In addition to generally having lower overall processing fees, Bitcoin also makes it feasible for nonprofits to run micropayment campaigns. The Chicago Sun-Times experimented with micropayments in February 2014, which allowed visitors to donate Bitcoin in order to access articles, with all proceeds going to the Taproot Foundation. The experiment resulted in 700 donations. The Opportunity However, Bitcoin’s potential for nonprofits extends far beyond micropayments. Organizations like Sean’s Outpost, which serves homeless individuals in Pensacola Florida, has received over 400 Bitcoins in donations to date. By today’s exchange, 400 Bitcoins is worth over $250,000 USD. In addition, the University of Puget Sound recently received a $10,000 Bitcoin donation from one of their alumnus. For organizations that are interested in exploring Bitcoin, Bitcoin100.org donates $1,000 USD to any registered charity in the world that adopts Bitcoin. Bitcoin presents an opportunity for nonprofits to engage with their supporters who are early technology adopters as well as position themselves as tech-savvy organizations. As well, this also permits those who prefer to donate anonymously to do so easily. Though some have dismissed Bitcoin as a trend, it is worth noting that there has been a significant amount of investment in Bitcoin startups, namely Bitpay and Coinbase, which have received over $25 million in venture capital in 2013. In my own conversations with QuickBT.com, which is a Canadian service that allows individuals to quickly convert debit transactions into Bitcoin, they estimate that at least 25% of their users are under the age of 18. It is worth noting that for young people who wish to purchase goods and services online, while many of
them may have bank accounts, not all youth have access to credit cards. Bitcoin offers a way for youth to engage with financial systems that have previously been outside their reach. As additional organizations start accepting Bitcoin, this has become a way to allow young people to engage with them. For instance, online games such as Bombermine.com have started allowing Bitcoin to be used to purchase premium items. While larger merchants like Overstock.com and Expedia.com
“BITCOIN PRESENTS AN OPPORTUNITY FOR NONPROFITS TO ENGAGE WITH THEIR SUPPORTERS WHO ARE EARLY TECHNOLOGY ADOPTERS, AS WELL AS POSITION THEMSELVES AS TECH-SAVVY ORGANIZATIONS.” are accepting Bitcoin, there still remains a few key challenges for nonprofits. When assessing whether your organization may be a good fit for Bitcoin adoption, it is worth considering whether you have the technological capacity to support it, and on a pragmatic level, if your donation systems can properly record these transactions. However, tools such as Bitpay and Coinbase continue to emerge, which make Bitcoin accessible to those who are not software developers. Governments are still in the process of determining how to deal with Bitcoin. In the US and Canada, it has been classified as a commodity that is subject to capital gains and
taxation, but this may change over time. When it comes to charitable donations, as long as fair market value can be established, this satisfies most requirements for tax authorities. Why is This Useful? Beyond all this however, it is worth exploring Bitcoin because digital currency is not an if, but a when. It is the next natural evolution of existing financial systems and we have already seen this progression with the advent of the Internet, with the usage of credit cards for online shopping, and online banking. This is also being reflected in government initiatives that are exploring this area. The Royal Canadian Mint explored digital currencies with a project called MintChip, and most recently at Apple’s worldwide developer conference, it was announced that the developers may be able to integrate “approved” digital currencies into their apps. If you are looking to learn more about Bitcoin, NonprofitBitcoin.org is a site that is dedicated to educating and supporting nonprofits who are looking to adopt digital currencies. It is a site that has been developed by individuals at nonprofits who have adopted Bitcoin and are keen to share their knowledge and experiences. Whether it be Bitcoin or another digital currency, it will only be a matter of time before a payment system emerges that reflects and embraces the decentralized model of the Internet and nonprofits who are prepared for this may stand to benefit as early adopters. JASON SHIM (@JasonShim) serves as Digital Media Manager at Pathways to Education Canada, an organization dedicated to helping youth in low-income communities graduate from high school and successfully transition into post-secondary education. Jason successfully implemented Bitcoin donations at Pathways to Education in 2013, and has advised numerous other nonprofits on how to do the same. Jason gratefully acknowledges the contributions and thought leadership of David J. Neff of PwC Digital for this article.
NTEN CHANGE | JUNE 2014
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