According to Coinbase, twice as many students report having taken a crypto course in 2019 and 41 of the top 50 universities have at least one student-led crypto and/or blockchain club. As people around the world continue to learn about and invest in cryptocurrency, many universities are wondering how to handle the increased interest.
This becomes especially pertinent as both the frequency and amount of cryptocurrency donations continue to rise, including within the higher education space. San Francisco State University made headlines in 2018 when Ripple co-founder Chris Larsen, his wife Lyna Lam, and the nonprofit Rippleworks donated $25 million to San Francisco State University’s business school.
Since then, cryptocurrency has continued to gain momentum as a vehicle for philanthropy, leaving universities wondering about the best way to handle it. Thankfully, there is now clear guidance for organizations and their donors to handle cryptocurrency donations. That said, many universities lag behind other nonprofits in cryptocurrency acceptance or active fundraising.
How to Accept Cryptocurrency Donations
There are two main ways that universities can accept cryptocurrency donations, and we’ll explore each of them so you can get a sense of what they entail.
Using Donor Advised Funds
Many universities don’t actively advertise that they accept cryptocurrency donations on their website; however, some will accept them from a Donor Advised Fund (DAF). This method requires a bit more heavy lifting on the part of the donor as they must reach out to the university first to see if cryptocurrency donations are accepted. If they are, the university may refer the donor to a DAF.
At this point, the donor will be required to complete a compliance process, including paperwork, setting up a giving account, and transferring the crypto to the DAF. The length of this process varies from days to weeks. Once the donation is complete, the DAF will sell the crypto and the university will receive the funds.
Using a Cryptocurrency Donation Service
Since the rise of cryptocurrency, some in the nonprofit sphere saw an opportunity to streamline cryptocurrency donations. As a result, there are now services and platforms available that make it very simple for a university to accept cryptocurrency donations through their websites.
Some solutions enable universities to embed a custom widget on their giving pages to enable a quick and easy way for donors to donate cryptocurrency directly to the institution. Universities that use these solutions find that their cryptocurrency donations:
- Are automatically converted to USD
- Automatically generate tax receipts for donors
- Provide full reporting of donations
- Provide a fully compliant wallet and custody solution (which is FDIC insured upon conversion to USD)
In 2021, colleges and universities can now tap into the benefits of cryptocurrency and the pool of donors who would like to give in this way. Cultivating this donor base can boost donations, but universities should be sure that they have the right technology in place to make the giving process as streamlined as possible for donors.
Considering adding cryptocurrency as a vehicle for fundraising? Reach out today for your free consultation on how Arrow Payments may be able to help you with this and so much more.