How Bitcoin Is Changing the Face of Non-Profits

As a tech-savvy person, you’re familiar with the huge potential of cryptocurrency.

And you’re not alone: since the release of Bitcoin in 2009, it’s been adopted by millions of people around the world. Today there are over 13 million Bitcoins in circulation, with each valued at over $300.

But if you’ve tried to talk to anyone about Bitcoins, you’ve probably also realized that most people don’t have a clue what Bitcoins are. In fact, less than 30% of Americans have ever even heard of Bitcoin, let alone know what how it works or why anyone should use it.

So it’s understandable that the business world hasn’t leapt at the opportunities that Bitcoins present. You can’t go to the movies, out shopping, or eat at a local restaurant and expect to pay in Bitcoins (yet).

That’s why it’s surprising — and a little befuddling at first — when you realize that there’s another sector that’s taking quickly advantage of the benefits of cryptocurrency: the nonprofit sector.

But when you take a closer look at the reasons, it makes a lot of sense.

When you’re a nonprofit struggling for enough funding to support your mission and operations, you need to take advantage of every opportunity that arises. For example, one big reason Bitcoins are becoming popular among nonprofits is because of transaction fees, which in many cases are significantly lower with Bitcoins than when receiving donations by more traditional means. And while big businesses may not have to worry about such small details, every penny counts when it comes to nonprofit donations.

When you look at all the benefits to nonprofits, it’s not surprising that many nonprofits have already set up to accept Bitcoin donations, even when many of their donors and constituents may have never even heard of the cryptocurrency.

As one of the minority who’s actually familiar with Bitcoin, you know all the potential that lies behind it — though maybe you’ve never given thought to how all that potential could apply to nonprofits as well.

Check out the graphic below to find out exactly how nonprofits are taking advantage of the cryptocurrency revolution, and just what difficulties they’re coming up against.


bitcoin-changing-nonprofits

How Bitcoin Is Changing the Face of Non-profits

In September 2014, the world’s largest privately funded non-profit organization, United Way Worldwide, announced it would begin accepting Bitcoin donations through Coinbase.

With 36,000 merchants and at least 1 million users around the globe, Coinbase and Bitcoin (BTC) will usher in a new era of non-profit fundraising.

Here’s how Bitcoin will electrify the non-profit and voluntary sector.

How Bitcoin Donations Work

When using bitcoins, two main routes are available for charitable donations.

  • Donor
    • Option A
      • Non-profit creates account with Bitcoin platform that handles transactions and holds digital wallet, e.g. Coinbase or Bitpay
      • Non-profit solicits donations by providing their Bitcoin address or QR code
      • Donor finds the non-profit and donates bitcoins to the address or QR code
    • Option B
      • Donor decides to donate Bitcoins to a non-profit or charity
      • Donor gives to charitable organization that specializes in handling Bitcoins, e.g. Bitgive Foundation
      • Organization handles transfer to non-profit/charity

How Bitcoin Will Transform Online Donations

Bitcoin presents a new and exciting alternative to traditional donations.

However, while bitcoins offer new benefits to non-profit operations, they also present new challenges to overcome:

Global Currency

Positive – As a digital, decentralized currency, bitcoins can be donated from around the world.

Negative – There are limitations. At least 7 countries currently have contentious regulations regarding bitcoins, while 2 are considered hostile.

Security

Positive – Ownership of individual bitcoins is publicly written into the bitcoin itself, making theft more difficult.

Negative – However, theft has occurred, such as the 46,000+ BTC stolen when Linode was hacked in 2012.

Anonymous Donations

Positive – Organizations that struggle with funding through traditional means may prefer anonymous Bitcoin donations.

Wikileaks, for example, had donations blocked by Bank of America, MasterCard, PayPal and Visa. It is now primarily funded through Bitcoin and Litecoin.

By January 2014, WikiLeaks had received 3,855 BTC from more than 2,200 transactions.

Negative – Bitcoin is still tainted by its adoption by online black markets, potentially deterring organizations from using it.

Non-Anonymous Donations

Positive – Organizations that accept non-anonymous donations can offer tax-deductible benefits for bitcoin donations.

Negative – Some non-profits might be legally compelled to accept only non-anonymous bitcoin donations, deterring some donators.

Because BTC is not considered as currency by the IRS, American donors should check if deductions are valid.

Exchange Rates

Positive – Bitcoins can be sold for traditional currency like a currency exchange. In November 2013, bitcoins reached a peak exchange rate as 1 BTC crossed $1,000 USD.

Negative – However, Bitcoin value remains volatile, potentially negating donations. The current exchange rate is $398.89 USD for 1 BTC. *1

Who’s Using It?

Impressed by the potential benefits of bitcoins, a number of worthy causes have accepted the currency to fund their work:

As We Grow

  • Target Demographic: Children
  • Target Geographical Location: Nguu Tatu, Kenya
  • Helps build 8 classrooms to provide more educational space for over 2,000 children of the Concordia Primary School in Kenya

Children’s Well-wishers Network

  • Target Demographic: Children
  • Target Geographical Location: North and East Sri Lanka
  • Focuses on advancing children’s education and providing educational facilities to deprived schools in North and East Sri Lanka

Freedom of the Press Foundation

  • Target Demographic: Adults
  • Target Geographical Location: US
  • Defends public interest journalism focused on exposing mismanagement, corruption and law-breaking in government
  • Published the previously unreleased recordings of Bradley Manning’s trial and defense in March 2013

Khan Academy

  • Target Demographic: All Ages
  • Target Geographical Location: Worldwide
  • Provides videos, exercises and other online educational tools for free online access worldwide
  • With 60 employed staff members, the organization reaches 10 million students a month

Pathways to Education

  • Target Demographic: Teens
  • Target Geographical Location: Canada
  • Helping youths in 16 low-income communities in Canada graduate from high school and make the transition to post-secondary education

The Water Project

  • Target Demographic: All Ages
  • Target Geographical Location: Worldwide
  • Provide access to clean water and sanitation
  • Has projects in Burkina Faso, Kenya, South Sudan, Sierra Leone, Uganda and Rwanda
  • In September 2014, The Water Project completed work at Emahungu Primary School in Western Kenya. The result was clean water and sanitation for 500 people

Sources

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