A new study from Fidelity has found that holders of cryptocurrency are disproportionately more charitable as investors, with 45 percent donating $1,000 or more to charity in 2020, compared to 33 percent of the entire investor population.
Part of this disparity is explained by the higher proportion of millennials who are investing in cryptocurrency. Nearly half of millennials said crypto was a smart investment, compared to 18 percent of Gen X, and 6 percent of baby boomers.
Millennials are also more inclined toward charity than prior generations.
Nearly 90 percent of millennials say charitable giving is an important part of their lives, compared to 74 percent of the total population.
Now this combination of interests could begin paying dividends, according to Fidelity Charitable, a nonprofit charitable organization that sponsors donor-advised funds.
"As investors—particularly Millennials—combine their interest in digital currency with their charitable values, digital assets have the potential to become a significant source of funding for philanthropy," said Tony Oommen, vice president and charitable planning consultant at Fidelity Charitable. in a statement. "Donors have already contributed $158 million in cryptocurrency assets to their donor-advised funds at Fidelity Charitable this year, a 464 percent increase from 2020."
Fidelity Charitable said it accepted $28 million in cryptocurrencies in 2020, more than double what it pulled in back in 2019.
The nonprofit expects this trend to only grow as crypto investors get more tax savvy.
The uptick in giving occurred even as 38 percent of crypto investors still don't realize that selling digital assets is taxable, and nearly 30 percent don't know for sure if crypto can be donated directly to charitable organizations.
This is crucial because out of those who did donate, 56 percent cited "my cryptocurrency appreciated significantly" as the reason for their charitable giving, while 54 percent cited the "tax benefits of donating cryptocurrency."
As more awareness spreads about the tax implications of crypto investing, more crypto investors could turn to donations for tax reasons.
They might also donate more if the process became more seamless.
The survey found that nearly 50 percent of those who made crypto donations said it was difficult to find charities that would accept crypto donations. Half of investors also said the charities they were looking at required a larger amount than they wanted to give, and 44 percent said it was a "cumbersome process" to donate.
"As the cryptocurrency market expands and matures, we would expect to see that many of the transactional processes that investors find clunky or difficult today become smoother, including the ability to donate these assets for charitable purposes," said Oommen.
As investors ease into the idea, so have a handful of charities.
The Fred Hutchinson Cancer Research Center now accepts crypto, along with International Animal Rescue, Save the Children, The Jewish Community Federation and Endowment Fund, and others.
Celebrities are getting hip to the idea as well.
The report came out in the same week that Tampa Bay Buccaneers quarterback Tom Brady gave a fan a bitcoin, now valued at $61,000 per coin, as part of an exchange for the football used in his 600th touchdown. Wide receiver Mike Evans had handed off the ball before realizing its significance.
"There is a tremendous role advisors can play here in not only educating clients on the implications of investing in cryptocurrencies but in helping them look across all assets they hold to determine the most effective way to support their charitable giving," Oommen said.