Bitcoin Holds Big Promise for Charity but Hasn't Delivered Many Big Gifts
Interest in fundraising in bitcoin is growing among charities, but the donations are slow to come in.
Aislinn Wish Leoncio-Apilado is a baby in the Philippines who needs a liver transplant. Miguel Cuneta, a bitcoin entrepreneur in the country, wanted to help.
Cuneta, co-founder of payment services startup Bitmarket.ph, had already successfully raised enough in bitcoin donations to buy 20 boats for fishers who lost their livelihood in 2013’s Typhoon Haiyan. Anxious to demonstrate again bitcoin’s potential for doing good, he helped Aislinn’s family set up a bitcoin wallet and spread the word on a Facebook group and reddit. Soon 3.4BTC had come in, delighting the family. He said:
“Raising money in the Philippines takes a lot of hard work, and the money we raised for them in three days would have taken much much longer, or taken much more resources to pull off.”
The donations averaged around $30 each – amounts that would hardly have been worth collecting if international money transfer fees had been necessary. But with bitcoin, all the money went directly to the family. The experience gave Cuneta a vision of how cryptocurrency could transform philanthropy:
“I imagine a time when instead of Facebook likes or retweets, you can send $1 or even 10 cents to a worthy cause, as easy as pressing one button. No other technology can do this.”
And yet, the bitcoins raised represent only a small fraction of Aislinn’s need. The operation – which she must have within one to two years to survive – will cost nearly $100,000.
Prospects for bitcoin philanthropy
It’s an apt depiction of the current state of bitcoin charity. The potential exists for a mighty river of bitcoins to flow directly to those in need, all over the world, but right now the flow is more of a trickle.
There are a handful of success stories. Sean’s Outpost, the Florida-based project where bitcoin donations – some 200BTC in 2013 – feed the homeless and have helped get some off the street; the BitGive Foundation raised $5,000 in bitcoin in one day for Save the Children, and is now halfway through raising $10,000 for The Water Project; and there's even the somewhat ad-hoc success story of the sports fan who held up a sign at a televised football game and received 22 bitcoins, the bulk of which he has promised to donate.
Altcoins have seized upon charity as an opportunity to raise their profile, with dogecoin raising money for the Jamaican Bobsled Team and, fittingly, shiba inu rescue. NobleCoin, Worldcoin and others have also organized fundraisers.
But considering that bitcoin is an investment that has nearly quadrupled in the past year, and that “bitcoin millionaires” are now a high-profile phenomenon, one would think they’d give more than a few bitcoins here or there.
The BitGive Foundation would need to raise $100,000 to ramp up with a full-time leader, said founder Connie Gallippi, but so far it has been able to raise only about a tenth of that, most of it right after its inception a year ago. So Gallippi leads the foundation in her spare time when she’s not working as a fundraiser and lobbyist for the California Urban Forest Council in Sacramento.
“We have a steep hill in front of us to make this happen,” said Gallippi, who was inspired to start a charitable foundation for the bitcoin community after attending Bitcoin2013 in San Jose. She originally went to see her brother, Tony Gallippi, who was manning a booth for the company he cofounded, BitPay.
Some charities that initially saw a bitcoin boom are now seeing fewer gifts come in.
Last year, bitcoins made up nearly 10 percent of the $375,000 budget at Songs of Love, a New York City charity that writes and produces personalized songs for sick children. But founder John Beltzer said he hasn’t gotten a bitcoin donation in a month.
“It's slowed down,” he said.
One theory on the slowdown is that bitcoin investors feel less flush, since – after surpassing $1,000 in late 2013 – the dollar value fell to the current $400-$450 range.
Gallippi speculated that the bitcoin industry is simply too young to divert large sums to charity. Many of the early bitcoin buyers who made bank are pouring their gains into startups now, she said:
“Most people are in a position where they are bootstrapping, they’re starting their business, and they may have taken their own bitcoin holdings to do that.”
Other companies, she said, are running on investor dollars, which they aren’t free to donate:
“If you look at some of the pioneer bitcoin companies, they have money, but it’s investment money. They have staff they need to pay, they have promised return on investments.”
BitPay donated 1BTC as a matching gift to the BitGive Foundation’s campaign for The Water Project, which provides safe drinking water in Africa. The company also processes bitcoin donations for charities free of charge. BitGive has received about $20,000 worth of in-kind donations, notably pro-bono legal work from San Francisco firm Perkins Coie, Gallippi said.
Donations from the cryptocurrency world might not be growing as fast as some had hoped, but interest from the charity side is coming along, stimulated by the undeniable advantages that bitcoin offers fundraisers.
Potential for bitcoin charity
Like Aislinn and Songs of Love, charities and people in need are realizing that accepting bitcoins can open up donor pools for them that they would not reach otherwise without international marketing operations.
“You're exposed to the entire world,” said Dmitry Murashchik, treasurer for Bitcoin100, an organization that encourages charities to accept bitcoin by offering them $1,000 in the currency if they add a bitcoin collection button to their website.
Bitcoin100 disburses the payments from a fund it collected mostly in its first year (2011); it currently has 92BTC. While donations have slowed, requests from charities have increased, with about 40 signing up in the past six months, Murashchik said.
Forward-thinking nonprofits are also excited about the opportunity to raise funds without losing large chunks of the money to international transfer fees. This would not just save money, but could give charities much more freedom to operate in innovative ways, wrote Peter Chasse, president of The Water Project, in a manifesto titled "Welcome Cryptos":
"Today, small grants are too expensive to send. Large grants are too risky to release to untested partners. I'm looking forward to lower/no cost transfers that could allow us to work with more of the smaller, less tested, but promising local water advocates. I imagine having our program team work with a growing indigenous team by transferring incremental and limited funds, 'just-in-time,' to complete discreet tasks. We've learned that building trust and accountability is much easier that way."
Risks and vulnerabilities
Like businesses, nonprofits are attracted to bitcoin because of its promise for fraud avoidance. Charities sometimes receive gifts from stolen credit cards, which end up getting reversed and costing the organization in fees, Murashchik said.
Funds are especially at risk of fraud when being transmitted to beneficiaries in the developing world, Gallippi said:
“Every time it changes hands, it’s open to fraud, and almost every time, that’s what happens. You could be donating to somebody, and the money will never even get there.”
Of course, bitcoin has its own fraud vulnerabilities, such as theft by hacking. Bitcoin donations have been scrutinized as possible thefts before, but charities would likely not even know if money donated to them had been stolen, Murashchik said.
“There's no way to prove it, and there's no way to pull the money back out. Somebody might have donated stolen bitcoins to us – there is no way of knowing,” he said.
Bitcoin enthusiasts have also explored innovative ways to give to the needy. One example is by donating mining cycles. Bitcoins For Charity connects miners to charities through its website, and says it has raised 900BTC for the Free Software Foundation and more than 3,800BTC for WikiLeaks.
Beneficence without borders
Perhaps the greatest goal for innovation in bitcoin charity is the dream of being able to transmit money person-to-person, across the world, with a mere click of a button. Theoretically, it’s already possible – but only if both the sender and recipient have a bitcoin wallet and the means to turn bitcoins into goods or services they need.
The BitGive Foundation is working with 37Coins, the startup that transmits bitcoins via SMS, on a plan to fulfill bitcoin’s potential for across-the-world giving, said Gallippi:
“Our long-term goal in a partnership with 37Coins or similar technology would be direct giving where you can send money to an individual as a donation, but it’s going through a charity for a vetting process. You’re not just blindly sending a bunch of people in Africa money, but you know someone has identified who they are and there’s some kind of check and balance. It’s definitely possible.”
Some are already experimenting with this approach. GiveDirectly, the nonprofit that transfers funds directly from donors to impoverished people in Kenya and Uganda, now has a Ripple wallet so that donors can send XRP.
Money growth image via Shutterstock
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