
Embracing the Digital Age: Food Banks Turn to Cryptocurrency to Attract Donors
- foodfightadmin
- January 25, 2023
- Food Bank Support
- rsc pages
- 0 Comments
Despite its volatility, cryptocurrency is increasingly viable as a fundraising tool for food banks capable of accepting it. Food Bank for New York City began accepting cryptocurrency donations in 2022 when a donor offered more than $1 million in non-fungible tokens, a type of cryptocurrency asset, and guided the organization through the process of setting up systems to accept it.
In terms of process, accepting cryptocurrency is akin to receiving a stock donation. Instead of a brokerage account, non-profit organizations, such as food banks, utilize a third-party service like The Giving Block. These services handle cryptocurrency donations, sell them within a few days, and transfer the converted funds into the organization’s accounts. Even though such services charge a fee, it’s usually covered by the donations processed and is deemed nominal.
Despite the market’s unpredictability, cryptocurrency donations through The Giving Block are reported to be strong, showing a 60% increase from the previous year in October 2022. Its 2021 report also indicated that cryptocurrency donations had surged over 16 times to exceed $69 million, and the average donation size had increased by 236% to nearly $10,500, substantially higher than the average online cash donation of $128.
While market volatility could affect the influx of donations if the overall market declines, it does not significantly impact food banks if the gifts are liquidated upon receipt. It is also believed that accepting cryptocurrency can attract a new, often younger, donor pool, thereby diversifying food banks’ funding sources.
Despite recent growth, accepting cryptocurrency donations is not yet a trend, with the million dollar gift to Food Bank for New York City being more of an exception than the norm. Subsequent contributions have been significantly smaller, and several food banks, particularly in remote areas, have reported little to no cryptocurrency donations.
The future potential of cryptocurrency donations is seen as promising, although this will likely require more awareness and education. Organizations need to communicate to their donors that they are open to receiving cryptocurrency, which could lead to unexpected contributions that they might not have otherwise received.