GiveDirectly, which provides cash transfer services to people living in poverty, saw the number of individuals giving in cryptocurrency increase by 60 times between 2020 and 2021, with countries in Africa the biggest beneficiaries of its cryptocurrency donations. Kenya and Rwanda topped GiveDirectly’s list of funding recipients who received donations in cryptocurrency in 2021, and Malawi is expected to be a major recipient in 2022.
Advocates for cryptocurrency philanthropy are expecting a boom in donors in 2022. The Giving Block, a popular cryptocurrency donation platform, expects to raise more than $1 billion this year through its work with nonprofits and donors – following its success raising $100 million in 2021, and an increase in clients from 100 in 2020 to more than 1,200 currently.
The potential for cryptocurrency philanthropy to grow in 2022 is ‘practically limitless’, said GiveDirectly’s CFO Jason Watters to Devex.
Other more established charitable mechanisms are also exploring the potential of cryptocurrency. UNICEF, for example, receives, holds, and distributes cryptocurrency under a broad venture fund that provides seed money to companies developing technology to benefit children in emerging and developing markets. And in the United States, the IRS classifies cryptocurrency as ‘property’, which means donors can receive a tax deduction for donations.
Despite all the recent growth in cryptocurrency philanthropy, experts believe it will likely remain a niche form of giving, as the use of cryptocurrencies among the public at large remains low. Cryptocurrencies are also extremely volatile – and certain currencies, particularly Bitcoin, require a large amount of energy to create and verify transactions, raising climate concerns.
Organisations that work with cryptocurrency donations are doing their best to address environmental concerns, with UNICEF carrying out research to compare the environmental impact of blockchain technology against the traditional financial sector more generally. And charities without the resources of a UN-backed organisation will likely be reluctant to accept cryptocurrency gifts regardless, given the instability of the currencies.
But in countries where the traditional banking system has crumbled, like Venezuela, it’s possible that cryptocurrency donations could see a big upswing in 2022.