The Charity Commission has updated its CC8 guidance to reflect the rise of digital payments and cryptocurrency donations.
The updated guidance, published yesterday, sets out the role strong internal financials controls can play in ensuring trustees can safeguard their charity’s assets and use them properly.
It now features sections on mobile payment systems, such as Google Pay and Apple Pay,donations of cryptoassetsand anupdated checklist to help trustees review internal financial controls.
The Commission also refreshed current advice on risks when holding public collections and fundraising events, making payments to related parties and operating overseas.
Digital payments and cryptoassets
The Commission said the updated guidance is “more concise, clearer and covers issues that were not in existence or widely relevant to the sector” when first published in 2012.
On mobile payment systems, it said that trustees “should have the same controls in place as for payment by debit, credit or charge cards”.
Charities should stipulate in their policy on donations whether they accept donations of cryptoassets and how these are dealt with.
It warned charities of the risks associated with cryptoassets such as the volatility of their value and the lack of protection compared with traditional currencies or financial products.
Trustees have “a legal duty to manage your charity’s resources responsibly, including by implementing appropriate financial controls and managing risk,” the guidance said.
“Understand the risks of holding, and the limitations of using, cryptoassets before you accept donations of them. You should be certain you have the expertise to manage these risks carefully. If you hold any cryptoassets you should be prepared for them to lose their value.”
Updated guidance reflects ‘digital age’
Sam Jackson, assistant director of policy at the Charity Commission, said: “As more and more charities move to operate online and newer technologies are developed, such as the use of cryptocurrencies, trustees will need to navigate risks that might not have been previously considered.
“We have updated our guidance to reflect the digital age we all live in and worked hard to ensure it is clear and simple to use.
“We know there are many internal and external risks to consider which is why we have also updated our helpful checklist so that trustees can have informed discussions about the measures they need in order to best protect their charity’s assets and donations entrusted to them by the public.”
FAQs
Charities should stipulate in their policy on donations whether they accept donations of cryptoassets and how these are dealt with. It warned charities of the risks associated with cryptoassets such as the volatility of their value and the lack of protection compared with traditional currencies or financial products.
Can charities accept cryptocurrency donations? ›
Donating crypto may be a highly tax efficient way to give for some donors. We will provide a receipt of your transaction to help you claim any deductions you are entitled to, but as cryptocurrency is quite complex we advise you to contact your accountant for personalised tax advice.
How many charities accept crypto? ›
Cryptocurrency adoption in the charity space is growing quickly, with 56% of the top 100 charities in the United States now accepting crypto donations as of January 2024, according to the 2024 annual report from crypto charity organization The Giving Block.
Do you have to report crypto donations? ›
If you donated cryptocurrency worth $5,000 or less, you can report it on Schedule A of your Form 1040 tax return. If you donated cryptocurrency worth more than $5,000, you will need to complete and file Form 8283, Noncash Charitable Contributions, in addition to Schedule A.
Can you donate cryptocurrency to a donor advised fund? ›
1. Donate before selling. In order to maximize the potential tax benefits described above, you can transfer your appreciated cryptocurrency, held for more than one year, directly to a donor-advised fund or other public charity rather than selling the cryptocurrency and donating the cash.
Can a 501c3 accept cryptocurrency? ›
Use an intermediary 501(c)(3) to minimize legal, accounting, and administrative burdens. Your nonprofit can accept crypto support through another 501(c)(3), such as a donor advised fund (DAF), without taking custody of cryptocurrency.
Should nonprofits accept crypto? ›
Accepting crypto can open up a new pool of donors.
This growing segment might not have been a priority for nonprofit development teams in the past, but it should be now. As more people buy crypto, more will likely see gains and want to give some of that wealth to charity in a tax-savvy way.
Why donate crypto instead of cash? ›
Crypto donors in the United States pay no capital gains taxes on gifts to 501(c)(3) organizations, which otherwise would have been incurred if donors sold the crypto and then donated. This is the reason why high-net-worth individuals may choose to donate property instead of cash.
Is crypto donate legit? ›
If someone got in touch out of the blue to ask for money, even a donation, it might be a scam. Remember that you can't typically reverse cryptocurrency payments and you can't get the money back unless someone sends it back to you. Visit ftc.gov/cryptocurrency for more information on avoiding crypto scams.
How many people have become wealthy from crypto? ›
There are 88,200 crypto millionaires worldwide. 40,500 of these millionaires have amassed their fortune in Bitcoin (BTC). The number of global crypto owners reached 580 million by the end of 2023, according to Crypto.com.
Proof-of-Donation Meaning: Proof-of-Donation - is the inclusion of charitable donations into the functionality of a blockchain.
How does the IRS track crypto? ›
Yes, the IRS can track cryptocurrency, including Bitcoin, Ether, and a huge variety of other cryptocurrencies. The IRS does this by collecting KYC data from centralized exchanges.
What happens if I don't report crypto on taxes? ›
US residents have to file their gains/losses from crypto trading and income from crypto earning activities on forms like Form 1040 or 8949; Failure to report crypto taxes in the US can lead to fines and penalties (up to $100K) or harsher consequences if prolonged in time (up to 5 years);
Why not use donor-advised funds? ›
Disadvantages of DAFs
8 DAFs often carry many hidden fees of which donors are unaware, similar to 401(k) plans. Critics, therefore, contend that the financial industry and its wealthy clients, rather than charities, are the real beneficiaries of DAFs.
Can you put crypto in a charitable trust? ›
Crypto investors can avoid taxes when selling their crypto with a Charitable Remainder Trust (CRT). On $2 million capital gain you could earn an additional $5.5 million over your lifetime by using a Charitable Remainder Trust to sell your crypto.
Who owns the money in a donor-advised fund? ›
Each account is composed of contributions made by individual donors. Once the donor makes the contribution, the organization has legal control over it. However, the donor, or the donor's representative, retains advisory privileges with respect to the distribution of funds and the investment of assets in the account.
How to accept donations in crypto? ›
The donor chooses their preferred cryptocurrency. An invoice is generated which the donor then pays with their crypto wallet. Once the cryptocurrency is received, BitPay converts the donation to fiat. Donations are deposited into the nonprofit's bank account in their preferred fiat currency the following business day.
Does Fidelity Charitable accept crypto? ›
Certain cryptocurrency, including bitcoin, is eligible for contribution to Fidelity Charitable. For all cryptocurrency inquiries, please contact us at 800-262-6039. Not a Fidelity Charitable donor yet? Sign up and we'll send you smarter ways to maximize your philanthropic impact in a tax-efficient way.
Are crypto donations taxable? ›
Due to its tax treatment by the IRS, by donating appreciated crypto, you won't owe capital gains tax on those appreciated assets as you would have if you had sold the crypto first. For that reason, donating crypto is also more tax-efficient than donating cash.
