Bitcoin bounty: Cryptocurrency donations skyrocketed in 2021, according to Fidelity

In 2021—the year cryptocurrency vaulted into the cultural zeitgeist—charitable donations of the digital asset skyrocketed 12-fold, according to data from Fidelity’s donor-advised fund, Fidelity Charitable.

That brought the total crypto donations to $330 million, up from $28 million in 2020, the fund published in its annual giving report. The lion’s share was in Bitcoin, which accounted for 88% of all crypto gifts. Another 11% came from Ether, and 1% from alternative tokens, such as Litecoin.

The trend of crypto-giving crystallized as the value of tokens soared: Bitcoin began the year at a price of $32,000 per coin, then peaked to new heights that almost doubled its value in the first half of the year, before reaching an all-time record of nearly $70,000 in November. It ended the year at $48,000, up 50% over the 12 months.

With that much potential to generate worth, it’s unsurprising that crypto was popularized as a vehicle for charitable giving. Rather than offering liquid cash, many donors have long elected to gift appreciated stocks, bonds, and other such assets—even real estate or fine art—which can allow them to give more by increasing their effective cash allocation. If a donor were to sell a stock first and gift the resulting cash to a philanthropic organization, any appreciation of the stock would be subject to a capital gains tax, worth up to 20% of the stock’s gains. However, if the stock itself is gifted, that 20% could land in the hands of the beneficiary rather than the government.

The same holds true for cryptocurrency, which falls under capital gains tax law if tokens are owned for over a year. And in the case of Bitcoin, any tokens purchased pre-2021 surely boasted massive gains for the vast majority of the year; the coin cost just $7,000 at the start of 2020, and its price stayed relatively flat until the launch of its meteoric ascent at the tail end of that year. Losing up to 20% of those dizzying gains would undoubtedly be hard to stomach.

But despite the surge, cryptocurrencies represent a small percentage of Fidelity Charitable’s philanthropic dollars. Its $330 million pales in comparison to the fund’s typical scale of giving: This year, it disbursed a record $10.3 billion in donor-recommended grants. Overall, 55% of total contributions to the fund came from publicly traded securities, including stocks and bonds.

Crypto people, however, have been noted to be a charitable bunch: In 2020, 45% of investors in the digital-asset class donated $1,000 or more to philanthropies, reported the fund (33% made their donations in cryptocurrency specifically). As Fidelity Charitable suggests, this might stem from the overlap between crypto investors and the philanthropically inclined within the millennial generation—nearly 90% of whom say giving is an important part of their lives, and 75% of whom would call themselves “philanthropists.” According to the fund, 35% of young investors say they own crypto, and half of those who don’t say they’re considering it.

And as the crypto-savvy generation grows into a greater share of the global donor base, we might only expect the share of Bitcoin gifts to grow along with them.