Why crypto donations are skyrocketing worldwide: Explained
- The rise in cryptocurrency use for philanthropic purposes is due to its unique technology
- The fees for accepting crypto donations are lower than credit or debit card
- Protection of anonymity of the donor is one of the key benefits of crypto contributions
Not only have cryptocurrencies revolutionised the financial world, they have also been widely accepted for charity. The rise in cryptocurrency use for philanthropic purposes is due to its unique technology, which offers it an advantage over the competition.
Also Read| How India's new crypto tax impacts investors
Traditional donations are vastly different from crypto gifts. What are these distinctions, and how have they made crypto philanthropy such a popular choice among the general public?
Let's evaluate the benefits of crypto fundraising over traditional methods:
Donors may focus entirely on the cause rather than identifying the right organisation on crypto contribution platforms, and immediately send the amount to the people in need.
The donation pattern has shifted from organisation-specific to cause-centric owing to crypto charity. This method of operation also ensures that smaller nonprofits have an equal chance to participate in the process.
The fees for accepting cryptocurrency donations are lower than those for using a credit or debit card.
According to Charity Navigator, a charity review group, the processing charge on credit card transactions, as well as a direct withdrawal from the charity contribution, ranges from 2.2% to 7.5%.
Many countries, including the United States, United Kingdom, Canada, Australia, and New Zealand, already provide tax deductions for cryptocurrency donations to nonprofits. Converting crypto to fiat, on the other hand, may result in the payment of capital gains taxes.
Protection of anonymity of the donor is one of the key benefits of crypto contributions. It enables donors to make large donations without having to comply with legal and routine banking regulations like KYC and other forms of identification.
Transferring cryptos to any region of the world is simple. This makes it possible for humanitarian groups to accept donations from all around the world. Many international charities, including UNICEF, Red Cross and Greenpeace, have begun to accept cryptocurrency payments.
Various charitable groups received substantial amounts of cryptocurrency donations in 2021. More than 1,300 NGOs welcomed cryptocurrency donations in the previous year.
According to United Way, a global charitable organisation, 60% of cryptocurrency donors are under the age of 40. The average age of crypto users in the United States is 38, while the average age of donors is 64.
During the current crisis between Russia and Ukraine, a request for assistance resulted in nearly $100 million in crypto donations to Ukraine. In May 2021, Ethereum co-founder Vitalik Buterin contributed roughly $1 billion in Shiba Inu (SHIB) tokens to India's COVID-19 aid during the pandemic.