Crypto philanthropy: the new era of giving
Are we entering a new era for charitable giving, where cryptocurrencies enable faster and wider philanthropy on a new scale? Maybe, says John Ayling & Associates’ Owen Williamson, but there’s still some way to go.
The same questions are consistently thrown at cryptocurrencies. How do I buy them? Are they a good investment? Will all my money go missing? And, perhaps most importantly, what can you actually do with them?
John Ayling & Associates considers the rise of cryptocurrency and how charities can utilize this space
Despite the mystique, there are currently estimated to be 2.9 million holders of cryptoassets in the United Kingdom; 2.4 million are under the age of 45. Within this statistic lies an opportunity for charities to reach a younger demographic and increase revenue streams; the average charity giver currently is 64, after all.
What makes crypto so good for charitable donations?
With modern blockchain technology, cryptoassets are easily transferable from one domain to another, so even while holding cryptocurrencies as an investment, these could be transferred to a charitable cause. This isn’t clear to the public (or marketeers) yet.
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Charities embracing cryptocurrencies in the US have found the average crypto donor to be far more generous than those donating cash. Crypto philanthropy specialists the Giving Block report the average crypto donation to be 82x larger than the average cash gift (though this will decrease as more volume is generated).
Not only did the Giving Block facilitate 1000% more donations in 2021 than in 2020, other macro factors have further accelerated the market in 2022. Although a ‘bullish’ Q4 of 2021 appears to have come to a halt for now, recent events in Ukraine have acted as a catalyst for cryptocurrency philanthropy. Emergency appeals, even from the official Ukrainian government’s Twitter page, have raised circa $100m as reported by Finbold. At the time of writing, their crypto appeal tweet is the third most interacted with post since the account’s inception, receiving over 72,000 retweets.
Not only does this appeal highlight the trend of crypto donations, it more importantly affords anyone worldwide who interacts with the tweet the opportunity to support a crisis that is close to the hearts of many.
Possibilities and challenges – beyond emergency appeals
Although crypto philanthropy has taken tremendous strides over the past few years, the UK market has remained slow on the uptake as a fully-baked giving mechanic rather than just facilitating emergency appeals. Fear and lack of understanding play a major role. This is completely understandable given that the crypto space can be selfish and confusing, with terminology that can be frankly bizarre.
Lack of transparency is an issue; donors can only refer to the relevant blockchain to ensure the transaction has been completed. There’s also the question of tax; the US has clearly outlined regulations for taxable charity donations, while this remains a gray area in the UK. As with any new phenomenon, these pitfalls provide a barrier for growth.
While these issues are currently unsolved, the ability to send crypto to charity does exist. The removal of these boundaries and addressing the misconceptions of crypto will open the door to a new generation of donors.
Maximizing the opportunity
From a media perspective, how can we implement a strategy to optimize this potential?
Charities typically use direct response television as their primary donor source due its high reach, older audience and cost-efficiency for daytime viewing. Considering crypto’s typical user base, charities may have to look to other channels to target the younger consumer. Cryptocurrency holders are over two and a half times more likely to donate fiat currency via social media than the average adult.
While these are typically emergency appeals, the next step to encourage younger donations could be consistent messaging on social media channels. Will targeting cryptoasset holders significantly impact the income for charities overnight? For most charities, probably not. The more important and longer-term goal is to encourage the younger demographic to donate, given the ever-increasing age of the ‘traditional’ donor. This will cause an attitudinal shift among charities to adapt to the ever-changing macro environment, and in doing so encourage the targeting of the next generation of givers.
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