Are crypto currencies an untapped fundraising opportunity for charities?

Should your charity accept donations in crypto currencies?

Online donations

The pandemic has accelerated the charity sector’s use of digital, with most charities relying on digital experiences throughout the pandemic to engage their audiences (in place of in person experiences and events). Audience engagement (on and offline) for charities is often the beginning of a path to conversion of audiences into donors, to enable the charity to continue it’s important work. 

Whilst online donations have been integral to most charity fundraising strategies for some time, the pandemic has meant that pressure on online donation strategies has increased. There’s an expectation that online strategies perform stronger than ever before to fill gaps from in person events. The result has been a shift in approach for many fundraising strategies, with both small and large charities being forced to innovate to succeed, all competing for our limited altruistic wallets.

New forms of digital money

Yet when it comes to donations, adoption of  donation platforms that open charities to new forms of digital money appears comparatively slow. By digital money, I am of course referring to crypto currencies.

Crypto currency is a form of digital money (the most well know of which is Bitcoin) not linked to a government or central bank. It is made possible by block chain technology, which is owned and maintained by the users of the system as opposed to being controlled by a single authority. As such, it is popular with tech-savvy wealthy demographics, who believe in contributing to a movement that will create change for the greater benefit of society. That’s right, I said wealthy. Now you’re interested right?

Personally, I don’t think crypto currencies are about to replace bank accounts, credit cards or apps like PayPal. But I do think they provide opportunity for charities; opportunity to generate donations from a niche community; opportunity to transmit money around the world; and opportunity to provide greater transparency to charity finances.

Let’s take each of these points in turn. 

Generating donations from a niche community

We’ll start with a few stats:

• According to Statista there are over 42 million Bitcoin accounts in the world.
• In 2020, the University of Cambridge estimated that the current number of active users of cryptocurrency is 101 million people.
• The total value of all crypto currencies is thought to be over €412billion and growing.

That’s a lot of money. Yet only 4% of charities currently accept crypto currencies. Early adopters include the RNLI and Save The Children. 

 (Are you beginning to see the opportunity here?) 

So who are these crypto holders? 

They’re typically young and willing to take risks. They have a shared motivation – to contribute to something greater than themselves to make the world a better place – a motivation that is also shared with supporters of charities. Importantly, due to the investments they’ve made and the success of crypto currencies, many of them have capacity to make a major gift. 

Within the crypto community, there are niche groups of crypto holders who prefer to build in particular block chains. This means you can uncover insights on what they care about, enabling you to target those who best align to your cause.

In my mind, there’s a clear opportunity here for charities to tap into a new major donor market.

So what’s stopping them?

• Stigma – there’s certainly a stigma around ‘crypto’ and in particular around the term ‘blockchain’, due to the volume of high profile scandals during the technology’s early days. Arguably, this stigma is fading as we see a wealth of reputable firms welcoming the technology. But perhaps this stigma is not yet fading in the eyes of mainstream observers, not au fait with the blockchain movement.
• The unknown – Getting a deep understanding of the crypto community and where to find them will be new to most charities so will likely feel like a dark art. People are always nervous about the unknown. It’s uncomfortable. There’s a lot to learn. If you’re not knowledgeable about something, it’s a risk. Therefore leadership and decision makers within charitable organisations will need to be educated before benefits can be realised.
• Public scrutiny – more so than any other industry, charities are scrutinised by the public – and rightly so. So where risk is perceived, understandably charities sit on the side of caution.
• Security – charities accepting crypto donations have to understand how to verify identities and avoid scams.
• Complexity – if non profits opt to get in on the crypto boom, they will face questions on which currencies to accept, and whether and when to convert them. For the charity it will often make sense (from an expertise perspective to immediately sell, converting the crypto into £). But the crypto donors like to see non-profits holding the gifts as crypto as part of an effort to help crypto go mainstream.
• Environment – production of crypto currencies involves considerable processing power from computers. Energy consumption needs to be closely monitored and better understood before some (particularly environmental charities) will feel comfortable with its use.

Transmitting money around the world

A clear benefit to crypto currencies comes from the fact they’re decentralised. This not only means that they’re not controlled by a third party (such as a bank) but also means that the currency is not geographic. This could be a massive benefit to charities operating in different parts of the world. For example, it enables international aid charities to respond to global events faster. It also eliminates the need for currency conversion costs.

Transparency of crypto currencies

Blockchain technology makes donations through crypto currencies totally transparent and traceable at all points. For example, if a donor makes a gift they can see through the blockchain how that money is being used. That means that they can trace exactly what their donation is spent on, giving absolute transparency to how charity money is spent.

The block chain by its nature acts as a public record. This creates potential for increasing trust in charities.

Taking this idea a step further, there’s potential for blockchain technology to open up the transparency of financial information on charities more broadly. For example by recording how we create and oversee the work of charities, presenting real time, accurate financial information, blockchain technology indicates potential for a fundamental shift in the way charities are regulated. I can’t see this happening quickly , but I do think the technology provides an opportunity (and could even disrupt the sector). I look forward to seeing where the industry is at ten years from now.

Back to donations.

Should your charity be accepting crypto currencies?

Admittedly, there’s an investment required in terms of time and learning. Personally, I think it’s worth investigating further. Obviously it should be considered as an extension to, rather than a replacement of, your existing fundraising strategy.

We’re all familiar with the phrase “You’ve got to be in it to win it”. Arguably in this scenario, “You’ve got to be able to accept it to get it”. 

If you think your digital fundraising efforts could do with a review, please get in touch.