Crypto investors have quadrupled a charity donation record set in 2017. Fidelity Charitable says it’s received over $270 million in crypto contributions so far this year — a near 300% increase on the previous $69 million record.
The figures are also an 860% increase from the $29 million in cryptocurrency it received in 2020.
However, the largest grantmaker to US charities said it converts its crypto to fiat quickly after receipt. Vice president and charity planning consultant Tony Oomen explained this was an effort to hedge against market volatility.
“You can have a situation where somebody donates cryptocurrency, and if we don’t sell it right away, it could lose 20% of its value in a day,” he said (via LA Times).
And while the total crypto market cap has pushed over $2.5 trillion in 2021, Oomen added Fidelity tends not to speculate on potential price appreciation.
Charities struggle with digital asset donations
In May, Ethereum co-creator Vitalik Buterin made headlines by offloading over $1 billion worth (50 trillion SHIB) of gifted Shiba Inu to India’s covid-19 relief fund.
Buterin coupled his donation with 500 ETH, worth just over $1 million at the time — a comparatively less volatile addition.
Sandeep Nailwal, founder of the recipient charity, told Bloomberg that local regulation hampered the ability to direct the funds to charitable efforts.
Of the $1.1 billion donated at the time, just $20 million found its way to intended efforts by the end of June.
However, Fidelity Charitable is positioning itself as an intermediary to help smaller non-profits deal with digital asset donations.
Fidelity accepts Bitcoin, Bitcoin Cash, Ethereum, and Litecoin. It splits the pot between thousands of charities across the US. Last year, it handed out over $9 billion across 2 million grants to more than 170,000 charities and non-profits.
Tax benifits of crypto charity donations
On its website, Fidelity Charitable boasts benefits for both crypto donor and donee.
Cryptocurrencies permit donors to mitigate capital gains tax incurred when converting a digital asset to fiat before donation.
Fidelity then places the converted cash in a donor-advised fund, giving them upfront income tax deductions.
A recent survey of just over 1,200 investors with $25,000 in assets outside a retirement plan found that one in three crypto investors have donated digital assets to charity.
And while close to half of those surveyed knew crypto could be donated to charity, the same survey noted more than 40% found it difficult to contribute with digital assets.
[H/T LA Times]