Steps To Take Before You Donate Crypto To Charity

It’s been almost two decades since cryptocurrency hit the markets with the invention of Bitcoin. Several for-profit and nonprofit organizations quickly found ways to benefit from the cryptocurrency wave. Real estate companies started accepting cryptocurrency payments, and charities added cryptocurrency donations to their lists. But our focus today would be charity. If you own some cryptocurrency and want to donate to charity, learning about the risk factors is important. Here’s how to do it:

Start With Research the Charity

The first and most important thing you must do is verify the charity’s credibility. Find out if they have a verifiable address, phone number, and website. The required regulatory bodies in the area should also license them. Also, their causes should align with your values. For example, if you want to support human rights, go for an organization that promotes human rights. They should also work with reputable firms like Pointer & Buelna – Lawyers for The People, a Civil Rights law firm in California.

Find Out if the Charity Has An Option For Crypto Donations

This goes without saying, but you need to find out if the charity accepts cryptocurrency donations and which cryptocurrencies they accept. You can get this information from the organization’s website. Visit the website and click on the donate option to see all the payment options available.

If there is nothing about this on the website, contact the organization’s support team directly to find out if they accept crypto donations or are willing to make an exception.

Learn the Tax Implications

Donating cash to charity has a different tax implication from donating fiat. This is because the regulatory bodies in the United States view cryptocurrency as property, not currency. The implication is that you may need to pay some capital gain taxes on your donation. This is especially so if you have held the cryptocurrency for up to a year before you donate it. A financial advisor who has experience with cryptocurrency payments will be in the best position to assist you.

Choose a Secure Donation Platform

The donation platform you choose will determine whether or not you end up in a financial pitfall. There is also a chance that the remaining funds in your wallet will be at risk if you use the wrong domain. If the charity provides the payment gateway themselves, find out what security measures they have.

Does it have encryption and two-factor authentication? Does the platform have a good reputation? What are others saying about it? Your wallet may get hacked if you choose the wrong donation platform.

Triple The Address

Blockchain, the technology upon which most cryptocurrencies are built, is great but unforgiving. Transactions on the blockchain cannot be reversed or stopped as soon as they are initiated. So, check the wallet address of the charity organization multiple times to confirm that it is correct before you hit send. Also, some cybercriminals use phishing scams to trick you into sending cryptocurrency to the wrong address.

Conclusion

Cryptocurrency payments are traditionally secure and fast. However, you must play your part to avoid human errors that may expose you to fraudulent activities.