The UK Charity Commission advises charities to be cautious and comply with the law when accepting crypto donations, as they can be volatile, risky, and hard to trace.
Cryptocurrencies, such as bitcoin and non-fungible tokens (NFTs), are becoming more popular and mainstream, but they also pose significant challenges and risks for charities that accept them as donations.
The UK Charity Commission, the regulator of charities in England and Wales, has guided nonprofits on safely and legally handling crypto donations.
The guidance says charities should record crypto transactions, follow tax and anti-money-laundering laws, and weigh digital asset risks. The Commission cautions charities about crypto donors’ reputations.
The Commission’s Chief Executive Officer, Helen Stephenson, said in a speech that the guidance aims to help charities “navigate this fast-moving and complex area” and to “exercise caution” when dealing with crypto assets.
She added that the Commission is “keen to foster innovation” and “protect public trust and confidence” in the charity sector.
Sam Jackson, the Commission’s policy chief, said in a blog that crypto assets could help charities raise, invest, and move funds, citing Ukraine’s and UK’s crypto success.
However, he also acknowledged that there are “real risks” in engaging with crypto assets and that “much we don’t yet know” about how they will develop.
The Pros and Cons of Crypto Donations
As charity crypto donations increase, the Commission provides guidance. The UK-based Children’s Heart Unit Fund (CHUF) received over £100,000 in Bitcoin donations in the past year.
The Effective Ventures Foundation, which received major funding from the FTX exchange and its founder Sam Bankman-Fried, filed for bankruptcy after misusing crypto offers.
Thus, charities should carefully consider receiving crypto donations and obey the law and best practices.
The Commission’s guidance provides some valuable tips and resources for charities that want to explore this emerging area of philanthropy.
