Bitcoin news has been everywhere in recent months. With so much buzz around this relatively new way to pay, it’s important to know how it works, and to think about whether your nonprofit should be either accepting donations in bitcoin, or indeed actively targeting successful Bitcoin investors. So, what exactly is Bitcoin, and how might it impact your nonprofit’s fundraising?
In the last six months, Bitcoin’s value has increased almost five-fold. On July 15, 2017, Bitcoin was trading at $2,000 per Bitcoin. As of this writing (February 22, 2018), Bitcoin was trading at $9,892. That’s a 395% increase in value over the course of seven months. Fortunes have been made in this short time.
So is there an opportunity for nonprofits tap into these newly wealthy individuals to generate revenue for their causes? And once you’re set up to accept payment in bitcoin, how can you leverage it to augment your fundraising efforts?
Bitcoin is a digital cryptocurrency that can be purchased and traded by anyone with access to the internet, anywhere in the world. U.S. nonprofits are legally able to accept donations in the form of Bitcoin.
Although getting your head around Bitcoin can be confusing, setting up your nonprofit to accept Bitcoin is relatively simple. Coinbase is a good example of a straightforward service that will convert your bitcoins into local currency. Nonprofits can create a Coinbase account that, just like PayPal or Venmo, allows your organization to transfer funds from a digital “wallet” to a regular bank account at will.
Bitcoin—Some Pros and Cons
Lower Transaction Costs
Accepting donations in Bitcoin can reduce the financial transaction fees a nonprofit owes. With Bitcoin, the costs are significantly lower compared to checks, credit cards, and other digital options, and if your organization is a registered 501(c)(3), there are zero transaction fees on platforms such as Coinbase or Bitpay. There is also no risk of bank charges accruing to the nonprofit in the case of a donor using a fraudulent credit card.
Some very large charities are already accepting payment in Bitcoin, via several different secure online platforms, for example:
- Wikimedia Foundation: uses Coinbase to convert Bitcoin to U.S. dollars.
- Save the Children: partners with BitPay to accept Bitcoin donations.
- United Way: accepts Bitcoin donations through either Coinbase or a personal QR code tied to a Bitcoin address.
A Fluctuating Market
Bitcoin valuation is largely determined by Bitcoin demand, so you need to be aware that Bitcoin value can rise dramatically, but also plunge, within short periods of time, as opposed to traditional currencies, whose values change at a slower, more predictable rate.
Identifying Bitcoin Players
Unfortunately for fundraisers, Bitcoin transactions are completely anonymous. Unlike traditional currencies, which are regulated by the Securities and Exchange Commission (SEC), there are no profit or sell disclosures, making transactions difficult to trace. There are still ways to figure out who is highly invested in the crypto market, however.
Utilizing Bitcoin to Meet Your Fundraising Goals
How to Target Bitcoin Investors
As with any fundraising process, targeting Bitcoin investors starts with building out a prospect list and creating a network. Since there is no public registry of successful Bitcoin investors, one way to proceed is with some basic Google searches using search terms such as:
- Bitcoin Companies
- Cryptocurrency Companies
- Bitcoin Millionaires
- Blockchain Technologies/Companies
- Mining Companies
The search results will generally surface the names of various CEOs and others who are heavily involved in the industry.
After you’ve built your list, we suggest testing out a donor analysis software such as RelSci. RelSci can map out how to reach people through personal and organizational networks. RelSci sifts through prospects and reports on their career and academic backgrounds as well as any board affiliations or volunteer positions. This will allow you to determine connections between Bitcoin investors and individuals in your organization, such as board members.
Bitcoin can also be incorporated into your online marketing strategy. Once you have the capacity to accept Bitcoin payments, you can include the currency logo in your web-based donation platforms. Donations can be accepted via a personal Quick Response (QR) code linked to a Bitcoin address. A QR code, scanned in barcode form, is generated when you set up your Bitcoin wallet. QR codes allow you easily to make and accept transactions because these unique codes recognize your personal virtual wallet information. Although there may only be a small number of donors wishing to pay in Bitcoin right now, it’s certainly a good idea to make it easy for those who do!
As Bitcoin continues to dominate the newsfeeds of tech-savvy innovators and create millionaires overnight, nonprofits that adopt cryptocurrency tools may be able to gain a competitive advantage. We suggest checking it out for your organization.
CJ Orr is the Director, Business Development, at Orr Associates, Inc., a consulting firm that helps nonprofits fundraise more successfully through a business orientation to problem-solving, a metrics focus, and an outcomes-driven perspective. Ali S. Hussain is the Operations Manager at Orr Associates, Inc. CJ and Ali spearhead the firm’s technology task force.