In an article for InsideHigherEd, Emma Whitford talks about colleges and Universities accepting cryptocurrencies as gifts from donors. Cryptocurrencies join stocks, monetary donations, land, and art as donations of gifts now accepted by campuses.
Increasingly, colleges and universities have shed the reluctance to accept crypto and are more than willing to accept crypto. For example, the University of Pennsylvania announced last week that it had accepted $5 million worth of Bitcoin from an anonymous donor. The donation was towards the Stevens Centre for Innovation in Finance at the Wharton School.
Largest Cryptocurrency Donation
The $5 million gift is smaller than the university’s previous donations, such as a $125 million gift to the law school in 2019 and a donation of $225 million to the school of medicine in 2011. However, the donation made waves because it is the largest cryptocurrency donation that the university has received.
Building Infrastructure For Crypto Donations
According to John Zeller, the senior vice president of development and alumni relations at Pennsylvania University, the donation sends a message that the university can accept large cryptocurrency donations.
Earlier, universities could not accept cryptocurrencies, but as the crypto market grew and more donors approached universities with gifts of Ethereum, Bitcoin, and other currencies. Colleges and universities focused on building the required infrastructure to accept digital donations or partner with third-party companies that could process digital donations on their behalf.
Previous Donations To The University Of Pennsylvania
The University of Pennsylvania has previously received virtual currency gifts, totaling between $35,000 and $50,000. However, cryptocurrency donations make up a very small percentage of the university’s fundraising revenue.
The university utilizes an intermediary called NYDIG that processes all virtual currency gifts on its behalf. Donors wishing to donate can send the cryptocurrency to NYDIG, which liquidates the digital assets and transfers the funds to the university.
Donations To Other Universities
Other universities have also received cryptocurrency donations recently. For example, the University of California, Berkeley, received its first Bitcoin donation from the Echolink Foundation in 2017. The foundation gifted over $50,000 worth of Bitcoin to the university’s blockchain lab.
An Alumni of the University of Puget Sound gifted $10,000 worth of Bitcoin to the university over seven years ago. The executive vice president and CFO at Puget Sound told EAB
“When Puget Sound received its gift, it immediately sold the Bitcoin to eliminate volatility risk.”
The University of Illinois Foundation has also received its fair share of cryptocurrency donations, with the university website guides for different gift types. Sue Johnson, marketing and communications director at the foundation, stated,
“The foundation also immediately liquidates the cryptocurrency gifts, which “mitigates any risk involved with this type of donation, As of today, we have only received a few gifts of this type, and it remains a small percentage of total giving to the University of Illinois. However, we believe it is important to provide our donors with the most current ways to give in support of the mission of the University of Illinois.”
Minimizing Taxes For The Donor
The cryptocurrency donations have also proved beneficial for the donors, allowing them to avoid capital gains tax. Donating the cryptocurrency directly to the college or university allows donors to avoid tax. Colleges and Universities also do not pay capital gains tax on donations because they are non-profit organizations and are exempt from those taxes.
A Complicated Process
Colleges and universities are exploring different options to receive non-cash donations. For example, some universities have set up digital wallets that act as intermediaries between the donor and the college and allows the donor to transfer the donation without liquidating it.
Universities like Penn have partnered with a third party that handles transactions on their behalf. Charitable Solutions is one such third party that appraises cryptocurrency donations and fills out IRS Form 8283. The IRS requires independent appraisals of gifts over $5000.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.