VANCOUVER, February 5, 2018 — The first known donation of cryptocurrency to a Canadian donor-advised fund was processed by CHIMP (Charitable + Impact), the online giving platform, in December of 2017. CHIMP processed $2.5 million worth of cryptocurrency, which capped off a record year for the growing company, administering over $127 million in charity donations by Canadians in the calendar year.
Cryptocurrencies earned mainstream attention in 2017, with Bitcoin (the most widely known cryptocurrency) skyrocketing 800% in value over the course of the year. Other cryptocurrencies also saw dramatic increases in value. As a result, many people are sitting on large investment gains that will trigger a tax payable when sold.
It is important for investing Canadians to understand how charitable gifts can offset taxes owing on investment gains. Profits made from cryptocurrency — just like other forms of income — are taxable in Canada. Since 2013, the Canada Revenue Agency has recognized cryptocurrency as a commodity which means that, for most investors, capital gains taxes will be triggered when a cryptocurrency is sold for more than it was bought for. The larger the profits, the greater the tax obligation.
Donating investment assets to charity has long been a way to lock in gains while reducing one’s tax obligation and satisfying the desire to do good in the world. When you are able to donate an investment “in-kind”, you are able to lock in your gains. Donating profits realized in the crypto market is a wise choice for investors.
Processing and accepting cryptocurrency is a complex process, and most Canadian charities aren’t able to do it for donors. Typically, a number of steps are necessary for a donor to donate cryptocurrency to most charities: a donor first has to sell their cryptocurrency, converting it to cash and triggering a tax bill. Next, the donor has to make individual cash donations to the charities they most want to help and manage the tax receipts they get in return.
Using CHIMP’s platform that operates under a donor-advised fund structure, Canadians can add money to the platform, immediately receive a tax receipt for their donation, and then decide later which charities they would like to distribute their donations to.
By donating cryptocurrency in-kind to CHIMP, the donor simply has to transfer the cryptocurrency from their wallet to CHIMP’s wallet. From there, CHIMP takes over. The donor receives a single tax receipt immediately after donating for the fair market value of the cryptocurrency. CHIMP then sells the cryptocurrencies for cash which is placed in the donor’s CHIMP Account. With cash in their CHIMP Account, the donor can support the charities they care most about as desired.
This process reduces the donor’s tax burden as the profits from the sale of the cryptocurrency were not realized by the donor themselves, and puts 100% of the donated cryptocurrency’s value into the hands of the charity. The process of establishing cryptocurrency wallets — including all requisite security measures, accepting and recording transfers, and liquidating funds is a complex one.
“At CHIMP, we’re excited by keeping up with innovations across the finance and technology space. Cryptocurrency can be complex but it is an emergent asset class that can be valued and converted to fiat currency, something all charities are easily able to accept and deploy to create impact in our communities,” said John Bromley, CEO & Founder of CHIMP. “At CHIMP we are used to dealing with complex donations and we consider it our job to make it as easy and efficient for donors to give. When we take the complexity out of the giving transaction, donors can spend more time researching the causes and charities they want to help and those charities can spend more time improving their program delivery.”
For more information or to secure an individual or joint interview with John Bromley, please contact Jesse Penner at firstname.lastname@example.org or 604-614-8179.
To learn more about donating cryptocurrency through CHIMP, click here.