Cape Cod Healthcare scores a different kind of donation
Beatrice Gremlich is used to dealing with major gifts through her job with the Cape Cod Healthcare Foundation. But two recent donations totaling $800,000 required a crash course in cryptocurrency.
In January, a long-time donor sent Gremlich an email asking if the foundation, the development arm of Cape Cod Healthcare, took Bitcoin. Gremlich, whose official title is director of advancement, had never dealt with cryptocurrency, a virtual currency that works quite differently from dollars and cents. But, not wanting to pass up a significant windfall, the Foundation checked with CCHC leadership and then jumped into finding out all they could.
Gremlich saw opportunity in cryptocurrency. As the Foundation told President and CEO Michael Lauf and other senior officers, “the potential upside is that if we are able to take cryptocurrency, that could open a door for all kinds of other donations from a new set of donors.”
Cryptocurrencies can’t be carried in your back pocket. Instead, investors buy Bitcoin or other cryptocurrencies through exchanges, paying a price that floats based on supply and demand, and keeping it in a virtual “wallet.” The currencies exist only in a decentralized network of computers that use a “blockchain” to keep track of transactions. Gremlich compares them to a pumped-up version of Venmo, the online app and payment system that can send money from one user ID to another.
“With Bitcoin or any of the cryptocurrencies, when you've established your account, you then create a unique link for your organization,” she said. “Then you can send that link to any potential donor who wants to give that type of currency to your organization.”
A Volatile Currency
The catch is that cryptocurrencies, like stock, have fluctuating prices based on demand. Bitcoin debuted in 2009 and finally hit $1 per unit in value in 2011. In the last year, however, the price has grown about 10 times, from around $5,000 to about $50,000. In February, Elon Musk, the founder of Tesla, announced he had invested $1.5 billion in it. That kind of volatility has led the U.S. Federal Trade Commission to warn that because cryptocurrencies don’t go through banks or other institutions, they lack the consumer protections of traditional currency or securities.
The volatility -- a donation can change value in moments -- also raises issues for nonprofits who receive cryptocurrency donations, said Gremlich. She was lucky, she said, to connect with two other nonprofits that accepted Bitcoin and were able to advise her on setting up a secure process. CCHC chose to work through a third-party company -- Coinbase -- that created a “wallet” for the healthcare company to accept the donation and then exchange it for traditional currency.
“It has the ability with a couple of keystrokes to sell the cryptocurrency to the open market in order to get U.S. dollars or whatever currency you’re looking for,” Gremlich said. “And, under the same company, we can do the wire transfer directly into our foundation bank account. A stock transfer is usually within 24 hours; but with the cryptocurrency, we can have it sold and transferred into our account within 15 minutes. That helps to defray the volatility of the cryptocurrency.”
The $800,000 came in the form of two $400,000 gifts from a donor who has chosen to remain anonymous.
“The first transaction caused some nervous moments, as this was all new to our organization,” Gremlich said.
The second transaction went more easily, she said, and calmed her nerves.
“When the second gift came, I was very comfortable selling it for dollars and then transferring it into our account,” she said. “So many of our transactions are by wire transfer or on the Internet.”
Donation at a Pivotal Time
The donation came at a pivotal time for the healthcare organization, Senior Vice President and Chief Development Officer Christopher Lawson told the Boston Globe recently.
“I’m really excited,” Lawson said. “We are coming out of a period during COVID when donations were hard to come by for a lot of folks. This lets people know that we have the capability of accepting these cryptocurrencies in donation, and we have the infrastructure in place.”
Cryptocurrency can be a boon for nonprofit donors, he said. By donating cryptocurrency directly to the foundation, the donor avoids selling it themselves and paying any capital gains tax.
“We are so grateful to our donor for asking if we accept Bitcoin. It’s actually expanded our ability to reach new donors. Thanks to this donor we’re on the forefront of this new avenue of charitable giving, which is amazing.”