Austin Community Foundation gets $1.2 million gift in cryptocurrency

Austin Community Foundation recently received a $1.2 million donation in the form of cryptocurrency.

The donor, who is remaining anonymous to the public, had gotten into cryptocurrency early on and saw the investment appreciate from a few dollars a unit to more than $230 a unit.

The donor decided to open a donor advised fund with Austin Community Foundation, which allows a donor to decide later how to allocate money to different nonprofit organizations while still getting the tax deduction for a donation and not paying capital gains taxes in this tax year.

Austin Community Foundation holds and processes money for many local nonprofit organizations, including Statesman Season for Caring, the American-Statesman's holiday philanthropy campaign.

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Donations in the form of cryptocurrency are becoming more popular, and the foundation has created policy for them. Before this donation, the foundation had accepted two other cryptocurrency donations worth a total of $1,500.

"Austin really is a tech hub and a cryptocurrency hub," said Cybil Guess, vice president of donor relations for Austin Community Foundation. "As the local community foundation, we felt like it was important to understand and build the capability to accept cryptocurrency if this is the type of wealth that exists in this community."

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Donors using cryptocurrency tend to be younger, in the tech industry or cryptocurrency industry, or very tech savvy, Guess said. Austin Community Foundation accepts a variety of cryptocurrencies, including Bitcoin, Ehereum and Litecoin.

Not many local nonprofit organizations are set up to accept cryptocurrency, Guess said. It took Austin Community Foundation staff time to think through all the systems that needed to be in place to accept donations of cryptocurrency and what would happen to the cryptocurrency once it was accepted.

Bitcoin is one of a variety of cryptocurrencies accepted by Austin Community Foundation.
Bitcoin is one of a variety of cryptocurrencies accepted by Austin Community Foundation.

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Austin Community Foundation does not allow the donor to be anonymous to the foundation, and it immediately turns the donation into cash by selling it through Giving Block, which specializes in selling cryptocurrency to turn it into a donation.

Guess thinks of accepting cryptocurrency as being similar to accepting stock and then selling it to turn it into a cash donation. Just like a stock, cryptocurrency's value can fluctuate wildly.

The immediate liquidation of the currency into dollars helps protect the foundation from being stuck with crypto that it can't liquidate or that loses value if this industry becomes more volatile.

"At this point, we don't want to take that risk," Guess said.

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Cryptocurrency has a reputation for being dark money or a way for criminal activity to be conducted, but Guess said that's outdated thinking. The foundation has put in steps, including knowing the donor, to try to prevent that. It's just like accepting a cash donation, she said, in that you don't know how that cash was previously used.

Bitcoin is a digital currency — or cryptocurrency — that is not backed by any government or central bank.
Bitcoin is a digital currency — or cryptocurrency — that is not backed by any government or central bank.

While Austin Community Foundation has accepted only a handful of cryptocurrency gifts, Guess said, it is in conversation with some other donors who want to give in this way.

Austin's cryptocurrency landscape has been growing in recent years. This year Bitcoin mining company Blockcap moved its headquarters from Las Vegas to Austin. Bitcoin mining is the practice of competing to extract digital currency from the blockchain or document data transfers using high-powered, energy-hungry computers.

Bitcoin miners have been coming to Texas because it has has no income tax and relatively low energy prices — which is important because Bitcoin mining requires vast amounts of electricity — and a “don’t tread on me” self-sovereignty vibe that appeals to many bitcoin miners.

Freelance writer Omar L. Gallaga contributed to this report.

This article originally appeared on Austin American-Statesman: Austin Community Foundation accepts $1.2 million gift in cryptocurrency