Exploring Bitcoin Donations: The Benefits of Donor-Advised Funds

'Tis the season for giving, and this article explores the growing trend of using donor-advised funds (DAFs) as a flexible vehicle for philanthropy, especially with the inclusion of bitcoin.

Overview

This is the last Crypto for Advisors newsletter for 2024. The coming year is expected to be vibrant in the crypto space, and we express our gratitude to our increasing readership, now at 44,000 active subscribers.

In this edition, Phil Geiger from Unchained discusses bitcoin donor-advised funds and their workings. Additionally, Eric Tomaszewski from Verde Capital Management answers questions regarding potential tax implications.

The Rise of Donor-Advised Funds: A New Philanthropic Approach

Donor-advised funds have become increasingly popular for managing charitable contributions. A DAF allows contributors to receive immediate tax deductions while recommending grants to charities over time.

Tax Advantages

Donors can enjoy tax benefits when contributing assets such as cash or bitcoin to DAFs. This is especially beneficial for those looking to offset large taxable events.

DAFs also offer the flexibility to delay fund distribution, allowing for strategic charitable giving.

Bitcoin DAFs: A New Trend

Bitcoin DAFs have emerged, merging traditional DAF benefits with the advantages of on-chain bitcoin. This allows donors to contribute bitcoin directly and maintain it within a DAF, enabling grants in bitcoin or USD.

Recent successes include the world’s first bitcoin grant to Base58 School and another to the Human Rights Foundation.

Insights from Professionals

Q&A Session Highlights

Q: How do advisors approach the topic of giving? A: Focus on the intent to give, driven by a desire to support others.
Q: What tools assist in optimizing giving? A: Resources like The Giving Block and Endaoment provide valuable insights.
Q: Why is giving crucial during market growth? A: It helps manage tax liabilities while diversifying donations strategically.

In closing, embracing new methods of giving, including utilizing bitcoin DAFs, can broaden charitable support and potentially create a legacy of philanthropy.