Bitcoin fundamentals for non-profits article and permission to publish here provided by Jean Nichols.
Cryptocurrency has already created a few billionaires, and others believe the world’s first trillionaires will emerge in the next decade. Many people would choose to contribute a part of their assets to a charitable organization like any other valuable commodity.
Based on the Silicon Valley Community Foundation’s (SVCF) knowledge, this essay lays out the fundamentals for receiving and valuing bitcoin and other cryptocurrencies donations, as well as several key requirements for keeping and transacting these properties. SVCF made its first cryptocurrency donation in 2013, and since then, it has received and traded a wide range of cryptocurrencies, including Bitcoin, Bitcoin Cash, Ethereum, and Ripple XRP.
The First Step
Updating your gift acceptance policies is a great way to go. “The company can receive gifts of cryptocurrencies, and other types of digital assets after due diligence is done to decide if the asset is ready to be exchanged and liquidated,” for example, according to the policies. On the other side, you would choose to treat them as policy deviations such that the right people check them before being accepted. If your company has agreed not to recognize cryptocurrency as a present, your gift acceptance policies should explicitly state the choice.
If you welcome such donations, bear in mind that most nonprofits would want to sell digital assets as soon as possible after receiving them, particularly since these assets’ value may be highly volatile. If you want to keep the cryptocurrency rather than sell it right now, you’ll probably need to pay for it as an expenditure.
Since the account setup phase for charitable companies will take a week or longer due to Know the Client and Anti-Money Laundering laws, it’s often a good idea to prepare ahead of time before accepting an individual donation. For more information you can visit here Fast Profit
Receiving a bitcoin donation may be done in a number of ways. The best strategy for your nonprofit would be determined by the form and volume of cryptocurrency contributed, as well as your organization’s capacity to handle uncertainty and danger.
Although you can collect and store cryptocurrency in your own “wallet,” most not-for-profits (NFPs) tend to have cryptocurrency received, held, and sold on their behalf by a third-party “exchange” or payment processor. This service provider will provide technological expertise, convenience, and protection that most charities cannot provide on their own.
Some of The Most Well-Known Third-Party Vendors
BitPay is a Bitcoin payment processor located in the United States that provides a straightforward solution for contributions, with an alternative donation button for the website. A donation invoice is created and sent to the donor using BitPay. Bitcoin or Bitcoin Cash is used to allow the purchase by the donor. The money is sent directly to BitPay, who is in charge of converting the coins and transferring the funds to the NFP the next business day. Bitcoin is never included in the NFP’s reports. A 1% settlement fee is charged through BitPay.
Coinbase is a cryptocurrency exchange headquartered in the United States that promotes Bitcoin, Bitcoin Cash, Ethereum, and Litecoin. As of March 2018, the exchange has 20 million users. It is optimized for individual use while being simple to set up and use. Coinbase Prime is intended for more advanced institutional investors and corporate accounts, but many nonprofits will find it too complicated. The first fee is 0.30 percent of the total amount owed.
Bitstamp is a European-based platform which accepts Bitcoin, Ethereum, and other virtual currencies. Person and institutional accounts are supported by Bitstamp, which often includes two-factor authentication for additional protection. The fees differ according to the cryptocurrency.
The blockchain market is also in its early stages. Fraud, malware, and government shutdowns prove to be a threat to online markets and third-party providers. It’s a good idea to have no more money in your online savings than you’re ready to lose.
As a result, an offline “cold storage” or “vault” facility is preferred for a significant gift that can be held and sold over time. These are increasingly being sold in combination with swap platforms, and there are a variety of stand-alone options on the market.
Accepting Cryptocurrency Donations
If, as previously said, your company wishes not to welcome cryptocurrency gifts, your gift acceptance policy should represent this. If you embrace them, the method of obtaining and selling cryptocurrencies is similar to that of receiving and selling gifts of publicly traded stock:
- To collect the donation, open a brokerage account with a respectable firm.
- The donor should be sent the account number.
- Accept the asset.
- Give orders for the commodity to be sold and the proceeds to be wired to your bank account.
Internal safeguards should be implemented in this phase, enabling several signers to open new accounts, establish signing authority thresholds, and separate duties for transacting and reconciling accounts.
It’s especially necessary to plan out the mechanism and controls for cryptocurrency transactions ahead of time since third-party intermediaries in this space haven’t yet established the kind of stringent controls operating in the banking financial services industries.