoin donations because they are exempt from capital gains tax. If you sell Bitcoin to donate it as your local currency, you are obligated to pay capital gains tax and any possible fees on the conversion. If instead you donate Bitcoin directly, you can avoid these deductions and donate the full intended amount. For example, suppose you want to donate $1000 to the charity of your choice. When you sell that amount in Bitcoin, you could owe up to 37% or $370 in capital gains taxes* depending on your income bracket and how long you have held the Bitcoin. In contrast, donating Bitcoin directly can help you avoid the capital gains tax, send the full intended amount and also help you get a tax deduction. If you donate Bitcoin that you’ve held for over a year, your tax deduction will be equal to the fair market value of the donated bitcoin (as determined by a qualified appraisal). 

*This example assumes short-term capital gains tax for the highest income bracket in the U.S. Please consult a tax professional if looking for advice specific to you. Learn more about Bitcoin donations & taxes here.

Encouraging the adoption of Bitcoin

Bitcoin holders and users want to see it become widely used so that the network can grow and gain even more acceptance. One way for them to do that is to request the charities of their choice to start accepting it. When organizations or individuals start accepting Bitcoin donations it raises their visibility and encourages wider adoption. With well-known charities starting to promote donating in Bitcoin, the benefits could encourage those who haven’t yet started using it to join in.

Bitcoin Donations are a better form of payment

Organizations that start to accept Bitcoin donations with OpenNode add a new method of payment that is separate from traditional payment processing channels and isn’t bound by the same restrictions. This can help maximize the volume of donations that the organization receives. Bitcoin provides a higher level of discretion and lower processing fees than traditional methods.

Accepting Bitcoin donations will attract new donors

With accepting Bitcoin donations, organizations can gain access to a new segment of donors. Bitcoin holders are more likely to donate to organizations that accept Bitcoin directly due to the issues involved with converting to a fiat currency. Additionally, a promising segment of potential donors are early Bitcoin adopters whose wealth has grown significantly with the price of Bitcoin. An example of this is the Pineapple Fund, which was established by an anonymous individual and donated 5,104 Bitcoins (worth over $55 million at the time) to 60 charities. Two of the top 3 biggest Bitcoin donations at the time were made by Pineapple: 320.8 Bitcoins ($5.3 million) were donated to GiveDirectly and 274.3 Bitcoins ($2.1 million) were donated to the Institute for Justice.

Receive donations from anywhere in the world

Accepting Bitcoin donations automatically means anyone from anywhere in the world can choose to donate to the cause. International transfers using legacy payment processors can be very costly and take days or weeks to complete. Accepting and donating with OpenNode can make moving money across borders much easier and much faster than international donations in fiat currency. With Bitcoin, there’s no need to wait on a bank to verify and process a transaction. Instead, the transaction is verified on the blockchain and can be completed in minutes. If the transaction is carried out using the Lightning Network, it can be completed even faster. Another benefit is that the transaction cannot be influenced by corrupt governments or politicians who may be looking to get their cut.

Spreading awareness of Bitcoin among donors and stakeholders

Despite Bitcoin’s growth and adoption over the years, there is a significant group of people who may still find using it to be daunting. As the first open, decentralized, immutable, and verifiably scarce digital asset, Bitcoin’s role in monetary sovereignty needs to be understood by as many people as possible. When charitable organizations start accepting Bitcoin donations, it incentivizes their employees, stakeholders, and donors to learn more about it. This in turn can lead to them discussing it with friends and family and creating a feedback loop of awareness and adoption of Bitcoin. 

At OpenNode, we make it very easy for organizations and individuals to start accepting Bitcoin payments and donations. After you sign up with us, you can easily set up a Bitcoin payment button for your websites, social media, and even live streams. Payment buttons provide a quick and simple experience for the person donating. Once they click on the button, they will be led to a custom-designed link to check out where they can provide any required info and will have the option of transacting directly on the Bitcoin blockchain or on the Lightning network. To address the concerns of Bitcoin’s price volatility, we also provide an instant exchange feature for those who wish to exchange into their currency of choice instead of holding Bitcoin directly.