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Forward Thinking: Yes, We Accept Crypto: Embracing Digital Assets & the Future of Finance in Philanthropy

Matt Miller, CFRE, CSPG
Published:  07/12/2021
A surgeon stands over a patient

Forward Thinking article sponsored by Graham-Pelton
Amongst the many ways COVID-19 has changed human behavior, the way we spend money has been a less frequently highlighted, but subtly consistent reminder of the effects of the virus on our society. Only a year ago, a trip to the grocery store was all it took to be informed of the national coin shortage while news outlets shared stories of world governments using ultraviolet lights and heat to sterilize paper currency before recirculating it (1). The coin shortage itself created challenging scenarios for cash payers in which merchants became unable to make change. The outcome of which required the use of exact change, credit/debit cards, or smartphone pay options (2). These factors further fueled an independent, ongoing movement toward an increasingly digital economy.

Concurrently, the maturity and adoption of digital assets began to rise in September 2019 and quickly realized over $1 trillion in total market capitalization for the first time in January 2020 (3). In December 2019, financial technology (FinTech) company Ripple Labs recognized a number of trends contributing to this rise and rightly predicted that 2020 would be “The Year of the Digital Asset” (4). In July, Cornerstone Advisors shared a study that revealed that 15% of Americans then owned cryptocurrency with half of those holders making first-time purchases in 2020 (5). Another study, conducted in February 2021 by consumer research firm Piplsay, revealed adoption of digital assets advanced further with 25% of Americans confirming ownership thereof. Pipslay also learned an additional 27% of the population indicated their intent to purchase digital assets for the first time in 2021, and a combined 57% of respondents want to see merchants and retailers begin accepting payment with digital assets immediately, furthering the realization of a robust digital economy (6). The IRS is paying attention, too. New to every tax schedule form in 2021, tax-payers are now being asked about their digital asset transactions from the previous tax year.

While still a nascent asset class, digital assets have ingrained themselves in the global economy and are here to stay. Once dismissed as the preferred currency for cybercriminals, traffickers, and those wishing to avoid government detection, digital assets have evolved, expanded their capabilities and use cases, appreciated in value, and have now been embraced by institutional investors. The time has come for fundraising shops to educate themselves on digital assets, explore their potential for philanthropic gifts, begin engaging their own constituents who may own these assets, and also engage crypto-savvy owners who are considering philanthropy as an exit strategy to liquify their appreciated holdings.

Blockchain Technology: What is it, how does it work, and what is used for?

2009 saw the launch of blockchain technology with the release of Bitcoin. While the technology is a more recent realization, its roots can be traced back to the late 1980s when David Chaum conceptualized an anonymous, virtual currency system and payment platform in the early days of the internet. His vision came to fruition in 1989 under the name DigiCash. The platform shut down a decade later, just as e-commerce began to take off. Throughout the 1990s and early 2000s, several similar iterations launched with varying levels of success through trial and error. The collective lessons learned from those endeavors inspired the creation of the technology we recognize today (7).

Blockchain technology is software. It establishes a decentralized ledger, an online method for record-keeping. As Nathaniel Popper of the New York Times explains, “Unlike conventional records kept by one bank or accountant, the blockchain ledger uses a bunch of computers that each add new entries visible to everyone. The blockchain design that Bitcoin inspired has been adapted for other kinds of records. The underlying principle is there is no central authority controlling a single ledger. Everyone who is part of the system controls a decentralized and shared record.” (8). The system works by connecting two or more people through a blockchain’s software to execute a transaction without the need for a centralized authority, such as a bank or banks, to verify the exchange. Because the information is spread across the shared system, the data within it is verifiable and far less vulnerable to corruption, manipulation, and data loss as a centralized system otherwise would be (9).

Use cases for the technology are seemingly endless with an abundance of new applications presenting themselves almost daily. These span industries from finance, capital markets, and global trade, to supply chain management, real estate, and more. Most commonly, these applications are focused on blockchain technology’s ability to create decentralized ledgers with transparency, immutability, and automation. Future elections may even be held on a blockchain with these features in place (10).

What Are Digital Assets?

Digital assets are data that are both digitized and come with the right of use. While digital assets can take on a number of forms, there are generally four agreed-upon classes of assets.

1) Cryptocurrencies—Tokens living on a decentralized blockchain generally serving as a store of value or medium of exchange. They can provide faster, and in some cases, immediate, payment and settlement compared to traditional banking methods; cross-border payments included. Transactions are largely anonymous. Some have a fixed supply while others can be “mined” using computers to solve new equations released onto the network through automation. Solving the equations first rewards the “miner” with a preset quantity of tokens (11). Mining requires significant amounts of energy, the consumption of which has fueled a debate around resource utilization, the environmental impact of cryptocurrencies, and in some contexts, even national security.

2) Decentralized Protocols and Platforms— Blockchains with corresponding tokens providing services such as smart contracts, or protocols which automatically execute actions outlined in an agreement or contract. These agreements range from simple transactions to highly complex programs and systems.

3) Asset-backed Tokens—A token backed with tangible, real-world assets, often with a specific or fixed value. Think equities, debt, or hard assets/commodities.

4) Pass-through Securities —Token structures with a limitless level of customization and purpose. A recent example of these is the emergence of Non-Fungible Tokens (NFTs), which can include digitized art, real estate, or sports media and trading cards. Each is unique and cannot be duplicated, unlike cryptocurrencies (12).

Why Crypto? Why Now?

2020 sparked an explosive run in the cryptocurrency market that significantly dwarfed the gains seen in late 2017, when a majority of the world was first introduced to Bitcoin and cryptocurrencies at large. As a result, Cornerstone Advisors (13) and Piplsay (14) performed studies in spring 2020 and winter 2021, respectively, and made fascinating discoveries about cryptocurrency holders. Their studies revealed insightful trends on the growing number of Americans whose collective attitudes continue to trend positively toward digital asset purchases. While Generation Z represented only 7% of buyers in July 2020, they are projected to account for 32% of them in 2021. Millennials are expected to increase their market representation from 27% of buyers in 2020 to 32% of projected stakeholders this year. Generation X is also projected to see increased market participation from 21% of buyers to 29% of all participants by the end of 2021. Baby Boomer participation is expected to continue to be modest as the asset class continues to evolve. Most significantly, 25% of Americans now own digital assets of some kind, and 50% believe they are a safe investment(15).

Institutional investors have also seen their perspectives on digital assets metamorphose over the past several years. While in 2017 institutional investors could not have been less interested publicly, 2020 saw them fully embrace the sector. Cryptocurrency hedge funds began aggressive marketing campaigns in the spring, railing against government stimulus and spending packages while selling their funds as safe havens from inflation and potential debasement of the US dollar. Then came Paypal’s announcement in October that they would begin offering cryptocurrency sales and custody services followed by Tesla’s announcement of a $1.5 billion purchase of Bitcoin to add to its corporate treasury(17). Since then, companies such as Walmart, Time magazine, and Square have all added digital assets to their balance sheets with more companies expected to follow suit due to softening volatility in the market juxtaposed to the dramatic increases in asset value(18). Additional institutional support has come in the form of salaries being paid in cryptocurrencies. The City of Miami is currently exploring the proposition of paying its employees in cryptocurrency(19), while several professional and e-sports athletes have begun requesting and receiving their compensation in digital assets, thus enhancing their total income as these markets have continued to rise in value(20).

Collectively, this data forecasts significant dollars will continue to be pumped into the digital asset market from both retail and institutional sources as the decade continues. Over $67 billion of assets alone were purchased between January and June 2020; impressive numbers considering the economic downturn that began in the spring. However, this will be nothing compared to the purchasing volume projected to occur in 2021. Principally, this behavior is what drove the total market capitalization of cryptocurrencies to double to $2 trillion in April of this year and potentially reach $3 trillion or more by year end(21).

Finally, the arrival of central bank digital currencies (CBDCs) signals the next substantial movement away from physical fiat currency. CBDCs are, in essence, digital banknotes designed to be used in increasingly digital economies. The difference between a CBDC and cryptocurrency is a significant one—the CBDC is backed by its country’s central bank. For example, a digital dollar backed by the full faith and credit of the United States versus a single Bitcoin backed by retail/institutional speculation(22). Thus far, 36 countries, including the United States and Canada, have publicly disclosed they are working on their own CBDC, with nine additional countries currently piloting or recently completing piloting one(23). China continues to be the most aggressive in its timeline to launch its CBDC, the digital Yuan, with the ambition to replace the dollar as the world’s reserve currency(24).

The confluence of these movements—the sustained drive for a digital economy, strengthening adoption from retail and institutional holders, stabilizing and appreciating asset markets, the imminent arrival of CBDCs— combined with a significant interest from everyday Americans to receive digital assets and conduct business with them should put charities and foundations on notice. It is increasingly likely our donors have or are entering this space, and the time has arrived to begin accepting gifts of digital assets from them.

Do We or Don’t We? What to consider and how to accept gifts of digital assets

The first thing charities and foundations must evaluate is mission alignment with the asset class. Do gifts of this kind reflect our institutional values? Are these assets something our health system or foundation wants to be associated with? While attitudes toward cryptocurrencies continue to evolve, there are significant portions of the population who still associate the asset class with criminal activity, particularly human, drug, and weapons trafficking and ransomware attacks. Conversations around the energy consumption required for mining and completing financial transactions, along with the subsequent environmental impact of doing so for some cryptocurrencies have also emerged. Finally, the identity or identities of the inventor(s) of Bitcoin itself have been cast as potentially controversial if they were ever revealed. When cryptocurrency exchange Coinbase filed its IPO prospectus with the Securities and Exchange Commission in February, it disclosed “the identification of Satoshi Nakamoto, the pseudonymous person or persons who developed Bitcoin, or the transfer of Satoshi’s Bitcoins” as a risk to its business model(25).

Could the decision to accept gifts of this kind alienate existing constituent bases? Additionally, consideration to gift acceptance policies must also be given with their content updated to reflect which digital assets or types of assets your institution will or will not accept, how they will be accepted, and how they will be used.

Understanding how your institution will utilize digital assets will directly influence your options for receiving them. The decision parameters to sell or hold gifted assets should be reflected in your institution’s gift acceptance policy, then agreed upon with the donor before taking any action with a gift. Institutions wanting to start out more simply with digital assets should consider a strict “receive and sell” policy before considering a broader range of options. Those wishing to hold the asset may do so for a variety of reasons including, but not limited to, treating the asset as a long-term investment, using it as collateral for institutional financial needs, or even creating research chairs or scholarship endowments by lending the asset and using annual percentage yields to underwrite the purpose of the fund.

Additionally, long-term holders of digital assets with significant tax implications around liquidation are actively pursuing tax-advantaged planned giving vehicles such as charitable remainder trusts or gift annuities to create streams of income. An emerging trend in the digital asset space has been the utilization of private firms whose only service is to draft and administer these giving vehicles for their clientele (26). For institutions with the resources to provide these services, gifts of this kind may be transformational in nature and seen with greater frequency as the asset class continues to mature.

Accepting gifts of digital assets is fundamentally more complicated than receiving a check or wire transfer from a donor. Determining an appropriate custody solution for your institution will require an appropriate level of research juxtaposed to how you intend to utilize gifted assets, risk tolerance, and cybersecurity considerations. Custody solutions may include retaining a third-party custodian offering industry-grade security features, using a cryptocurrency exchange wallet or online vault service, or “cold” storage options in the form of physical wallets, many resembling USB thumb drives, utilizing an internet connection(27). There are also third-party crypto-exclusive services where donors may give and direct their donation to the charity of their choosing so long as they’re registered on the site. Services such as these keep a percentage of the gift for transaction fees and services.

Traditional banking institutions have also begun offering custody solutions for their clients. Last summer, the Office of the Comptroller of the Currency released an interpretive letter authorizing national banks and federal savings associations to custody cryptocurrencies for their clients. This federal opinion complements the position of several states which have already permitted state banks and trust companies to do the same(28). Foundations and institutions exploring digital asset custody options may have services already offered or coming soon from their financial institutions.

How to Engage Donors About Gifting Digital Assets

Exploring gifts of digital assets with a constituency begins with having current and updated information on your giving page and in physical materials. Information about the types of assets the institution accepts, its methodology for receiving those assets, and its policies for selling and receipting those assets should be in clear and simple language. It would be prudent to include digital wallet address information to aid donors in knowing where to send their gifts. These may be displayed as a customized QR code for exchange-based wallets or vaults. Depending on your institution’s or foundation’s comfort, QR code address information can be included on business cards or email signatures to help develop awareness and spark questions and conversation around the asset class and giving. Additionally, suggestions on how to structure gifts to accomplish a variety of donor objectives should be included with a specific focus on tax planning. Contact information for a fundraising or accounting professional from the fundraising team should also be featured for the convenience of the donor.

Discussing gifts of digital assets with donors should be approached in the same manner as giving more traditional assets like securities or real estate. When appropriate, fundraisers would serve their donors well to remember to ask open-ended, fact-finding questions pertaining to the objectives of the donor apart from mission advancement and investment. Are you happy with your assets? How do you feel about your income? How do you like to give? Have you had or will you have any foreseeable taxable events this year? Finally, it is important to recall deferred giving opportunities incorporating digital assets, including exploring beneficiary designation gifts from digital asset accounts.

Embracing the Future of Digital Finance

Blockchain technology is quickly ushering in an era of financial access and independence previously thought unreachable. Among its many hallmarks, transaction speed, reliability, privacy and security, and cross-border functionality are going to change the way the world views and uses currency. As additional assets like real estate, securities, art, and more become tokenized, the collective value of the asset class will continue its meteoric rise and bring unimaginable wealth to those who buy into it. Digital assets have the capacity to change the nature of philanthropic outputs around the world and move the needle of total giving against national GDP unlike any asset, currency, or setting in history.

Embracing philanthropic gifts of digital assets today will allow charities and not-for-profit institutions to engage with new groups of donors and tap into an ever-growing class of digital asset holders. It has the potential to expand the volume of gifts being received and enhance the size of gifts coming into the institution. It will provide holders with highly appreciated assets to create win-win scenarios for themselves and the charitable causes who afford them the opportunity to donate.

In 2020, nearly 75% of Millenials and 66% of Generation Z gave to COVID-19 related causes–an incredible level of engagement(29). These two demographics are also projected to be the largest holders of digital assets by the end of this year, many of whom will have appreciated unprecedented wealth along the way. The statistical likelihood these individuals are currently or will soon be in your donor base is undeniable. It’s time to meet this engaged and affluent group where they are in the digital space. We all will be better for it once we do.



1 Sangster, Kalila. (2020). Banknotes may be spreading coronavirus, World Health Organization warns. March 3. Accessed February 18, 2021.
2 Peter O’Dowd, Samantha Raphelson. (2020). US Coin Shortage Highlights Implications Of Moving Toward A Cashless Society. December 4. Accessed February 19, 2021.
3 Shevlin, Ron. (2020). The Coronavirus Cryptocurrency Craze: Who’s Behind The Bitcoin Buying Binge? July 27. Accessed December 29, 2020.
4 Team Ripple. (2019). 2020: The Year of the Digital Asset. December 19. Accessed January 4, 2021. https://ripple.com/insights/2020-the-year-of-the-digital-asset/
5 Shevlin (2020).
6 Piplsay. (2021). The Growing Crypto Universe: How Interested Are Americans? Consumer Report, Pleasant, South Carolina: Piplsay.
7 Klint Finley, Gregory Barber. (2019). The WIRED Guide to the Blockchain. July 9. Accessed February 28, 2021.
8 Ovide, Shira. (2021). What is a Blockchain? Is It Hype? January 26. Accessed February 21, 2021. https://www.nytimes.com/2021/01/26/technology/what-is-blockchain.html.
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10 Boring, Perianne. (2021). The Future of Voting is Blockchain. Accessed March 16, 2021.
11 Popper, Nathaniel. (2017). What Is Bitcoin, and How Does It Work? October 1. Accessed April 2, 2021.
12 Dorman, Jeff. (2020). The Four Types of Digital Assets. June 29. Accessed March 2, 2021.
13 Shevlin (2020).
14 Piplsay (2021).
15 Piplsay (2021).
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17 Kovach, Steve. (2021). Tesla buys $1.5 billion in bitcoin, plans to accept it as payment. February 8. Accessed February 8, 2021.
18 Bambysheva, Nina. (2021). Expect More Bitcoin On Balance Sheets, As Paypal, MicroStrategy Fidelity and Walmart Sound Off On Blockchain. April 14. Accessed April 14, 2021.
19 Jonathan Levin, Michael Smith. (2021). Miami Mayor Pushes Crypto With Offer to Pay Workers in Bitcoin. February 11. Accessed February 11, 2021.
20 Warner, Jonathan. (2021). Former Seattle Seahawk Russell Okung puts half of salary in Bitcoin, considered highest paid in the league now. February 22. Accessed February 22, 2021.
21 Kharpal, Arjun. (2021). Cryptocurrency market value tops $2 trillion for the first time as ethereum hits record high. April 6. Accessed April 6, 2021.
22 Bank for International Settlements. n.d. Central Bank Digital Currency (CBDC). Accessed April 2, 2021.
23 Raphael Auer, Giulio. Cornelli, Jon Frost. (2020). Rise of the central bank digital currencies: drivers, approaches and technologies. Working Papers, Basel, Switzerland: Bank for International Settlements.
24 Vincent, Danny. (2020). “One day everyone will use China’s digital currency”. September 25. Accessed February 2, 2021.
25 Voell, Zack. (2021). Coinbase Lists Unmasking of Bitcoin’s Creator Among Business Risks. February 25. Accessed April 2, 2021.
27 BitIRA. (2021). Cryptocurrency Security. Accessed April 12, 2021.
28 Office of the Comptroller of the Currency. (2020). Federally Chartered Banks and Thrifts May Provide Custody Services For Crypto Assets. July 22. Accessed January 28, 2021.
29 Leonhardt, Megan. (2020). Nearly 3 Out of 4 Millennials Have Donated Money During the Pandemic. September 30. Accessed April 12, 2021.

Meet The Author

Matt Miller, CFRE, CSPG
Director of Development & Strategic Engagement
Loma Linda University Health

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