Alex Wilson, Co-Founder of US based crypto donation platform The Giving Block, on why more and more people are donating cryptocurrencies and how big the crypto donation market has become
Alex, in Germany there are only a few charity organizations that accept cryptocurrencies as a donation. Can you describe the first days of the crypto donation ecosystem in the U.S.?
It was quite the uphill battle for a long time, too. When we started The Giving Block over six years ago, there were really only a handful of non-profits that were really accepting cryptocurrency at all. But even those, honestly, were struggling with it. They were using payment solutions rather than donation solutions. And then we saw Pineapple Fund happen.
What’s the Pineapple Fund?
The Pineapple Fund was a big inspiration for why we started the company. End of 2017, someone posted anonymously on Reddit saying, ‘I’ve made a lot of money investing in Bitcoin, and now I want to give millions of dollars to different charities that are willing to accept it.’ Everyone thought: “This sounds like a scam. Who’s just going to give that much money on Reddit?” But Charities in fact did apply from all over the world.
Turns out it was completely legitimate: $55 million worth of Bitcoin were given to about 60 different charities. So on average, they got roughly $1 million each. People were mind-blown.
The Pineapple Fund was the catalyst that brought crypto donations into the mainstream?
I think it was just a combination of different catalysts. The Pineapple Fund helped a lot, but in 2017, crypto were also much more in the media. Bitcoin had just hit $20,000 for the first time. There were stories of people getting rich by investing in crypto.
Before that, people hadn’t heard about it much. And if they did, they thought: ‘It’s a pump and dump’ or ‘It’s not going to be here in two years.’ A common misconception, even today, is that they think crypto is used by ten people sitting in their basement and it’s not worth anything. After The Pineapple Fund, non-profits realized maybe this is actually going to stick around.
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How did that momentum inspire your idea of The Giving Block?
My co-founder and I thought to ourselves, well, this isn’t the last time someone’s going to make money investing in crypto and want to donate. So we decided to interview those charities that got Pineapple Fund donations to learn about their experience. We used that feedback to inform what really became the MVP of The Giving Block.
I think in the charitable market in general, the U.S. is a bit more tech-forward than many other places in the world. Charitable giving is so huge here that the organizations are able to make bigger investments in technology. That was our big advantage.
How did you overcome the misconceptions that non-profits had?
There was no silver bullet, it just took a lot of education like presentations, webinars, going to conferences, writing blogs. And it’s still not completely mainstream. Many people think: ‘Crypto is just for criminals’ and other ridiculous things. But once you talk to people about it, they understand why that’s not true. What is eye-opening for a lot of non-profits is how many people use crypto now.
When you compare it to previous technologies, like credit cards, it’s similar. Ten years ago, not everyone was taking credit cards, which seems crazy now. We think crypto follows a similar adoption path.
Speaking about numbers: How big is the crypto donation market in the U.S.? How many organizations are already accepting crypto?
We work with about 2,000 charities directly. But we also work with thousands more indirectly through integrations with other partner fundraising platforms. For example, we power the crypto and stock giving of large fundraising platforms like Donor Box, which you’re probably familiar with in Europe too. They have over 50,000 non-profits they work with.
Among these we’ve worked with over the years, hundreds of millions of dollars worth of cryptocurrency have been donated just through us. But donations are also happening outside The Giving Block through places like Fidelity Charitable, which has also raised hundreds of thousands of dollars. There’s certainly been over $1 billion worth of crypto donated, just since we’ve started six years ago. It’s amazing what kind of impact it’s had.
What are the motivations for donors to donate cryptocurrencies instead of traditional assets?
I would say there are two primary reasons: One is simply convenience. Some people have their entire net worth practically in crypto. Like crypto natives, who might have $500 in their bank account, but $50,000 in their crypto wallet. There’s a surprising number of situations like that where the donor would rather say: ‘Hey, I’m going to send you $100 in Bitcoin or stablecoins because it’s easier for me.’ They don’t want to go through the hassle of moving it to their bank account.
Then in the U.S. and a few other countries, a major driver is the tax benefits of donating. In the U.S. and the U.K. donating non-cash assets like crypto and stocks is much more tax efficient. When you donate crypto you don’t have to pay capital gains taxes on the appreciation, and you get to write it off on your taxes. Since charities are tax-exempt, too, the charity doesn’t have to pay taxes either. It’s a win-win for both sides.
Can you give us an example?
Let’s take a donation of 1 million Dollar. If the donor sold the crypto first, after taxes, he may be left with $700.000 for their donation. And they’re getting a write-off for $700.000. But if they donate that $1 million of Bitcoin directly to the charity, they’re not paying taxes. They’re getting $1 million instead of $700.000. And the charity’s getting $1 million too. So everyone’s better off by about a $300.000 difference. The only one losing is really the IRS. We always say to crypto donors: ‘”‘Would you rather donate to your favorite charity or to the tax agency?’
You see it all the time with other wealthy donors outside of crypto. When you hear about Bill Gates, for example, making a big donation, he’s donating Microsoft stock. For the same reason: It’s simply more tax efficient.
How can a non-profit reach out best to crypto donors?
The biggest mistake is them not reaching out at all. We often see non-profits get set up with a way to accept crypto, but then it’s very hard to find on the website. Or they don’t tell anyone that they’re accepting crypto. There’s a big difference between accepting crypto and actively fundraising crypto. You have to do both.
That means you need to incorporate it into your existing marketing strategies. Use your newsletter or your social media accounts. Crypto is just another way to give – you simply have to have it on the menu.
Some people misinterpret that and think they need a dedicated crypto marketing strategy. You don’t. Just incorporate it into your existing strategy. That’s the easiest way to reach donors, because now that so many people own crypto, the non-profits are often pleasantly surprised by how many of their existing audience already own it.
What happens to the cryptos when a non-profit receives a donation?
Great question because one of the most common concerns we hear from charities is about the volatility of crypto. They don’t want the value to go down. With our platform as part of the process, as soon as a donor sends you a crypto donation, it’s immediately liquidated into U.S. dollars. The non-profit doesn’t have to do anything, it’s completely automated.
At the same time, they get the same reporting about the donor’s name or whatever other information they want to collect. We really don’t want it to be harder than anything else for them.
Why isn´t Germany on your list of supported countries?
Unfortunately, it’s because our exchange partner, which we use for the liquidations, isn’t licensed in Germany. Until they obtain that license, we don’t have an easy way to offer the service in Germany. The only alternative would be if it’s maybe a global non-profit that has a U.S. or Austrian entity, that we do support.
Germany is a pretty tough market when it comes to crypto. There are not so many companies that have the German virtual asset license. I think that becomes easier when MiCA (Markets in Crypto-Assets Regulation) goes into effect next year.
Any final words to German non-profits that aren’t accepting crypto yet?
It’s not as scary as you think! If you’ve already taken the time to read this interview, you’ve taken the first step in starting to get educated and learning the basics. You can take it slow. I encourage you to look up crypto a bit more, start following some newsletters or blogs, learn about it. Most non-profits will be pleasantly surprised by how widespread crypto donations have become.
Crypto is coming. And you don’t have to like crypto to accept it.