The Future of Philanthropy with Cryptocurrency Donations 

Cheryl Frietas, Vice President of Corporate and Executive Giving
Fidelity Charitable®

Despite its current volatility, cryptocurrency (crypto) is increasingly emerging as an option to pay for goods and services. With high appreciation for early adopters, crypto can even be used to fund charitable giving. Donor contributions of crypto grew exponentially last year. Fidelity Charitable®, the nation’s largest grantmaker and sponsor of donor-advised funds, accepted more than $330 million in crypto assets in 2021—a nearly twelvefold increase over the previous year. 

Though there are significant opportunities to use crypto in charitable giving, many corporate professionals aren’t familiar with how crypto donations work with their corporate and/or employee giving programs. How can you harness the power of a changing philanthropic landscape fueled by crypto to make a positive impact?

Embrace crypto 

Organizations that embrace crypto as part of their employee giving programs and allow employees to donate digital assets will be well-positioned for the future—particularly as crypto-savvy Millennials come to make up a more significant portion of their employee donor base.

Why donate crypto?

It’s important for crypto investors, especially those who’ve experienced rapid growth in the value of their assets, to be aware that selling digital assets is typically subject to capital gains tax. At Fidelity Charitable, we’ve found significant confusion exists around the tax implications of selling crypto—even among those who own these assets. However, donating crypto to charity can have a double benefit of potentially reducing taxes for the crypto owner and possibly providing a larger gift for the causes they care about.

Let’s look at an example of an employee who invested in Bitcoin that appreciated significantly. As someone who is charitably inclined, they would like to give back to a cause they’re passionate about supporting.

The employee originally purchased Bitcoin valued at $7,200 and would now like to donate it to a charity focused on disaster relief efforts. Today, their Bitcoin is worth $29,800, which means selling and then donating the after-tax proceeds would incur a long-term capital gains tax of $3,390.1

If the employee instead donated their appreciated Bitcoin directly to the public charity or to a donor-advised fund program, they could avoid the long-term capital gains tax and be able to make a gift of $29,800 rather than $26,410 (or the $29,800 minus the $3,390 capital gains tax). The full value of their Bitcoin, $29,800, is now available for charitable giving2 enabling them to maximize their impact. 

Educate your employees

Encourage employees to make an impact by sharing resources on crypto donations. Many donors may be unaware of their options when liquidating digital assets and unlocking these funds for philanthropy. Some ideas could include highlighting the benefits of this funding source in addition to providing lists of nonprofits accepting crypto or giving vehicles such as a donor-advised fund (DAF) that could make the contribution process even easier.

DAFs are like individual investment accounts with a sole purpose of supporting charitable organizations you care about, simplifying the transaction for both donors and charities by accepting the crypto assets, selling them, and then making the proceeds available for grant recommendations. Charities are exempt from paying capital gains on the sale of assets, so the full value of a gift stays intact. Furthermore, an employee will be eligible to take a tax deduction for the value of the bitcoin.

As crypto continues to grow in popularity, digital assets are poised to become a strong source of funding for the future, particularly among the philanthropic Millennial generation. Proactively prepare for a shifting landscape in the charitable sector by adapting your employee giving programs to be more global, social, and inclusive with crypto.

1This assumes all realized gains are subject to the federal long-term capital gains tax rate of 15%. This does not take into account state or local taxes, if any.
2Amount of the proposed donation is the fair market value of the appreciated property held more than one year that you are considering donating as determined by a qualified appraisal.

Fidelity Charitable is an independent public charity that has helped donors support more than 357,000 nonprofit organizations with more than $61 billion in grants. Established in 1991, Fidelity Charitable launched the first national donor-advised fund program. The mission of the organization is to grow the American tradition of philanthropy by providing programs that make charitable giving accessible, simple, and effective.

Disclosures: Fidelity Charitable is the brand name for the Fidelity Investments® Charitable Gift Fund, an independent public charity donor-advised fund program. Various Fidelity companies provide services to Fidelity Charitable. The Fidelity Charitable name and logo and Fidelity are registered service marks of FMR LLC, used by Fidelity Charitable under license. Giving Account® is a registered service mark of the Trustees of Fidelity Charitable. 

Information provided is general and educational in nature and should not be construed as legal or tax advice. Fidelity Charitable does not provide legal or tax advice. Content provided relates to taxation at the federal level only, and availability of certain federal income tax deductions may depend on whether you itemize deductions. Rules and regulations regarding tax deductions for charitable giving vary at the state level, and laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of the information provided. Charitable contributions of capital gain property held for more than one year are usually deductible at fair market value. Deductions for capital gain property held for one year or less are usually limited to cost basis. Consult an attorney or tax advisor regarding your specific legal or tax situation.


Thank you for your submission.