Bitcoin? What’s that?
Bitcoin is a form of digital currency. No one controls it, and bitcoin isn’t printed, like dollars or Euros. It’s produced and used by people and businesses as part of a growing category of money known as cryptocurrency.
The desire to donate with bitcoin is growing
Our researchers quickly learned that several major charities were starting to accept bitcoin in response to donor interest. Fidelity Charitable decided to explore its ability to accept bitcoin.
Because the IRS considers bitcoin property, there can be a tax benefit to donating it directly (also known as donating “in-kind”), rather than converting it to cash first. This is particularly true when the donor has held the bitcoin for investment purposes for more than a year. So we knew we had to figure out a way to let donors contribute bitcoin to Fidelity Charitable directly, just like they can other non-cash assets.
A conversion technology solves the problem
After a thorough research and interview process, we found a solution: a third party vendor and bitcoin exchange that focuses on converting bitcoin to US Dollars. Utilizing this vendor let Fidelity Charitable streamline the process and allow its donors to take advantage of the tax benefit of contributing property. Just like a contribution of any other asset, donors could support multiple charities with their bitcoin contribution. Once Fidelity Charitable accepts and sells the bitcoin for cash using the third party vendor, the proceeds are put into the donor’s donor-advised fund. The donor can then recommend how the assets are invested. When the donor is ready, they recommend grants from the donor-advised fund to qualified charities of their choice.
The solution evolves through a series of launches
After a six-month iterative process, including prototyping, user testing and refinement, we helped Fidelity Charitable launch a pilot program, complete with regulatory considerations, legal structure, and full technical and business requirements. We refined front- and back-end functionality and integration with each launch.
Fidelity Charitable affirms its position as a leader
With the new capability in place, Fidelity Charitable became even more of a pioneer in the charitable sector—and working with Fidelity Labs let it do so without disrupting its core operations.
An immediate PR impact
Lagging behind some charities in bitcoin innovation.
Leading the pack in helping donors give how they want to give.