How to use cryptocurrencies for charity

We tell you what barriers foundations and those who want to help them face when using cryptocurrencies, as well as what prospects digital currency opens up for charity

Cryptocurrencies appeared relatively recently, but are rapidly gaining popularity – their capitalization in the world has already exceeded $2 trillion. Our country ranks third in the world in terms of mining, and according to the Triple A payment service, more than 17 million people own cryptocurrency in the country. At the same time, the number of charitable donations in cryptocurrency is growing by hundreds of percent a year. Foreign foundations: Food for Life Global, Greenpeace, Save the Children, United Way, and Podari.Life (Give Life Partner Fund in the US) are already accepting donations in cryptocurrencies, along with many other non-profits around the world.

The Friends Foundation and the analytical agency MINDSMITH have published the results of the first study in our country on the use of cryptocurrencies in the non-profit sector. The authors surveyed more than 60 Russian charitable foundations and conducted interviews with donors and experts to find out whether cryptocurrencies can become a new tool for raising funds and what legal, technical and organizational barriers need to be overcome for this.

Foundations want but don’t know how

Non-profit organizations express great interest in the topic of cryptocurrencies. The survey showed that every second fund (46,7%) would like to accept donations in this form. At the same time, only 1 out of 10 funds plans to introduce mechanisms for collecting donations in cryptocurrency in the coming year. Their fears are dictated by three main reasons: the uncertainty of the legal status of cryptocurrencies in our country (63,3%), technical difficulties (60%), lack of understanding of how to properly report to the state for these funds (53,3%).

Ekaterina Smirnova, lawyer and head of the antimonopoly practice at Ivanyan & Partners Law Office, says that the law does not prohibit charitable foundations from collecting donations in cryptocurrencies, but their legal status is still ambiguous: “The Ministry of Finance has prepared a bill on regulating cryptocurrencies, which supports the idea of ​​their partial commissioning. Namely: it is planned to allow buying and selling crypto and changing it to fiat money through the official banking system. At the same time, the use of cryptocurrencies as a means of payment is still prohibited, and they will be considered solely as a tool for investment.”

Funds with a proactive stance explain their interest in cryptocurrencies by the need to be more “flexible”, “modern”, “fashionable” and ready to provide the most diverse set of donation tools to a wide range of donors. However, they are concerned about the ethical origin of cryptocurrency – its “image” in society is too ambiguous.

Based on interviews and surveys, the authors of the study identified two main ways to solve this problem:

Cryptocurrency is the new money for the sector

Most of the funds and experts surveyed expressed the opinion that cryptocurrency donations can attract new donors to the sector, and hence new money. Only 16,7% of funds doubt that there are philanthropists who are ready to make donations in cryptocurrency.

The situation is complicated by the fact that NGOs do not understand how to find common ground with cryptocurrency owners and attract their attention. Today, the crypto holder is a “dark horse” for Russian charity. Experts interviewed by the authors of the study expressed the opinion that today the worlds of Russian charity and cryptocurrency holders do not intersect. The survey showed that representatives of NGOs have little idea about the crypto communities: their profile, values, content of activities, willingness to provide donor support. At the same time, the idea of ​​​​the similarity of the values ​​​​of the two sectors is expressed: a view of the world as decentralized, the separation of the principles of self-organization and collective responsibility, which can become a starting point for the convergence of charity and cryptocurrency communities.

Everyone is waiting for the pioneer

The general position of most funds is that the massive use of cryptocurrencies in charity will only occur when one or more large funds become “pioneers” and show by example that this is possible, accessible and transparent.

Today, donations in cryptocurrency are accepted by Podari.Life, a partner fund of Give Life in the USA. Its director, Lelya Shergova, explains this by the fact that in the United States there are no legal prohibitions on the circulation of cryptocurrencies, so the fund has no problems with receiving, withdrawing and crediting them to the fund’s bank account: “As for Russian realities, it seems to me that the idea of ​​organizing a special a platform that would centrally collect donations in cryptocurrency for non-profit organizations. In America, this already exists – this is the Coinbase platform.

The results of the survey and interviews showed that the level of competencies that Russian NGOs have now will not allow them to cope on their own. Charities need an intermediary to guide them through the entire process, from accepting cryptocurrency to reporting.

The authors of the study also emphasize the role of the state – in addition to legislative regulation, it is possible to popularize cryptocurrencies in charity through special government initiatives. For example, one of the options could be the issue by the Russian government of its own cryptocurrency or “good tokens”, which will go to the charitable sector. In addition, it will be necessary to introduce educational formats for NPO employees: online courses, lectures, consulting assistance from blockchain specialists and the assistance of intellectual volunteers in the development of technical solutions.