If you’re a nonprofit professional ready to offer more payment options for donors, Bitcoin could be a worthy option. It’s a cryptocurrency created in 2009 by an individual or group using an alias. People can send this digital currency to each other from anywhere in the world without bank accounts, which makes Bitcoin in Nonprofit potentially quite convenient if you have an international reach. You read our earlier article on How Bitcoin work if you are still not aware of that.
Understand Practical Reasons for Accepting Bitcoin in Nonprofit
Before making a serious decision about whether Bitcoin in Nonprofit is a feasible solution, think carefully about the reasons that make it appealing to your organization. For example, Bitcoins and blockchain — the technology associated with them — are becoming more popular in the social good sector.
In addition to accepting Bitcoin donations, some nonprofits are using a system that allows members of the public to trace those funds and see how organizations use them. Known as GiveTrack, it gives real-time information, which helps increase transparency.
Perhaps some of the donors in your target audience have expressed to you that they’re using Bitcoins more often now than in the past, and would appreciate it if you’d accept them as a method of payment. In that case, you might want to make use of Bitcoin in nonprofit for convenience purposes.
Also Read: 5 Best Bitcoin Apps For 2018
Regardless of the specifics surrounding your situation, it’s crucial to have a solid grasp on why Bitcoin in Nonprofit make sense. Once you know that, it’s easier to address your audience through press releases or other means that announce the new offering.
Many people view organizations that accept Bitcoins as ones that are keeping up with the digital revolution. Your decision to do so could represent meaningful growth for your nonprofit.
Choose a Digital Wallet and Payment Processor
When your organization handles Bitcoins, they come from and go into your chosen digital wallet. Many digital wallets are also associated with payment processors. Notably, Coinbase — one of the most well-known Bitcoin payment processors — began waiving fees for nonprofits.
That benefit allows organizations to instantly convert Bitcoins into U.S. dollars and receive daily transfers into bank accounts without dealing with additional expenses.
Regardless of the digital wallet and payment processing company you choose, always learn the details of associated fees. If you pick an entity other than Coinbase, it’s worth bringing up the fact you’re a nonprofit interested in using Bitcoin and seeing if the provider offers any enticing deductions.
Be Aware of the Potential Downsides
Because Bitcoin is a relatively new method of payment — and a digital one — the regulations surrounding it are not as concrete as they are for physical forms of money. That results in some tax and accounting matters that could increase the workload for your nonprofit, or make it difficult to justify the funds if the IRS performs an audit.
For example, the IRS classifies Bitcoins as property, which means your nonprofit must consider them non-cash gifts. As such, the donor has to assign a value to the donation and acknowledge that value.
Before starting to accept donations, contact an accounting professional and ask what you need to do differently when preparing donor receipts or any other documents associated with charitable giving.
There could also be tax-reporting implications associated with whether your establishment retains the Bitcoins or converts them to another, more widely accepted currency. Also, if you’ve read Bitcoin-related news, you probably know its value wildly fluctuates.
Your accountants must keep careful records of how much Bitcoins are worth when you receive them. That documentation should be helpful in the event of an audit.
There are pros and cons to almost everything, and your nonprofit should be mindful of the potential pitfalls above when evaluating Bitcoin and whether it’s beneficial for your organization.
The more knowledgeable you are about those aspects, the easier it’ll be to determine if Bitcoins are an appropriate area of focus and take further steps toward making your plans turn into realities.