I believe my crypto will continue to appreciate, why would I donate it?
What assets can I donate and how
Who can I donate to
I can’t find my charity of choice with your search function
What fees are involved in donating
I am making a large donation and am worried about the dollar amount that will be taken in fees
How large of a donation can I deduct on my tax return?
Do I need a qualified appraisal to get my tax exemption?
I want my charity of choice to hodl my cryptodonation rather than selling to USD
If you have been investing in cryptocurrency for over a year, chances are you may have some assets that have appreciated considerably. You may even have some you intend to HODL for the long run or may have even mentally written off a portion of your stack to pass on to your children or grandchildren. With that type of conviction in the long-term thesis, even the thought of letting go of any of your stack may seem absurd to you.
However, you may be selling yourself short! If you donate the value in crypto held a year or longer that you otherwise would have donated in US dollars, you can realize the appreciated value without taking a hefty tax hit on your gains. You can then take the US dollars you were originally going to donate and fully rebuy your position in crypto, the exact same amount of coins you just donated, only now at a tax-advantaged higher cost basis (meaning a lower future taxable amount should you sell those coins down the road).
There are three ways to donate through our partner every.org.
You can donate to any registered US non-profit. As we are an organization dedicated to helping American Muslims take advantage of potential tax benefits we only focus on US registered 501(c)(3) nonprofits. The IRS only grants tax exemptions for donations to registered 501(c)(3) nonprofits
Our search function is driven by IRS NTEE codes, pulling in any organizations that have filed with the IRS under the X-40 denomination, indicating a religious organization affiliated with the Muslim faith. The only name that will show in our search bar is the official name the organization registered under with the IRS. Sometimes nonprofits rebrand to different names or websites, which makes them harder to find within our search feature in order to donate your crypto to them.
If you are not finding your charity of choice in our search function, the first thing you should do is find your organization’s EIN, which usually is located somewhere on their website or can otherwise be readily obtained by contacting the charity (if the charity does not have an EIN then your donation might not be tax exempt). Once you have the EIN, you can enter it into the IRS’ search tool to find the official name the nonprofit status was secured under.
In other situations, the project you are wishing to donate to is not a registered non-profit itself, but is fiscally sponsored by another 501(c)(3). With a little collaboration from the fiscal sponsor, we can establish a payment process for the project you are wishing to support. Please reach out to us with the name of the project and fiscal sponsor and we will work to make it happen.
Neither CryptoZakat or our primary partner Every.org charge any fees or surcharges. When you donate using payment links, your donation is processed using Coinbase Commerce, which charges a flat 1% fee to liquidate your donation into US dollars. Every.org sends you a donation receipt for the US dollar value at the time of transaction and will generate a USD grant for the organization you chose to donate to.
If the organization has claimed its profile on Every.org and connected its banking via Stripe, it will be able to retrieve grants on-demand, without any additional disbursement fees. For organizations that have not claimed their profile, Every.org relies on NetworkForGood to generate and mail a physical check. Unfortunately, NetworkForGood takes a 2.25% fee for providing this service. At the end of the month, Every.org sends the total dollar amount of donations a charity has received to NetworkForGood, which then mails a check to the nonprofit’s address on file on the 15th of the month. If you are an administrator at your organization, please claim your organization’s profile on Every.org. In most situations, the entire process can be completed in 2 business days or less.
If you are making a large donation in excess of $20k and worry that the Coinbase Commerce fee may outweigh price volatility involved in a donation that is not immediately liquidated, please contact us to coordinate a manual donation via Every.org. Please make sure to let us know :
The charity you intend to donate to
The amount you wish to donate
The asset you wish to donate
If the assets being donated were held as an investment for more than one year and you itemize deductions, you may deduct the fair market value of the gift, up to 30% of your adjusted gross income (AGI) with a five-year carryover.
It depends on the amount you are donating. If you are donating over $5k in cryptocurrency in a single tax year, then you most likely will need a qualified appraisal to complete IRS form 8283 and ensure your donations maintain tax exempt status. While common sense would declare it excessive to get an appraisal for an asset like BTC or ETH where there is robust, 24/7 historical price data traded on international markets, the IRS has not provided updated guidance that would allow crypto donations to be treated like donations of publicly traded stock. This is particularly frustrating for donations that are immediately sold to USD, yielding an indisputable value for the donation. If you are worried about getting dinged on a technicality, then the conservative approach is to get the qualified appraisal, which must be completed prior to the date you file your taxes to be valid (if you are unable to secure an appraisal before the tax deadline, you can file for an extension; the appraisal just needs to be complete before you file your return).
If you need assistance finding an affordable appraiser, email us at email@example.com. We are currently working to partner with qualified appraisers to offer discounted rates to our users. If you know an appraiser who may be interested in partnering with us, please let us know.
We are longterm believers in the ability of blockchain technology and crypto assets to change the world for the better with a transformational potential on the scale of the printing press and the internet. In just over a decade, blockchain technology has grown into a multi-trillion dollar industry.
Despite this, the asset class is still very volatile and requires a higher risk appetite than most non-profits have. Most non-profits do not carry over a large treasury from year to year in which they might hold BTC or ETH as a reserve asset and almost none are interested in temporarily holding crypto/trying to time the market with their sells to USD. Compliance and custody concerns stand as further barriers for most organizations
Nonetheless, we keenly recognize the opportunity nonprofits may have to position themselves for the future with a crypto endowment. It is our vision to be able to make this happen in the future as our organization grows. If you are affiliated with a qualified custodian that may be interested in helping to make this a reality, please reach out to us!
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DISCLAIMER: CryptoZakat’s tools utilize API data from third party sources that can be prone to market volatility, which may cause divergence from the reported price of an asset while utilizing the tool and the price a donation is executed at. Cryptozakat’s price quotes should not be used when completing official tax documents. The tools and resources on CryptoZakat.io are for educational and informational purposes only and are not intended to constitute, and should not be relied on for, tax, legal or accounting advice. Some donations may require qualified appraisals in order to be granted tax exemption from the IRS. Optimal tax strategies can vary greatly from person to person and we strongly encourage users to seek qualified guidance from a certified professional accountant or registered tax lawyer.
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