Long Island charities, eager to woo youthful donors flush with gains in cryptocurrency, are gearing up to accept donations of the digital money.
Jeffrey Reynolds, president and chief executive of Garden City-based Family & Children's Association, said his not-for-profit and others are shedding "the same old tired strategies" and seeking new solutions in an era of tight budgets and pandemic restrictions.
"Holding another golf outing or dinner is out of the question," he said. "We're all scrambling to find out how to engage the new generation."
Ken Cerini, president of Bohemia accountancy Cerini & Associates LLP, said crypto-philanthropy is poised for takeoff on Long Island.
"We haven't seen a lot of it yet, but we expect it to be a big source of donations in the next couple of years," he said.
Cerini, whose 64-person firm works with more than 300 not-for-profit organizations, said that a charity could gain a higher marketing profile by accepting cryptocurrency.
"That could be a way to separate you from the pack," he said.
Reynolds said the FCA — which serves about 30,000 people per year on Long Island with addiction treatment, children's mental health and senior services — has begun working with a company to allow it to process cryptocurrency donations.
The company, Washington D.C.-based The Giving Block, specializes in handling cryptocurrency donations for nonprofit organizations.
Its clients include: the American Cancer Society, St. Jude Children's Research Hospital, The University of Alabama, Los Angeles County Museum of Art, People for the Ethical Treatment of Animals, Jewish National Fund, Catholic Charities USA and United Way Worldwide.
In September, The Giving Block said it was on pace to process more than $100 million in cryptocurrency donations in 2021 and projected to increase that to $1 billion in 2022.
Not-for-profits traditionally mount their biggest fundraising efforts toward year-end, when they mark #GivingTuesday, a day of charity on the Tuesday after Thanksgiving, Black Friday and Cyber Monday.
The end of the year also is when many U.S. taxpayers consider charitable donations to help offset realized investment gains.
Cerini said that his firm is advising not-for-profits to install a formal policy regarding the acceptance of cryptocurrency, including a provision to liquidate the virtual currency once it's received.
Cerini advises promptly exchanging cryptocurrencies for U.S. dollars because of the notoriously volatile nature of bitcoin and other digital currencies.
For example, bitcoin, the largest cryptocurrency by market capitalization, recently trading around $56,000, has ranged from $16,351 to $68,790 over the past 52 weeks.
For potential donors with cryptocurrency or stocks that have appreciated, Cerini advises giving the asset — instead of selling it and using the proceeds to make a donation.
"It's much more attractive for investors and donors to donate appreciated assets," he said.
That's because the donor can take a tax deduction for the fair market value of the asset without having to recognize the gain on their tax return, he said.
Reynolds said that by connecting to cryptocurrency, charities also can connect with a new generation of donors.
"If you look to see who's investing in cryptocurrency, it's the millennial generation," he said. "That's where they're investing their money. That's where they're seeing their gains."