Crypto Philanthropy Becoming Mainstream in Higher Education
Despite the volatility of cryptocurrency markets, colleges are lining up to cash in on gifts of Bitcoin, Ethereum, and other digital assets.
- Gifts of cryptocurrency to colleges and universities are becoming more frequent.
- These are largely uncharted waters for most university fundraisers.
- One expert speculates higher ed could soon realize billions of dollars in crypto gifts.
Slowly but surely, cryptocurrency is making its way into higher education. Universities are offering academic programs on digital currencies and blockchain. A handful are accepting crypto as tuition payments. And increasingly, donors are making gifts to colleges using Bitcoin, Ethereum, and other assets unheard of just a few years ago.
Welcome to the world of crypto philanthropy.
Cryptocurrency Gifts Gain Traction in Recent Years
The first known cryptocurrency gift to higher education occurred in 2014, when University of Puget Sound alumnus Nicholas Cary made a gift to his alma mater of 14.5 bitcoins, at the time worth about $10,000. Cary co-founded Blockchain.com, a crypto finance house.
"It shouldn't surprise us that money is going digital," Cary said at the time. "Look at music and photography and the power of peer-to-peer networks. It's going to be tremendously exciting to see what happens in this space."
His comments proved prophetic. As of December 7, the global market capitalization of all cryptocurrency was $2.38 trillion. Today, that gift of 14.5 bitcoins would be worth roughly $740,000.
Since Cary's donation, crypto giving to higher education has become more common.
- In 2018, the blockchain software company Block.One committed $3 million worth of its cryptocurrency, EOS, to Virginia Tech to support blockchain teaching and research.
- In 2019, Ripple co-founder Chris Larsen and his wife Lyna Lam donated the equivalent of $25 million to San Francisco State University using Ripple's native cryptocurrency, XRP. It's thought to be the largest crypto gift to higher education.
- Also that year, Nikolai Mushegian pledged 10,000 MKR (Maker) tokens, worth about $4.2 million, to Carnegie Mellon University.
- In September 2021, Lehigh University received its first-ever Bitcoin gift, worth about $42,000, from alumnus Dev Chanchani for the Lehigh@NasdaqCenter Startup Academy.
- And in December 2021, the University of California Berkeley's Blockchain Lab received a gift of $50,000 in the form of Bitcoin from the EchoLink Foundation.
Earlier in 2021, the University of Pennsylvania's Wharton School received an anonymous gift of $5 million in Bitcoin, Penn's largest crypto donation. Wharton is launching a certificate program in the "Economics of Blockchain and Digital Assets" and is allowing students to pay their tuition using cryptocurrency.
"It…sends the message that the university is capable of receiving gifts of all sizes of cryptocurrency," said John Zeller, Penn's senior vice president of development and alumni relations. "That's why this was such a big deal."
Some institutions, such as the University of Illinois Foundation, have published cryptocurrency guidelines on their "How to Give" pages, alerting donors to the options and offering instructions. The kinds of cryptocurrencies Illinois accepts reads like a latter-day New Deal alphabet soup: BTC (Bitcoin), BCH (Bitcoin cash), XRP, ETH (Ethereum), and stablecoins such as GUSD, USDC, PAX, and BUSD.
If that's not enough options, the Arizona State University Foundation says it can accept more than 90 forms of cryptocurrency.
“We have to be forward-thinking about alumni and new ways in which we can engage with them”
— Jazmin Medina, Member of ASU Foundation's Next Generation Council
"We have to be forward-thinking about alumni and new ways in which we can engage with them," said Jazmin Medina, a member of an ASU Foundation young alumni advisory group called the Next Generation Council.
Fellow member Daniel McAuley says it's important for ASU to encourage crypto giving among young alums, who tend to be less philanthropic than older graduates.
"I…think it's a strong signal to younger alumni that ASU sees where the world is going and can be entrusted to put their capital to work in shaping it," he said.
New Biz Helps Colleges Devise Crypto Strategies
It can all be rather confusing to university fundraisers new to the world of cryptocurrency. That's where The Giving Block comes in.
The firm helps nonprofits, including colleges, devise crypto philanthropy policies and marketing strategies and works with donors eager to make such gifts. Co-founder Alex Wilson told BestColleges the firm has partnered with nearly 100 colleges since 2019, including the University of Arizona, the University of Maryland, the University of Alabama, Catholic University, and its first client, Wake Forest University, where Wilson and co-founder and Pat Duffy met as undergrads.
Wilson told BestColleges a few institutions, such as MIT and Stanford, were early adopters of crypto philanthropy, but it's become more widespread across higher education in part because of the pandemic.
"2020 really felt like the main turning point, when schools and other charities started to more seriously consider crypto," Wilson said. "COVID acted as a huge catalyst for that, like it did for many online giving platforms. It really sped up that adoption curve."
Wilson said colleges were looking to offset lost revenue resulting from the cancelation of fundraising events.
"They realized they had to do more than ever online," he said, "and of course crypto, being purely online, was sort of a natural fit as part of this broader digital strategy."
One Giving Block client, the University of Arizona Foundation, has realized a few crypto gifts as a result of its engagement with the firm. JP Roczniak, the foundation's president and CEO, told BestColleges that donors of all ages want to discuss the possibility of donating crypto.
"They're happy to know that option is available," Roczniak said. "And we certainly don't want to leave money on the table."
Wilson said many colleges are "just dipping their toes" in the crypto waters but that the trend line is "up and to the right."
“Crypto philanthropy as a whole is definitely booming”
— Alex Wilson, Co-founder of The Giving Block
"Crypto philanthropy as a whole is definitely booming and, I would say, certainly across the [nonprofit] industry in the hundreds of millions of dollars," he said.
Wilson and his colleagues help colleges market crypto-giving online and through social media (he joked that they try to keep clients from writing "Bitcoin" as two words on Twitter for fear of scaring away potential donors). They also advise on internal gift compliance and accounting tactics.
Donating cryptocurrency has tax implications. Crypto, like stocks, is treated as property and is subject to capital gains tax. But donors who make crypto gifts are allowed to write off the fair market value of the donation on their taxes. Donors increasingly are managing crypto philanthropy activities through donor-advised funds, which act as intermediaries between individuals and the charities they wish to support.
At the same time, colleges typically don't handle cryptocurrency assets. Instead, they receive U.S. dollars once the assets are sold through a third party or, in some cases, sold by the school after they're deposited into its digital wallet. The volatility of the crypto market leaves fundraisers dubious about holding on to the assets long term.
"We're not in the investment or speculation business," said Penn's Zeller.
Wilson said his firm gives colleges the choice of keeping the cryptocurrency or cashing it in, with 95% choosing the latter option. Those who opt to hold on to it have more experience dealing with crypto, Wilson says, and have grown tired of seeing prices rise and feeling like they've missed out.
Roczniak says the University of Arizona Foundation treats crypto like stock, selling it on the day it's received.
"God forbid we hold it and it goes down," he said, "We want the gift to equal what the donor was expecting to give. Sure, there have been stocks we wish we had held onto for six months because they went up, but the opposite can happen too."
In time, Wilson speculates, more universities will choose to keep their crypto and manage the assets.
"As crypto becomes more mainstream, it's going to become part of their balance sheet and their treasury management," he said.
Crypto Donations Might Soon Reach Into the Billions
Despite the recent crypto crash and the overall volatility of the market, Wilson remains bullish on the prospect of crypto philanthropy becoming a significant portion of universities' fundraising portfolio.
"In the next five years, it'll be almost unusual if a university isn't fundraising crypto and accepting crypto," Wilson said. "It'll be as common as credit card donations are now."
And just how lucrative might it become?
"It's certainly going to be an industry worth billions and billions of dollars of giving just to higher ed every year," he said. "The growth we've seen in the last 12 months has been unbelievable."