This story is part of BREAKER’s Social Good Week, a series looking at ways blockchain technology can engineer progress and help humanity.
Cryptography is central to keeping blockchains secure, and in cryptographic logic exercises, Alice (A) passes information to Bob (B). In BREAKER’s blockchain advice column, Alice passes useful advice to “Bob,” our anonymous reader. Have a question? Ask Alice here.
Q: Dear Alice,
Crypto winter or blazing hot summer, I’m a good person with bitcoin to spare. I want to put it towards a worthy nonprofit—maybe even one that’s based on blockchain (I’m a true believer in Web 3.0). How do I know that my attempt to aid Syrian refugees won’t end up funding a weirdo living in his parents’ basement?
Okay, I admit—I’ve also heard the tax write-offs are better with crypto. Will I save myself money by donating bitcoin
With bitcoin to spare, Bob
A: Dear Bob,
I get your concern. Sometimes it feels like everywhere you turn in the crypto space, you come face to face with another scam, in places as seemingly pure and innocent as Elon Musk’s Twitter. But don’t worry. It’s surprisingly easy to discern a scam from the real deal when you’re looking to crypto-fund an established nonprofit.
First, let’s talk the two types of nonprofits potentially worthy of your bitcoin. There are a) established organizations you already know about newly accepting cryptocurrency donations (like the Humans Rights Foundation, which does take crypto), and there’s b) charities you don’t recognize but are accepting crypto, and new, blockchain-focused nonprofits (which accept crypto because duh, they’re built on a blockchain).
Let’s address a) first. The not remotely tech-related nonprofit you know and appreciate suddenly announces it’s accepting donations in cryptocurrency. How do you know it’s legit? Alex Wilson, founding partner of The Giving Block, a consulting firm to nonprofits getting into blockchain and cryptocurrency, suggests a so-simple-we-should-have-thought-of-it-ourselves solution. Check the organization’s website. “Only donate cryptocurrency to [a nonprofit] if they’re advertising [that they accept crypto] on their website,” says Wilson. It’s also important that the nonprofit posts their wallet address, so you can verify where your funds are going. If the ASPCA tweets that they’re now all about ETH , sharing a QR code for donations, take a look at their website. If you don’t see any mention of ether there (you won’t), think twice before sending some.
Say you come across a nonprofit you’ve never heard of, but it’s promoting a worthy cause. You want to raise funds so that people in impoverished Venezuela can buy food (an example Wilson’s come across), but there’s no established website to tell you this org is for real. Wilson’s tip: “Check sites like Charity Navigator.” If you can’t find the charity there, the safest move is not to trust it. Charity Navigator and sites like it (such as Guide Star or even the IRS’s tax exempt org search) only list 501(c)(3) registered nonprofits. They also feature metrics about organizations’ financial performance, transparency, and accountability. And keep in mind, “very few nonprofits that take cryptocurrency,” says Wilson. “We think it’s less than one percent.”
Okay, we’ve got your good intentions out of the way. Now let’s talk what’s in it for you.
Since the IRS has classified cryptocurrency as property, you get significant write-offs from donating it. The potential savings on capital gains tax, both federal and local, can reach as high as 30 plus percent in some cases (closer to 15 percent if you’re on the lower end of the tax bracket). You’ll be doing the charity a favor, too, as they don’t have to pay capital gains taxes on property. Plus, cryptocurrency offers something most property donations don’t—liquidity. Charities can cash it out at any time, unlike if you donate stocks or real estate.
Regardless of what you decide, remember to keep your crypto far away from Elon Musk’s Twitter.
Q: Dear Alice,
I’m about to launch a brand new blockchain charity (…details available upon our debut ;)), and I want to announce our mission with a splash. I also happen to be a huge fan of Justin Bieber, who always gets really cool media coverage. I’ve seen other blockchain companies recruit celebrities to promote their missions. Ripple has Bill Clinton and Ashton Kutcher, Centra has DJ Khaled, and PotCoin has Dennis Rodman. I want Bieber. How do I get him to show up at my crypto charity ball?
Beliebing for charity, Bob
I’m more of a Jojo Siwa fan myself, but there’s no accounting for taste!
Instead of answering your question directly, I’m going to post a piece of relevant advice. When you choose a celebrity to represent your cryptocurrency nonprofit, choose carefully. You’re trying to get people to donate money to help others. You want respect, you want legitimacy—and a (former?) pop star who takes time out of his day to insult a 15-year-old YouTube performer for her super cool dream car might not be taken so seriously by the crypto elite, or anyone else considering donating to your cause.
But okay, you want a bully who pokes fun at a sweet, innocent teenager to rep your new blockchain charity. Cool, fine, I’m here to support you with my guidance. But I’ll be straight with you—I’m a crypto expert, not a getting-in-touch-with-celebrities expert. I suppose you can try Bieber’s website or his Twitter.
How do you get his attention? I can tell you what not to do. Don’t pay him to show off your org.
Consider what happened with DJ Khaled, Floyd Mayweather, and Centra. The two celebs got paid to promote a shitcoin and the SEC cracked its regulatory whip. Now they’re paying hefty fines. If you love Bieber as much as your message suggests, even though he said mean things about this really cool car and therefore the 15-year-old who owns it, don’t make him pay.
Although he should pay, for what he said about this cool car.
I mean, just look at it. It’s got all the colors. It’s got a picture of the 15-year-old owner’s face. She probably doesn’t even have her driver’s license, and yet, she has this. (Can 15-year-olds drive? I forget. I’m not a legal-driving-age expert.) There’s only one word for the whole situation: Amazing. Okay, two words—also: Wow. Maybe: Much wow? This car definitely has enough “much wow” cred to become an internet meme. Is it one already? Let me Google it…
What were we talking about? Social good? Your charity organization? I got so distracted by these celebrities and their weird feud about a colorful car. Maybe there’s a lesson here… Oh yes: Think carefully about which celebrity you get to endorse your crypto nonprofit. The wrong one may prove a distraction, not an attraction. Don’t let a celebrity take attention away from your worthy cause.