Why Cryptophilanthropy Continues to Outperform the Market
In 2022, crypto news coverage sometimes felt like a 1970s made-for-TV movie, complete with cliffhangers, cartoonish villains, and escapist melodrama. “Could a supervillain kill the glorious rise of crypto? Tune in next week to find out…”
For those watching from the outside, the industry was getting a rough ride. After months of falling prices, as the market felt like it was getting back to its sea feet, Sam Bankman-Fried rushed with the FTX debacle for one final kick to the knees.
Pat Duffy is co-founder of The donation blockA Shift4 business. He and his co-founder have also been featured on the Forbes 30 Under 30 list in 2022 in the field of social impact for their work at The Giving Block.
Such uncertainty is nothing new for crypto. We all know the cycle. Every few years, crypto is declared dead as prices fall. Traditional players stop paying attention and a phase of silent growth begins as more investors And more developers enter the ecosystem.
We are in such a phase now. But there is one area of the crypto ecosystem that continues to grow strongly, despite the ups and downs in asset prices: philanthropy.
Last year, more nonprofits joined The Giving Block, the crypto-philanthropy platform I co-founded with Alex Wilson in 2018, than ever before. More, in fact, than the record we set during the 2021 bull cycle. Through rain, sleet, and SBF, nonprofits continue to rise to raise money for crypto.
The average nonprofit on our platform has raised $26,000 soliciting crypto giveaways in 2022some raising millions of dollars.
Motivated by powerful tax incentive To choose crypto over cash, donors continued to reward nonprofits that marketed their crypto options to their supporters. For the second year in a row, more Google searches contained “donate crypto” than “donate stocks” as more crypto users become familiar with asset donation strategies. Attribute it to the digital native user base or the fact that crypto remains one of the best performing assets of the decade. Either way, more people go online looking to give away crypto than stocks.
Read more: Pat Duffy – Greed, Lies, and FTX: Is Crypto a Force for Good or Evil?
Today, the non-profit sector is one of the biggest adoption sectors for crypto; half of the Forbes Top 100 Charities are now raising funds through crypto and non-fungible tokens (NFTs). With thousands of nonprofits now involved in Web3, cryptophilanthropy has not only weathered last year’s storm, it has thrived.
Based on Cryptophilanthropy Adoption Index (CPAI), which compares total crypto donations through The Giving Block to the average price of bitcoin (BTC) over time, we can measure whether changes in crypto donations are outperforming or underperforming the crypto market as a whole . Since we started tracking it in 2020, crypto philanthropy has outperformed crypto markets every year. In 2022, for example, crypto donors collectively gave $172 for every dollar of bitcoin market value, an increase of 41% from 2021. Combining historical donation data from our platform with years bitcoin price data, we are also able to forecast the growth of crypto philanthropy over the next decade.
$10 billion in crypto donations to charity this decade
Most experts expect the crypto market cap to grow over time (although it is roughly halved in the last 12 months). Given this expectation, it is fair to assume that crypto-philanthropy will also grow. By taking the last three years of CPAI data, we were able to develop the first forecast for the growth of crypto-philanthropy alongside the market.
Based on bitcoin price data for the past five years, charitable cryptocurrency donations are expected to net nonprofits $10 billion by November 2032, on our platform alone. Today, that would mean cryptocurrency would account for about 2% of all charitable donations in the United States.
Below are other cryptophilanthropy trends we are monitoring.
Stablecoin donations reign supreme, for now
As we face another year of market uncertainty, we will continue to see stablecoins gain market share in donation volume, demonstrating the growing use of stable-value cryptocurrencies as methods of payment. In 2022, the USD coin (USDC) was the most donated crypto, with 44% of our donation volume. This was followed by ether (ETH) as the second most donated cryptocurrency with 24% of donation volume and bitcoin in third place with 17% of donation volume.
Web3 philanthropy is the one that generates the most notoriety
In 2022, we continued to see NFT philanthropy and Decentralized Autonomous Organization (DAO) philanthropy grow, proving that you don’t have to just give away bitcoins to make a difference. We anticipate that we will continue to see the Web3 community come together during difficult times as it did during the Ukrainian humanitarian crisis in 2022 and the earthquake that devastated parts of Turkey and Syria earlier this year.
Crypto has become the norm among major nonprofits
Nearly half of the Forbes list of “America’s Top 100 Charities of 2022accept cryptocurrency donations, up from just 12 in 2019. Of these 49 crypto donor-friendly charities, 38 of them use The Giving Block as their crypto fundraising system, including four of the top five charities from the list (Feeding America, United Way Worldwide, St. Jude Children’s Research Hospital and Direct Relief).
Tax Literacy Brings More Crypto Donors Online
Motivated by powerful tax incentive choose crypto over cash (in short, like donations of stocks, direct donations of appreciated crypto are not subject to capital gains tax and can also be deducted from the donor’s overall gross income ), donors continued to reward nonprofits that marketed their crypto options to their supporters. Attribute it to the digital native user base or the fact that crypto remains one of the best performing assets of the decade. Either way, more people go online looking to give away crypto than stocks.
As long as millions of people in the United States remain incentivized to donate crypto rather than cash, crypto will continue to be a force for good in the nonprofit industry. This trend is good for the planet, but the crypto industry could also see huge opportunities to benefit from it.
Nonprofits crave partnerships with companies, projects, and influencers in this industry. These are the connections that put their brand in front of one of the most valuable donor demographics – crypto donors.
The world needs reasons to see the positive impact of crypto. As we pick ourselves up and dust ourselves off from the collapse of FTX, regulators are making decisions that will determine what crypto growth will look like. We are fortunate in 2023 to bring together the biggest voices in crypto with the biggest voices in the charitable sector. If it happens often this year, nonprofits will be more ready to solve our world’s most pressing problems, and the world will be more ready for crypto.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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