This is part of my ongoing series about Digital Currencies. This is my interview with Amanda Quraishi about Bitcoin from Mobile Loaves and Fishes where she works on marketing and IT issues.
What are the risks for a nonprofit that wants to take Bitcoin? What are the benefits?
I don’t think there are any risks to non-profits in accepting Bitcoin on a donation basis. It may actually open up relationships with an entirely new set of donors who may not have known about your organization before. I really think that if someone wants to give you something of value that can help further your mission, it’s worth looking into and finding out how to accept it and use it.
There are, however, a few things nonprofits should be aware of and take steps to educate themselves about before they begin. For example, organizations would want to understand how to best secure their donations, how to convert them to dollars (or other fiat currencies) as needed—things like that. I also think it’s important for non-profits to realize that Bitcoin (and all crypto-currencies) are in their infant stages and are very volatile. That means the value can go up and down very quickly, so it is probably best not to rely heavily on that income for financial planning purposes.
With the IRS ruling that Bitcoin is not a currency, should nonprofits be scared to deal with it at all?
Absolutely not. The recent IRS ruling treats crypto-currencies as property rather than currency. Most non-profits receive in-kind donations of all sorts, so we already have processes in place for accounting for them. There may a small learning curve involved for non-profits in how they use the tools for tracking and exchanging crypto-donations. As far as it being more or less financially complicated than say, receiving donations of office supplies or clothing, it would be very much in line with what is already being done.
How would a nonprofit even approach to start taking Bitcoin for donations? Who would they hire to enable it with their current systems?
Well, it’s actually very simple. Almost anyone with a basic understanding of online transactions (of any kind) can easily set up a ‘wallet’ for accepting Bitcoin. Most of the people who are currently buying, using, and trading Bitcoin are not professional financiers. They are average people who have an earnest interest in seeing decentralized currencies become popular. The website Bitcoin.org has many excellent resources and very simple, practical, and easy-to-understand information about how Bitcoin works. There are also some very robust online communities where individuals can join to read Bitcoin news, ask questions, and learn how others are using it.
If a nonprofit wanted to experiment with taking bitcoin, how would they start? Events? Galas? Mobile campaign?
I think there are unlimited possibilities, especially since the early adopters of crypto-currencies tend to be ok with unconventional ways of doing things. We are, obviously, in unchartered territory here. I say get creative and have fun with a campaign to test the waters. My only real piece of advice would be to find local Bitcoin users and talk to them about their interests, since you’ll want to leverage those relationships as you plan an event or campaign around crypto-donations.
How long before we see wide acceptance (in small to mid-size nonprofits) of Bitcoin or other digital currencies?
I’d like to be optimistic, but I think it will take far longer for non-profits to adopt. Even many for-profit businesses are still resisting. Historically, non-profits tend to be behind the curve when it comes to innovation or using new technologies. The good news, though, is that non-profits that do want to take the plunge will be leading the way. I say, go for it!