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A guide for donating your Bitcoin

You can now donate your Bitcoin to charity. Read the article to find out how

someone taking bitcoin from a computer monitor

There is a revolution that has been ongoing for about a decade now.

This cryptocurrency revolution has seen various cryptocurrencies emerge and become widely accepted and used.

Today, you can use your Bitcoin or another cryptocurrency to pay for goods and services, trade, and invest. Apart from these, you can now donate your Bitcoin to charity.

With more charities and organizations accepting Bitcoin, you can easily give and enjoy the ease, convenience, and other benefits. You can choose a reputable platform like quantum ai to start your trading career.

Donating your Bitcoin

Bitcoin is still relatively new to many organizations and entities that depend on donations.

Not all organizations that need your Bitcoin donation operate within the tech-centric environment. Therefore, not many of them accept Bitcoin donations directly.

Instead, to donate your Bitcoin, you can either sell the digital asset and then donate the proceeds or directly through a third-party processor. 

Donating after selling your Bitcoin

selling bitcoin
Image: Payza Blog

You can sell your Bitcoins and then donate the proceeds. This option is relatively straightforward because Bitcoin selling and buying are now commonplace.

While this may be a good way of contributing to charities that don’t accept Bitcoin directly, it has a significant drawback.

After selling your Bitcoin, your proceeds will attract capital gains tax. And this means that the final amount that the charity will receive will be lower than the original value of your Bitcoin sale.

Selling and then donating the proceeds to charity also affects the amount of your charity contribution. You may wish to make a large donation, but the capital gains tax will reduce it.

Therefore, consider these disadvantages while using this mechanism to donate your Bitcoin. 

Donating your Bitcoin through third parties

Instead of selling your Bitcoin and donating the after-tax earnings, you can use third-party processors.

Donating your Bitcoin this way overcomes the problem of tax deductions when you first sell and donate the gains.

It means you will be donating Bitcoins directly through the third-party processor, and hence the charity will receive the total value of your donation.

Third-party processors accept Bitcoin directly on behalf of the recipient organizations. The third-party processors will convert your Bitcoin into fiat currency for the charity at a small fee.

And this makes it straightforward for you to donate your Bitcoin without having to worry about the process of selling and taxation.

Apart from third-party processors, you can also donate your Bitcoin through a donor-advised fund. The donor-advised fund will also accept Bitcoin directly. It will then convert it to fiat currency and invest it.

As the donor, you will have the opportunity to endorse specific charities that will benefit from your donation.

Third-party processors and the donor-advised fund will often have a website or mobile app that you can use to make your direct Bitcoin donations.

illustration of a person sitting on a pile of bitcoins
Image: Open Geeks Lab

You will first need to sign up and provide some details. Then, you will select Bitcoin as your preferred way to donate.

You will also get support in picking your preferred charities to benefit from your donation. 

You will find various third-party processors or donor-advised funds by searching the internet. Some examples include the Gift Block and Fidelity Charitable.

As a Bitcoin donor, you don’t have to worry about handling the process of registering and donating. Instead, you will find valuable tips and support in making your donation.

Take away

You can donate Bitcoin to charity and worthy courses of your choice.

While you can sell your Bitcoin typically and then give the proceeds to charity, using third-party processors or donor-advised funds is much better. But the option is yours.

Have any thoughts on this? Let us know down below in the comments or carry the discussion over to our Twitter or Facebook.

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