There’s a reason high net worth individuals donate highly appreciate assets like crypto and stocks
About 6 months ago, Twitter and Square CEO, Jack Dorsey, donated $1 billion dollars worth of Square stock. Jack didn’t donate in the form of stock for the sake of convenience. He and many others are smart enough to know that they should donate their most highly appreciated assets first. For many HODLers, that tends to be crypto.
The IRS classifies cryptocurrency as property, just like stocks. When you donate appreciated cryptocurrency (or stocks) directly to a nonprofit, as long as you hold the asset for a minimum of twelve months, you are exempt from capital gains taxes on unrealized gains and are eligible to deduct the fair market value on the date donated from your tax return as a charitable contribution. For many donors, that can mean saving 20-30% in taxes on the unrealized gains and giving their favorite charity 20-30% more funds.
The last time we saw bitcoin approach $20,000, the Pineapple Fund donated $56 million to 60 different nonprofits. Many other generous donors followed up with multi-million dollar gifts to offset their capital gains.
One thing many of these donors may not have noticed is that they were also spreading crypto adoption in the process. The Pineapple Fund hit mainstream news almost immediately. People were hearing about bitcoin for the first time because an anonymous donor was giving aways $56 million dollars worth of bitcoin. Imagine being introduced to bitcoin for the first time because your favorite nonprofit received a major gift.
Crypto donations are changing the way people view the entire industry. Donating crypto isn’t just about saving you money on your taxes. It’s helping bring in the next wave of HODLers. More donations means more nonprofits accepting cryptocurrency. More nonprofits accepting crypto means more nonprofits talking about cryptocurrency to their millions of followers. More industry participants means more adoption. It’s a virtuous cycle of giving.
Next time you go to donate, the choice is yours. Would you rather donate your crypto to the IRS or your favorite charity? I’d be willing to bet we see Jack donating Bitcoin next time.