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Do you want to donate crypto to charity, but you don’t know how? It's much easier than you think!
Are you interested in donating cryptocurrency to charity, but you don’t know how? The good news is that it’s much easier than you might think.
Some charities, like the United Way, have set up an account with Engiven that allows them to build portals right into their websites that allow you to donate crypto to the charity much like you’d donate cash. Other organizations haven't adopted crypto-giving as a regular part of their philanthropy quite yet, but thanks to Engiven, it’s still possible to donate to many of them as well.
Other large charities and international aid agencies haven't set up mechanisms to accept cryptocurrencies yet. So, if you want to donate to one of those nonprofits, what options do you have? Thanks to Engiven, there's still a way for you to make a crypto payment to your favorite charity, and reduce the amount due on April 18, regardless of the size of your taxable income.
Donating to a charity that already accepts crypto donations
If you wish to give to an organization that already has a crypto-giving platform, that can be done simply by visiting their website. Once there, you’ll fill out a quick form, designate the cryptocurrency you wish to donate, and their platform will handle the rest. Here’s a list of just a handful of the many charities and funds that you might choose from:
Donating crypto to charities that don’t have a system in place
But how do you donate crypto to charity, particularly to a charity that hasn’t established its own crypto donation platform? Let’s take a look at the simple 5 step process that Engiven has created to do exactly this!
Step 1: Find the charity
It’s quite easy to donate crypto to charity. You probably already have an organization in mind, but if you don’t, take a look around for somewhere that can help your crypto do what you’d like it to do. The Engiven Foundation keeps a database of nonprofits that you can search for.
Step 2: Select the cryptocurrency you want to donate
Next, it’s over to your crypto wallet to decide which cryptocurrency to donate to charity. If like millions of others, you own Bitcoin or Ethereum, you can donate that, but we are set up to accept over 95 different cryptocurrencies.
Step 3: Use the QR code
Once you have selected the crypto to donate to charity, the system will generate a QR code and public address to use for sending the crypto donation using blockchain technology. This will help ensure that your funds get to the right place.
Step 4: Get confirmation
The next step is vital for your crypto donation. As you likely know, every transaction on the blockchain generates a unique hash. You will want that information for your records. You will also want a donation receipt so you can take advantage of the tax benefits of donating.
Remember that a charitable donation, whether it’s cash, bitcoin, or other cryptocurrencies, may be eligible for a tax deduction. And because you donated the crypto itself instead of selling it and donating the proceeds, you will avoid hanging to pay capital gains tax on your crypto windfall.
If you donate more than $5000, you will need a qualified appraisal of the value of your currency, in case you need to give that information to the IRS. Our system will handle all of that for you.
Step 5: Funds are exchanged
Finally, we will exchange the crypto you donated into fiat currency (USD) and create a grant for the nonprofit you have selected. This will help in the event that they don’t already use crypto and will protect them from any market volatility.
Why donate cryptocurrency to charity?
Though there are many viable payment methods for supporting your favorite charity, donating crypto might be ideal. As we mentioned above, there are real tax advantages for you, from deductions to navigating capital gains taxes. The IRS considers crypto an asset, similar to real estate. So donating crypto is tax efficient, regardless of your tax bracket.
But crypto donations also help your generosity go to the causes you support. Nonprofits and charities exist because of donors, and they use those funds to meet their missions.
When you choose to donate crypto to charity, you'll be supplying the essential resources they need to not only keep their doors open but to grow their world-changing causes, making our world a better place.
In addition to receiving tax documents for your donation transaction, you'll also receive the satisfaction of knowing that your contributions will be put to good use, furthering a mission that you value.
When you donate your crypto, a taxable event has occurred. If you've purchased crypto in multiple tax years, your filings must reflect it. Depending on the price you paid for your crypto and when you bought it, you may be subject to short-term capital gains taxes.
Though you may have purchased your crypto on a cryptocurrency exchange (that requires proof of stake) with hopes of generating long-term capital gains, donating it is often preferable to selling an asset like crypto and subjecting your financial portfolio to capital gain tax rates.
See What Makes Engiven The Most Simple And Secure Crypto Donation Solution
The content of this blog is not intended as tax advice. Please consult a tax professional when filing your taxes and declaring your cryptocurrency transactions.
