It started, as so many things do in crypto, on Reddit.

In late December 2017 a post went up describing “The Pineapple Fund,” which pledged to donate about $86 million worth of Bitcoin to charitable causes. Incredibly, it wasn’t a scam and the poster encouraged charities to apply through a web site.

That was a wake-up call for Alex Wilson and Pat Duffy, co-founders of The Giving Block, which facilitates philanthropic crypto donations.

“Obviously non-profits were super skeptical about crypto in 2017,” Wilson said to me recently. “But a lot of non-profits applied and for a lot of them it was their first time getting a Bitcoin donation.”

“Would you rather donate to your favorite charity or the IRS?”

— Alex Wilson

Digital currency investors are likely still reeling from tax day in the U.S. on April 18 this year. Someone I know has a spread sheet several hundred pages long to record and tally small crypto payments that are non-the-less each taxable. While it seems major accounting services have begun promising to be crypto savvy, the IRS has provided little guidance on how it should be treated and the process remains confusing.

One bright spot seems to be the amount of digital assets being donated to charities, according to figures from The Giving Block. Like crypto writ broad, the startup’s performance has been off the charts. Donations rose to $69.6 million in 2021, a 1,558 percent increase from 2020. For the first time last year, Ether outpaced Bitcoin, largely driven by a big jump in non-fungible token projects allocating some of their revenue to philanthropy, Wilson said.

“At this point we’ve seen somewhere around $20 million to $30 million donated as a result of NFT projects,” he said. The ability to assign royalties from future sales of NFTs to previous owners is also being utilized for charitable giving.

“Each time it gets re-sold there’s a perpetual donation stream being created for charities,” Wilson said. This wasn’t possible before NFTs. “I’ve never seen a use case like this, you obviously can’t do that very easily with physical art or other physical goods.”

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Non-profits saw a big increase in digital asset donations once the Covid-19 pandemic had shut most public interactions around the world. Many began creating more digital content to keep the money coming in and found that cryptocurrency donations came with the territory, according to Wilson.

“Covid was a huge catalyst for crypto philanthropy,” he said. People donating to charities with cryptocurrency don’t tend to be donating otherwise, Wilson said, giving non-profits an entirely new donor pool to tap.

“They tend to be younger donors,” he said. “A lot of Millennials and Gen Zs are the one who are donating crypto, and a lot of the reason they’re donating is for tax purposes.”

Crypto donations offset capital gains taxes. If you bought Bitcoin for $1,000 and then sold it for $10,000, over 30 percent of that would go to federal and state taxes and you’d be left with around $7,000 to donate to charity. However, donating that $10,000 in Bitcoin reduces any other taxable gains by that amount and the charity gets more money.

“We have a very candid approach to talking to donors about this,” Wilson said. “Would you rather donate to your favorite charity or the IRS?”

The Giving Block has seen the number of non-profits wanting crypto donations skyrocket. At the end of 2020 they were working with about 100 groups, Wilson said. A year later it was 1,000 and only four months into 2022 the number is up to 1,500, he said. Their better-known client include The American Cancer Society and Save the Children.

The infamous Reddit post

The identity of the person or people behind The Pineapple Fund is still a mystery, Wilson said, but crypto philanthropy is no longer a secret. Resistance has come from some institutions that view digital assets a ephemeral or scammy, so education is the top priority at The Giving Block.

“As long as crypto continues to be more popular, so will crypto philanthropy,” he said.