On Friday morning, a team at Cape Cod Healthcare got an e-mail from a donor telling them to check their newly established bank account that can process cryptocurrency transfers.
Inside the account was an unexpected donation of bitcoins worth $400,000, which the organization immediately exchanged into US dollars. It was the second bitcoin donation Cape Cod Healthcare had received from the individual less than a month after setting up a process to accept digital currency.
Cape Cod Healthcare accepted its first bitcoin gift last month — valued at about $400,000 — opening up the possibility that the organization could accept more in the future as digital currency surges in popularity.
Christopher Lawson, the company’s senior vice president and chief development officer, said a donor, who wished to remain anonymous, sent an e-mail to Cape Cod Healthcare in mid-January inquiring whether the group accepts bitcoin. Lawson said the donor has been a regular annual supporter in the past, but this was the first time they offered to make a donation using cryptocurrency.
“Before we responded, we had to make sure there were not any issues,” he said. “It required a good amount of research... My office probably spent a week or two doing our best to learn who else was doing this.”
Lawson said the health provider had to get clearance from its legal and finance departments, as well as CEO Mike Lauf, about accepting the digital coin. Cape Cod Healthcare found that the Internal Revenue Service has a procedure in place for virtual currency transactions, including those made as a charitable gift. In gifting bitcoin to a charity, the donor does not need to report gains or losses to the IRS.
“It makes it an asset that is attractive to donate,” Lawson said. “You get maximum impact on the value, and any gains you get, much like stock, you don’t pay the tax.”
The biggest initial concern from Cape Cod Healthcare was the fact that bitcoin’s price is highly volatile. At the time the parties were working out the logistics of the initial gift, bitcoin’s price fluctuated from $40,000 to $30,000, then up again. This week the price of bitcoin hit a record high of over $50,000, fueling its 65 percent growth since the start of the year.
In order to accept the gift, Lawson said Cape Cod Healthcare had to establish an account that could accept cryptocurrency payments. The account generates a personalized QR code, which the group shared with the donor to facilitate the transfer of funds. Now, that donor, or anyone with the code, can transfer bitcoin to Cape Cod Healthcare at any time.
Lawson said his team is instructed to immediately convert bitcoin gifts into US dollars as soon as it hits their account, since fluctuations in price could affect the value of the donation. The timing of the transactions on Jan. 28 and Feb. 19 were solely up to the donor.
“I’m really excited,” Lawson said. “We are coming out of a period during COVID when donations were hard to come by for a lot of folks. This lets people know that we have the capability of accepting these cryptocurrencies in donation, and we have the infrastructure in place.”
Lawson said he thinks more nonprofit organizations, including museums and universities, will begin exploring how to accept cryptocurrency as gifts.
“It is not widespread but it is becoming more mainstream,” he said. “People are accumulating these assets, and they are looking at opportunities to donate them.”