Among the Many Unique Donations Colleges Receive, Bitcoin Puzzles Them
Among the Many Unique Donations Colleges Have Received, Bitcoin Has Them Puzzled
Many colleges have the luxury of being recipients of donations from students and students’ families over the years, which have been both traditional donations and less traditional ones. Along with massive checks for the work they do, there have been donations of art pieces and shares of the family business. Sometimes, there are issues with these types of investments, making it hard to account for them and setup tax filings. In other events, the investments need special storage to preserve.
The University of Puget Sound recently received an untraditional offer, and they are struggling to figure out exactly how to accept it. One of the graduates has been successful in their investments with Bitcoin and has decided to donate towards the school with the digital asset. This isn’t the first time that the liberal arts college has been faced with a related decision, considering how many of their alumni have been pioneers in the crypto industry and have since made a good amount of profit. Before deciding how to accept the donation, research was necessary.
There are many issued that the financial industry has with Bitcoin, noting that the lack of regulation and volatility of the token makes it risky to even hold. To make matters worse, Bitcoin and other cryptocurrencies are frequently stolen, and wallets are hacked, which can make new investors worried.
So far, this university is believed to be the first one to accept cryptocurrency investments at all, and that can be credited to some help from Nicolas Cary, the donor of the Bitcoin. He told the media,
“I had to do a little bit of convincing for them to accept it. They wanted to dig in about how it works and what the process would be. We had a lot of conversations.”
The first step that Puget Sound had to take was to change the policy, allowing them to accept the Bitcoin. Once the policy was altered, they were able to generate an invoice with QR code through Bitpay. The invoice was sent to Cary in Berlin, and he was able to take a picture of the code and use the Blockchain wallet to send over 14.5 Bitcoin.
Even though cryptocurrency has been suffering a bit lately, their total value is over $200 billion still, which is held onto by many young investors right now. They’ve been educated in this kind of investment to eventually become long-term donors. As a result of Cary’s hard work, there have been other cryptocurrency gifts since then. Sherry Mondou, the executive vice president and chief financial officer of the school, has said, “For us, it’s just kind of normalized now.”
Despite the acceptance that the liberal arts college has had of cryptocurrency, bigger universities have yet to do the same. Harvard University, for example, has a $39 billion endowment and they still haven’t welcomed a cryptocurrency donation to their accounts. While this disallowance is common amongst the richest and savviest universities, though there are other schools that are gravitating toward it. Yale is presently testing out a process that would allow them to accept cryptocurrency, though they aren’t going out of their way to do so.
Less profitable colleges are working on acceptance as well. The University of California at Berkeley has accepted it’s first donation of this kind this year. Both Cornell University and the Massachusetts Institute of Technology have accepted cryptocurrency donations too, but there is no information about how much they’ve accepted.
There’s a certain skill needed for universities to encourage the donations from alumni and families, but the majority of colleges will refrain from accepting any donation that has too much work required. Some of the rejections that colleges issue are paintings, wetlands, and vacation timeshares. The only real way to accept the gifts as a usable donation are to liquidate them, giving them the cash to spend in the areas that the school needs.
Reputation is another factor with the acceptance of cryptocurrency. Right now, cryptocurrency is considered property in the eyes of the Internal Revenue Service (IRS), so there are more steps involved than if the donation was just cash or securities. Anything in cryptocurrency that exceeds $5,000 in value at the time of the transaction needs to be appraised first, giving them the ability to get a tax deduction.
Charitable Solutions is a consulting firm that allows charities to receive donations that are not cash and appraise them. Bryan Clontz of the consulting firm commented on the ability for schools and other organizations to accept a variety of donations, saying, “How many gifts are they going to get a year – and is it worth the effort?” Ultimately, the majority of nonprofits do not have a clear understanding of digital currency, leading to weeks of work to simply open a virtual wallet and make it possible to accept the donation. Most colleges refrain from sharing the personal details that are often required to setup that wallet.
The question remains – how did the donation from Cary ultimately work out? The university opted to sell the Bitcoin as soon as they could, eliminating the fluctuations that could occur at any moment. However, considering that this donation was made not long before the height that Bitcoin reached in December, they unfortunately lost out on a donation that would’ve been $280,000. Right now, the value would be $93,000, which is still over nine times the amount that it was when the company cashed it out.