Saturday, May 7, 2022
As popularity in nonfungible tokens (NFT) and cryptocurrencies has exploded, nonprofit organizations are trying to figure out how to navigate the acceptance of crypto donations. There is a fear of missing out on dollars, accompanied by a fear of doing something that’s going to result in noncompliance.
The IRS treats crypto or NFTs as property, which has lead to an increase of investors donating them to charity. Donors are able to avoid paying capital-gains taxes on the assets they have held onto for longer than a year and have the option of deducting the value of the gift itself.
During the Oscars in March, a fundraiser was held for the people of Ukraine on Crypto.com, which raiser $1.6 million in donations, with 60% of the funds raised coming from the sales of NFTs that artists created for the cause. Experts suggest that fundraisers with NFT components will become increasingly popular, as it's a way to incorporate art into charity and give donors something to show for their contributions.
For more information:
See Jeremy Olshan, “The New Way to Get a Tax Break: NFT and Crypto Donations”, The Wall Street Journal, May 2, 2022.
Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.