Should we accept cryptocurrency donations?

This guide is for small charities that have been offered a gift in cryptocurrency, or are wondering whether to add a "donate crypto" button. Some donors like giving crypto that has grown in value, and saying yes can bring in gifts you'd otherwise miss. It also brings paperwork, price swings and security questions that a small team needs to think through first. After reading, you'll know how the IRS treats these gifts, what the donor and your charity each have to do, and how to decide whether to accept them.

This is general information, not tax or legal advice. Talk to your accountant before you accept your first crypto gift.

How the IRS treats crypto gifts

The IRS treats virtual currency as property, not cash. It first said so in Notice 2014-21, and its digital assets page says digital assets "are considered property, not currency." That one point drives most of what follows. The IRS FAQs quoted below say they generally apply to transactions completed before January 1, 2025, so check the current IRS pages too. The current Form 8283 instructions list "digital assets," including cryptocurrency, as a type of property on Section B, the section for gifts that generally need an appraisal.

For the donor, the IRS says:

• No gain on the gift. A donor who gives virtual currency to a qualifying charity "will not recognize income, gain, or loss from the donation" (Q34).
• The deduction depends on how long they held it. If they held it for more than one year, the deduction is generally its fair market value when donated. If one year or less, it's "the lesser of your basis in the virtual currency or the virtual currency's fair market value" (Q35).
• An appraisal over $5,000. In Chief Counsel Advice 202302012, IRS lawyers concluded that a donor claiming a deduction of more than $5,000 for cryptocurrency needs a qualified appraisal, because crypto isn't cash or a publicly traded security. They also said that using the value reported by an exchange instead of an appraisal won't count as reasonable cause. This advice "should not be used or cited as precedent," but it shows how the IRS reads the rule.

Valuing the gift is the donor's job, not yours. Don't give donors a value for tax purposes.

What your charity must do

The IRS FAQ (Q36 and Q37) lists the charity's side:

• Acknowledge the gift. For a deduction of $250 or more, the donor needs your contemporaneous written acknowledgment. Describe the crypto (type and number of units) and the date, and say whether you gave anything in return. Don't put a dollar value on it. Our donor acknowledgments guide explains the wording.
• Sign Form 8283 when asked. When a donor claims more than $5,000, your charity generally signs Section B of their Form 8283. The IRS says your signature "does not represent concurrence in the appraised value." Our non-cash gifts guide explains what you're agreeing to.
• Report it as a non-cash gift on your Form 990-series return, and on Schedule M if it applies.
• File Form 8282 if you sell it within three years. If you sell, exchange or otherwise dispose of the crypto "within three years after the date" you received it, you file Form 8282 and give the donor a copy. If you convert gifts quickly, expect to file this form for gifts that needed Section B.

Questions to answer before you say yes

1. Can we receive it safely? You need a way to receive and hold crypto that doesn't depend on one volunteer's personal account or phone. Options include an account in the charity's name at a regulated exchange, or a processing service that converts gifts to dollars. Compare fees and terms; we don't recommend any provider.
2. Who controls the keys or the account? Use the same controls as your bank account: at least two people, written approval to move funds, and access that survives a volunteer leaving. Our financial controls guide covers this.
3. Will we sell straight away? Prices can move sharply in a day. Consider a rule to convert gifts to dollars as soon as practical, rather than holding them as an investment.
4. Is it insured? The FDIC doesn't insure crypto assets, as our banking guide explains. Money only becomes insured once it's converted and in an insured account.
5. Do we know who the donor is? Ask for the donor's name and contact details, as for any gift, so you can acknowledge it and check it against your gift acceptance policy.
6. Does our gift acceptance policy cover it? Add crypto to your gift acceptance policy: which currencies you accept, how you'll receive them, that you'll usually sell promptly, and who can approve exceptions.
7. Can our bookkeeper record it? Record the gift, the sale and any fees, and keep the paperwork for Forms 8282 and 990.

Should you accept it?

• Probably yes if a donor is offering a meaningful gift, you have (or can set up) a safe way to receive and convert it, and your accountant is comfortable with the reporting.
• Probably not yet if receiving it would rely on one person's personal account, you have no gift acceptance policy, or the gift is small enough that the paperwork outweighs it. You can ask the donor whether they'd sell it and give the cash instead, but explain that the tax result for them may differ and they should ask their own adviser.
• Say no if anything about the gift seems off: an anonymous donor wanting a receipt, a request to send part of it back, or pressure to act fast.

Your checklist

• Our board has decided whether we accept crypto, and our gift acceptance policy says so
• We receive crypto through an account in the charity's name, with at least two people in control
• We have a rule for converting gifts to dollars promptly
• We acknowledge crypto gifts in writing, describing the units, without stating a value
• We know who signs Form 8283 and how we track Form 8282 deadlines
• Our bookkeeper records gifts, sales and fees, and our accountant has reviewed the process