In 2021, the year cryptocurrency entered the cultural zeitgeist, charitable donations of the digital asset increased 12-fold, according to data from Fidelity’s donor-advised fund, Fidelity Charitable.
This brought total crypto donations to $330 million, up from $28 million in 2020, the fund published in its annual donations report. The lion’s share was in Bitcoin, which accounted for 88% of all crypto giveaways. Another 11% came from Ether and 1% from alternative tokens, such as Litecoin.
The crypto-donation trend crystallized as the value of tokens skyrocketed: bitcoin started the year at a price of $32,000 per coin, then hit new highs that nearly doubled its value in the first half, before reaching a record level. record near $70,000 in November. It ended the year at $48,000, up 50% year over year.
With such potential for generating value, it is no surprise that crypto has been popularized as a vehicle for charitable donations. Rather than offering cash, many donors have long chosen to donate stocks, bonds and other valued assets, even real estate or works of art, which can allow them to give more by increasing their effective cash allocation. If a donor first sold a stock and donated the resulting money to a philanthropic organization, any appreciation in the stock would be subject to capital gains tax, up to 20% of the stock’s gains. However, if the stock itself is donated, that 20% could end up in the hands of the recipient rather than the government.
The same goes for cryptocurrency, which falls under capital gains tax law if the tokens have been held for more than a year. And in the case of Bitcoin, all tokens purchased before 2021 have surely posted massive gains for the vast majority of the year; the coin was only $7,000 at the start of 2020, and its price remained relatively stable until it launched its meteoric rise at the end of this year. Losing up to 20% of these dizzying gains would no doubt be hard to digest.
But despite the surge, cryptocurrencies make up a small percentage of Fidelity Charitable’s philanthropic dollars. Its $330 million pales in comparison to the fund’s typical giving scale: This year it disbursed a record $10.3 billion in donor-recommended grants. Overall, 55% of total contributions to the fund came from publicly traded securities, including stocks and bonds.
Cryptocurrencies, however, have been noted as a charitable group: in 2020, 45% of investors in the digital asset class donated $1,000 or more to philanthropic organizations, said the fund (33% made their donations in cryptocurrency specifically). As Fidelity Charitable suggests, this could stem from the overlap between crypto investors and philanthropy-inclined people among millennials, of whom nearly 90% say giving is an important part of their lives, and 75 % of them would call themselves “philanthropists”. According to the fund, 35% of young investors say they own cryptos, and half of those who say they don’t think about it.
And as the crypto-savvy generation grows into a larger share of the global donor base, we can only expect the share of Bitcoin giveaways to grow along with them.