The University of Pennsylvania received a $5 million bitcoin donation and confirmed it still holds some of the donation in Bitcoin.
The University of Pennsylvania has received an anonymous bitcoin donation worth $5 million to its business school. The bitcoin gift was announced by the university with the amount of publicity usually reserved for larger donations of fiat investments such as stocks, bonds, and real estate.
In an interview, John Zeller, senior vice president for development and alumni relations at Penn stated, “The donor’s goal was to make a gift of that magnitude, a promotable gift, to say, ‘If you’re interested, we’re in the crypto world, and we can accept it.'” This comes after years of discussion among nonprofits about whether they should accept Bitcoin.
The benefit for the donor is that any future capital gains taxes are voided when the bitcoin is donated to a charity. Although it is difficult for a donor to commit to a fixed amount of bitcoin denominated in US dollars, any commitment denominated in bitcoin can easily be kept, as one bitcoin equals one bitcoin.
Perhaps the greatest benefits of international donations made in bitcoin are that the final settlement of those donations can occur in as few as ten minutes for extremely low fees that are independent of the donor and recipient’s locations. Whereas, all international fiat transfers are subject to extremely high fees and final settlement between central banks takes days (at best) and can take weeks and even months. Some would argue, due to the invariable threat of confiscation, final settlement in the fiat world never really occurs at all. Therefore bitcoin can be a preferable donation strategy for international aid organizations.
Tom Pageler, chief executive of Prime Trust, a firm that custodies bitcoin on behalf of businesses and donors such as UNICEF, said, “You can have the local office in the region convert the crypto into the local currency, and now you don’t have to pay the wire fees on the transfers.” He continued, “You can get money there immediately.”
Another problem that international aid organizations face is scrutiny over the lack of transparency about how their received funds are allocated. Due to the distributed, transparent nature of the Bitcoin blockchain, the allocation of donations held in bitcoin are completely traceable and accessible.
Pageler added, “if I’m the Red Cross and moving crypto around the world, it’s all on blockchain, so I can see when it’s cashed and used. There’s the ease of it.”
According to John Zeller, Bitcoin donations to Penn have been contracted through NYDIG since the beginning of 2020. The $5 million bitcoin donation in May was made in part to help attract attention to Penn for other bitcoin donations.
Regarding Penn’s history of liquidating investment donations, Mr. Zeller said, “Our policy had been to traditionally sell everything immediately, even if it had been $5 million in stock.” Although, of the recent bitcoin donation, he said, “We liquidated some; we’re holding some.”
Large donor-advised funds such as Fidelity Charitable (over $35 billion in assets) and Schwab Charitable ($17 billion) both accept and have seen an increase in bitcoin donations. According to a spokesman Stephen Austin, Fidelity received $13 million in cryptocurrency donations in 2019, $28 million in 2020, and $150 million so far this year. It is unclear what percentage of these donations were made in bitcoin specifically.
John Zeller, who helped facilitate the bitcoin donation to Penn concluded, “It’s very nice to have the capacity to do it when a donor says, ‘I have some Bitcoin.’”
“We can accept it now without it grinding the university to a halt.”
Source: Bitcoin magazine