Donating Bitcoin to Charities Is On the Rise

Charities are typically welcoming towards all kinds of donations, in money and in kind. Acceptance of bitcoin donations has been steadily on the rise for several years already, with more and more charities accepting the cryptocurrency both at events and on websites.

Giving USA, a 59-year old publication highlighting philanthropy, estimates that Americans gave $358.38 billion in 2014. This figure shows a 7.1% increase from 2013, and after adjusting for inflation, it’s the highest total since before the Great Recession.

The largest source of charitable giving in the US last year was from individuals, at $258.51 billion. Of these funds 32% went to religion organizations, 15% to education, 12% to human services and grant-making foundations, and 8% to health organizations.

The top five reasons people donate to charity, according to a BBB report, are for emotional satisfaction, recognition, to help the local community, to maximize money’s impact, and personal tax benefits.

As more and more people move their daily activities onto the internet, donations to charities who list themselves online are typically on the rise too. In 2014, online giving grew 8.9% in 2014 compared to 2013, while overall charitable giving grew by 4.9%. 100 of the largest charities reported receiving 13% more in online donations.

Smaller nonprofits grew their online donations the most, according to a Charitable Giving Report, derived from The Blackbaud Index. It’s now easier than ever for new charities to accept funding, but there are costs involved.

PayPal company, Braintree, processes donation payments for GiveWell, an American nonprofit charity evaluator and altruism focused organization. GiveWell is charged 2.7% and $0.30 on each transaction. The fee is taken out on GiveWell’s end which means if you donate $100, GiveWell receive $97.

Bureaucracy, graft, and simple inefficiencies can also whittle a $100 donation down to a single meal for someone, or no real benefit at all. Direct Relief attempts to add transparency with it’s unique map-based tracking system. There are also a number of organisations, including Givalike, that try to highlight the worst, and best, charities to donate to.

In May, the Federal Trade Commission (FTC), filed a lawsuit against four cancer charities which included the Cancer Fund of America and the Breast Cancer Society. The lawsuit alleged the operators used as much as 15 percent of more than $187 million raised to cover salaries and personal expenses, including trips to Disney World, concert tickets and dating site memberships over the course of 2008 to 2012. According to the lawsuit only spent 3 percent of the collective funds raised were used for the intended charitable purposes.

"The defendants’ egregious scheme effectively deprived legitimate cancer charities and cancer patients of much-needed funds and support… The defendants took in millions of dollars in donations meant to help cancer patients, but spent it on themselves and their fundraisers." – Jessica Rich, director of the FTC’s Bureau of Consumer Protection

An example of how bitcoin donations can impact charities is shown in the BitGive Foundation’s recent video, which details how a water well at a girls’ school in Western Kenya was funded entirely with $11,000 in Bitcoin donations. “It has made a huge impact”, says founder and executive director, Connie Gallippi.

Direct Relief recently partnered with ChangeTip, making it easy to receive bitcoin donations. Direct Relief, a California-based 501c3 organization has become one of the most popular and highly-rated international charities for the victims of disaster relief and poverty.

The organisations mission statement is “to improve the health and lives of people affected by poverty or emergency situations by mobilizing and providing essential medical resources needed for their care.”

Together with ChangeTip, Direct Relief has launched an eight-day fundraising campaign to help prevent deaths from pregnancy and childbirth complications in Africa. Since bitcoin has no transaction fees, 100% of the donated funds go toward the cause, which in this case is to purchase prenatal vitamins for 2,000 expecting mothers in the West African nations of Sierra Leone and Liberia. A single $5 bottle of prenatal vitamins can provide for one safe pregnancy,  roughly 0.02 Bitcoin at current exchange rates.

Using ChangeTip makes donating effortless across many different social media platforms. Twitter users can tweet their donations within just a few words while Reddit users can leave a tip by simply posting a sentence similar to “@ChangeTip give /u/Direct_Relief $10.”

When ChangeTip finds these commands it automatically moves the right amount of bitcoin out of the senders’ ChangeTip account and into the recipient’s account. When recipients don’t have a ChangeTip account yet, it creates one for them automatically, notifying them how to access their funds.

So far, people have mostly used the platform to send small payments such as paying for a beer ($3.50), a coffee ($1.50), a doughnut ($.35) or a custom-named amount on many of the most popular social media sites, including Reddit, Twitter, Youtube, and Facebook.

When ChangeTip approached Direct Relief for the campaign, they had not even considered accepting bitcoin payments, but quickly found it fit their needs very well.

“I explained the potential for Bitcoin as a global donation option. They were like, that’s huge, because we can’t accept yen, we can’t accept yuan, we can’t accept all these other currencies, because of [transaction and foreign exchange fees]. We would love to experiment with Bitcoin as a global currency.”
— – Victoria van Eyk, ChangeTip’s head of community

ChangeTip is only one of many options. A bitcoin wallet has also been set up for Direct Relief, so that all bitcoin users can donate directly. Many other major charities use BitPay or Coinbase to process donations for them.

Save The Children, a top-rated charity founded in 1919 to provide aid for European children who were affected by World War I, has been accepting bitcoin donations since late 2013. The charity started using Bitpay in 2014. The charity is currently running a campaign to raise money to help devastated children and families in Nepal, suffering after the worst earthquake in the country in 81 years. The earthquake killed more than 9,000 people and injured more than 23,000.

The American Red Cross, one of the largest and most recognized humanitarian organizations, has enjoyed bitcoin donations through a partnership with BitPay since November 2014.

“Bitcoin users are extremely passionate people who are looking to put their bitcoin towards good causes. I’m sure the community will be excited to have such an established charity to donate to.”
— – Elizabeth Ploshay, Bitpay account manager

Given time, and greater bitcoin adoption, all charities may be inclined to adopt bitcoin donations. Bitcoin provides charities with a cheaper option, donations have no transaction or foreign exchange costs, and can be sent internationally without intermediaries. Donors can also make micropayments, and track their donations from start to finish.