Cryptocurrency, also known as virtual currency or “crypto,” is a digital asset designed to function as an alternative to sovereign fiat currency (U.S. dollars, for example) whereby transactions between two parties are verified through a public, distributed ledger, also known as a blockchain. Most people think of Bitcoin and/or Ether when they hear the word “Crypto,” and while Bitcoin is the original cryptocurrency and most widely followed, there are many cryptocurrencies currently available.
Yes, the IRS has classified crypto as a virtual currency and is treated as property (not a fiat/sanctioned currency or security). On March 2014, the United States Internal Revenue Service (IRS) ruled that Bitcoin is treated as property for tax purposes (IRS Notice 2014-21).
Donors are looking for creative ways to give that supports the ministry but also minimizes their tax liability. Much like a gift of stock, if a donor sells crypto that has appreciated in value, they will have to recognize a capital gain on the sale. If, instead, the donor decides to donate that crypto, they will get the double benefit of receiving a charitable tax deduction for the full fair market value while also avoiding capital gains.
For U.S. tax purposes, transactions using virtual currency must be reported in U.S. dollars. Therefore, taxpayers will be required to determine the fair market value of virtual currency in U.S. dollars as of the date of donation. If a virtual currency is listed on an exchange and the exchange rate is established by market supply and demand, the fair market value of the virtual currency is determined by converting the virtual currency into U.S. dollars (or into another real currency which in turn can be converted into U.S. dollars) at the exchange rate, in a reasonable manner that is consistently applied.
Donors who give cryptocurrency donations to Biblica will receive an automatic electronic donation receipt directly from the Engiven platform. The receipt will include the type and number of coins donated, along with the date and time of the donation.
Yes, you may designate your gift to benefit approved ministry projects. If you would like to designate your cryptocurrency gift to a specific Biblica program or project, please contact the Office of Legacy Giving at (800) 448-0456 or email us at [email protected].
Biblica does not directly trade in cryptocurrency and will not hold the donated cryptocurrency. Crypto values can swing wildly, potentially reducing the impact of the gift, and most donors intend for their gift to benefit the mission immediately. Biblica will liquidate crypto upon receipt to prevent loss due to the volatility of the crypto market.
The Engiven platform is a third-party vendor provided donation software technology that enables Biblica and other nonprofit organizations to receive cryptocurrency donations safely and securely and then convert those donations into usable fiat currency such as U.S. dollars. Learn more about Engiven at http://engiven.com.
As with any form of electronic payment or transaction, there are risks; however, our vendor Engiven has created certain safeguards they believe are needed to ensure that the transaction is secure. With the transfer of cryptocurrency from donor to nonprofit, Engiven believes the transaction can actually be more secure than many other forms of payment, provided certain protocols are followed:
1) By using the Engiven platform, both the nonprofit and the donor are required to undergo a simple but effective Know Your Customer (KYC) and Anti-Money Laundering (AML) screening which provides a high level of background security to ensure both parties are properly screened.
2) As with any cryptocurrency transaction, when transferring your tokens to Biblica’s wallet to make a donation, do not expose or share your wallet’s private keys at any time.