Fidelity Charitable joins bitcoin bandwagon, will accept currency
The charitable savings arm of Fidelity Investments will start accepting bitcoin, signaling a wider acceptance of the virtual currency once used by money launderers and drug dealers trying to skirt authorities.
Fidelity Charitable, the second-largest nonprofit fund-raiser in the country, said Wednesday that it will allow its donors to contribute bitcoins to their giving accounts. Fidelity joins United Way Worldwide, the country's largest charity, and the American Red Cross in accepting bitcoins.
Fidelity Charitable is a donor-advised fund, which allows investors to make contributions to their accounts, take the full tax deduction, and later distribute the money to charities of their choice. Fidelity is among the first of the national donor advised funds — largely managed by investment firms — to accept the digital currency.
Fidelity will work with Coinbase Inc., a San Francisco-based company, to convert bitcoins into cash. Fidelity will later distribute the money to the charities that the client chooses.
"There's more and more people investing in digital currency, and we felt like donors would want to tap into their digital wallet," said Matt Nash, senior vice president of donor engagement for Fidelity Charitable. "For us, it's far enough along in its maturity that it was something we wanted to consider taking in."
Bitcoin, created about seven years ago, is a computer-generated currency not backed by any central government. It can be moved between buyers and sellers without having to go through the traditional banking system and paying associated fees while maintaining the anonymity of the parties in the transaction.
That initially made bitcoin an appealing currency for criminals. But it also gained wider acceptance among legitimate users, attracting investors who trade the virtual currency on bitcoin exchanges. Some retailers, nonprofits, and other businesses also began accepting bitcoin.
Donations through bitcoin are still relatively low, because it still isn't a mainstream currency. Also, most people own the currency as an investment and the price has been mostly flat, leading them to hold their investments, said Nick Tomaino, a spokesman for Coinbase.
But the price of a single bitcoin has been climbing in recent weeks and it closed at $336.11 on Tuesday, up from $227.35 on Sept. 1.
"In the past, we've seen that as the price has increased, spending and donations have increased," Tomaino said. "Many charities now are adding bitcoin donation capabilities to be well positioned for a price increase."
Fidelity's bitcoin strategy may also be a way for the organization to appeal to high-net worth individuals who work in the technology industry and likely invested in bitcoin, said Connie Gallippi, the founder and executive director of BitGive, a nonprofit that is trying to expand bitcoin giving among donors and charities.
Still, Gallippi said, the move signals a greater acceptance of the virtual currency.
"It's exciting," she said. "They're a very large organization. It provides more validation for the use of bitcoin."