- February 12, 2020
- Posted by: icoblock
- Category: Uncategorized
Microsoft accepts bitcoin. Nobody cares. Why? Because if you want people to give up their bitcoin, you’d better have a damn good reason. Microsoft and other companies that accept BTC don’t currently have that. When you currently spend BTC on something from Microsoft, you aren’t getting any additional financial benefit of using that payment method versus a credit card, especially in the U.S. where using BTC for purchases is a tax nightmare. The typical case for spending BTC versus fiat is usually about adoption to encourage more merchants to accept BTC. In a lot of cases, that incentive isn’t strong enough for many HODLers.
Nonprofits are a completely different story. Donations of BTC are not a taxable event. Not only do you not incur capital gains tax, but it’s also a tax write-off on your tax return. Plus, donations still have the added benefit of spreading adoption since they also have powerful social media armies to spread the word. Here’s why nonprofits will lead the adoption of bitcoin and other cryptocurrencies in 2020.
Incentivized: Nonprofits Need to Accept Bitcoin Donations
Nonprofits are accepting bitcoin donations. This is the result of a powerful incentive: taxes. Since the the United States’ Internal Revenue Service (IRS) has classified bitcoin as property, that means it’s similar to donating stock — but in the case of bitcoin, the process is much easier. This incentive is already proving to be stronger for bitcoin than it is for stocks, as “donate bitcoin” has been searched more than “donate stocks” on Google over the last five years.
For the donor, when they donate appreciated bitcoin to a 501(c)(3) nonprofit, they do not have to pay capital gains and can write it off on their taxes. Bitcoin donations are not taxable events for the donor or the nonprofit, allowing people to contribute 20-30 percent more, depending on their tax bracket. That’s why over just the last few years we’ve seen hundreds of millions of dollars worth of bitcoin donations sent to nonprofits, particularly during bull markets. Some of this was fueled by major donors, like the infamous Pineapple Fund that donated $56 million worth of bitcoin to 60 different charities.
If you were going to donate fiat to a nonprofit this year, consider donating bitcoin instead. If the bitcoin has appreciated, this is likely a more tax efficient way of supporting your favorite causes. Plus, you can even redirect the fiat you were planning to donate and just repurchase the same amount of BTC after the donation, so you can keep stacking sats.
Vocal: When Nonprofits Talk About Bitcoin, People Listen
Nonprofits often have larger and more engaged audiences than major corporations. Take Save the Children, for example. They have almost 3 million Twitter followers and a budget of over $800 million per year — more than most for-profit companies. That’s why people are increasingly excited about major nonprofits entering the space. A $1 million fiat donation isn’t a story. A $1 million donation in bitcoin is still a story.
Active: Nonprofits Are Already Accepting Bitcoin Donations
Over the last year, the number of nonprofits accepting bitcoin or other cryptocurrency donations has doubled. You might be surprised by some of the nonprofits that already accept bitcoin donations, such as
Hundreds of nonprofits accept bitcoin donations and are actively fundraising with bitcoin and other cryptocurrencies.
So when it comes time to file your taxes, would you rather pay the IRS or a bitcoin-friendly nonprofit? Donating bitcoin can lower your taxes. More importantly, it could be the biggest thing you do this year to speed up adoption.
This is an op ed by Alex Wilson and Pat Duffy. Views express are their own and do not necessarily reflect those of Bitcoin Magazine or BTC Inc. Content has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.