The use of cryptocurrency has been on the rise in recent years with the younger, tech-savvy generation. Some investors are now looking at donating cryptocurrency due its potential tax savings.

As cryptocurrency values have historically been volatile, not-for-profit organizations should consider updating their gift acceptance policy to include this new asset class. This policy should start by including a broad definition to cover all types of cryptocurrencies. Additionally, organizations should consider whether they would like to include a donation approval process. If any individuals in the organization are concerned with accepting cryptocurrency, this process would give the organization discretion with donations they’d like to accept.

The main piece of the gift acceptance policy should include how the organization would like to accept cryptocurrency donations and when the donations should be liquidated. Although liquidating the cryptocurrency immediately upon receipt is the least risky option, the organization may consider holding the digital currently if they have other prominent income streams.

Organizations have a couple options for accepting donations. The most preferred option for organizations is a third-party processor that will sell the cryptocurrency immediately for cash. This is the easiest option for organizations, but may come with an additional cost. If the organization has someone with an in-depth knowledge of cryptocurrency, they may consider using a cryptocurrency wallet. This wallet would allow the organization to hold or sell the cryptocurrency.

Additionally, the organization may consider including a policy for cryptocurrency appraisals. As the IRS considers cryptocurrency non-cash donations, any donation over $5,000 needs an independent appraisal. The organization will want to specify whether the individual or the organization will be responsible for the appraisal cost.

Once the gift acceptance policy is updated it is important for the organization to discuss the policy with all staff who work with donors. This will allow them to better assist donors who intend to donate cryptocurrency.