Certain colleges, such as the University of Puget Sound, have been receiving offers of bitcoin donations they are unsure of how to accept. One of its graduates scored big and decided to make a sizable donation to the university — in the form of Bitcoin.
For years, colleges have debated on the subject of accepting unconventional donations. Some of those have included art, shares in a family business and now, Bitcoin. Some of those gifts can be questionable, even to the most seasoned of accountants, and make things difficult when it comes to filing taxes.
In the case of Bitcoin, which has long been unregulated, apt to fluctuate and is often vulnerable to hackers, this is certainly no exception. Some universities wonder if it is even worth accepting such a donation. However, in 2014, the University of Puget Sound, which is located in Tacoma Washington, had several alumni dealing with cryptocurrency and making themselves small fortunes. As a result, the college did some research so that it could make an educated decision about the Bitcoin donations.
University of Puget Sound Becomes the First to Accept Bitcoin Donations
According to one donor, Nicolas Cary, Puget Sound was one of the first universities to accept these types of donations. Cary, the founder and vice chairman of Blockchain, stated that the school wanted to know firsthand how cryptocurrency works and the process of such donations.
Puget Sound broke ground in the area by being the first school to change its policy regarding accepting gifts and started allowing Bitcoin donations and other cryptocurrency gifts. It created a service called Bitpay and created an invoice that used a QR code.
While Cary was on his laptop in a Berlin, German hotel, he captured a photo of the invoice on his smartphone and used his Blockchain wallet to send the school 14.5 Bitcoins, which, at the time, was worth around $10,000, through an Atlanta, Georgia bank.
Although there was a snowstorm brewing in Atlanta at the time of the transaction, it took the college a day longer to receive the gift, according to Sherry Mondou, Puget Sound’s chief financial officer and executive vice president.
Cary said he wanted to prove that such a donation could be done and that it’s easier than it seems. At the moment, cryptocurrency is going through a slow period, but their worth fluctuates and usually ends up on the high end as a lot of it is owned by young entrepreneurs.
Then, there are other schools like Harvard University, which have yet to accept Bitcoin donations. Yale initiated the testing of a process to allow it but has not implemented an actual process for accepting cryptocurrency-based gifts, according to spokesman Tom Conroy.
Other schools are more receptive to the idea, such as the University of California, Berkeley, which accepted its first such donation this year. Cornell University and the Massachusetts Institute of Technology have also accepted cryptocurrency gifts but have no revealed the details surrounding it.
Schools have long managed to get donations from their alumni, but at the same time, they often reject gifts that are unconventional. Some of those gifts include vacation timeshares, paintings and even wetlands.
In spite of the viability of cryptocurrency, some school officials are worried about certain risks. Additionally, the Internal Revenue Service views cryptocurrency as property. As a result, nonprofit schools have to take extra steps to accept it where they don’t have to with actual cash. Cryptocurrency donations that are higher than $5,000 must also be appraised so that the donor can receive a tax deduction.
Bryan Clontz of Charitable Solutions, a consulting firm, said that the majority of these organizations don’t understand how cryptocurrency works and that it is often intimidating for them to accept such gifts as a result. In addition, to accept them, the schools would have to take certain personal information, including Social Security numbers.
As for Cary’s donation, Puget Sound immediately sold the Bitcoin to reduce risk, according to Mondou. However, if the school had kept it and cashed it during December 2017, when Bitcoin was at its peak, it would have garnered over $280,000.