Fidelity Charitable, the charity arm of Fidelity Investments, released its annual report in July, which showed that the company received over $106 million worth of cryptocurrencies in donations since it began accepting them in 2015. Donations in cryptocurrencies have mirrored the asset’s trajectory in crypto markets. In 2017, Fidelity received over $69 million in crypto donations. But that figure declined by more than half to $30 million during the crypto winter of 2018. In general, as the value of tax deductions drop, people are less incentivized to give.
Fidelity Charitable accepts Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. In May 2019, the company began to accept donations in XRP. The charity stated that a majority of the crypto donations they receive are in Bitcoin. Fidelity’s investment arm is already a player in the crypto industry with its custody solutions.
Donations in Crypto Are on the Rise
While it is still a nascent sector, cryptocurrencies have gained traction as a medium for charity in the last couple of years. A year ago, Coinbase CEO Brian Armstrong announced he had signed the Giving Pledge declaration for billionaires interested in giving up their fortune during their lifetime. He is also the founder of GiveCrypto, a charity that helps people donate their crypto wealth to those in need.
Corporates in the crypto world have also joined in donating to charity. In 2018, Binance announced that they would donate any listing fees they get from crypto projects. When a fire damaged the Notre Dame, many in the crypto world donated tens of thousands to the restoration work.
The Benefits of Crypto Donations
There are a couple of benefits to donating cryptocurrency.
For starters, it helps spread the gospel of cryptocurrencies and enlarge its market. In instances like Facebook’s Libra, cryptocurrencies and blockchain are being positioned as instruments to alleviate poverty and provide banking services to the unbanked. Charitable giving helps spread the word about their utility.
Crypto donations are also beneficial for tax purposes. According to Fidelity’s report, those that make crypto donations can eliminate capital gains taxes while also giving the full fair market value to charitable causes.
Sending cryptocurrencies for donations is also said to be convenient because the transaction is instant and comes with low fees. This is different from the high-fee, multi-day system on which most charities rely on.