Charities Explain How Bitcoins Can Serve Their Cause

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Because Bitcoin transactions are virtually instant, free and near-anonymous, charitable organizations are collecting and distributing donations in bitcoin.

"Bitcoin is great for non-profit organizations and non-profit organizations are great for Bitcoin," said Stephanie Murphy, who works with Fr33 Aid, during a panel discussion at the Bitcoin 2013 conference in San Jose, Calif.  Fr33 Aid provides support to volunteers who offer medical and educational services at events promoting liberty.

Several women that work with charities spoke about their experiences dealing in bitcoins during the panel discussion.

Released in 2009, the decentralized digital currency has become increasingly popular over the years. Mainstream companies such as WordPress and Gyft have begun accepting bitcoins as payment. The U.S. federal government has also taken note of it, with the Financial Crimes Enforcement Network issuing guidance in March and the Department of Homeland Security seizing U.S. Mt. Gox funds from accounts at Dwolla and Wells Fargo. Mt. Gox is the largest Bitcoin exchange and is based in Tokyo.

On April 15, 2013, tax day, Fr33 Aid announced it would drop its non-profit IRS application and instead deal only in bitcoins. Fr33 Aid converts all donations received via other payment methods into bitcoins. 

Fr33 Aid was taking donations in bitcoins during the recent price fluctuations stemming from bitcoin users' panic-selling sparked by hacks on Mt. Gox. Bitcoin's instability is seen as a roadblock for merchant adoption.

"We don't worry about the volatility quite as much because it's kind of averaged out over time," said Teresa Warmke, treasurer of Fr33 Aid.

The Free State Project received donations for its summer festival, PorcFest, from the online casino Satoshi Dice when the bitcoin's price was up. Only a couple days later the price had dropped to around $70. The bitcoins were converted into Federal Reserve Notes (FRNs) a day after receiving them, but the experience highlighted Bitcoin's risks, said Carla Gericke, president of the Free State Project.

The Free State Project is a geopolitical movement to concentrate freedom lovers into New Hampshire, a state that's touted as the "freest in America." The Free State Project started accepting bitcoins in 2011.

Bitcoin "is easy to use, it's easy on the website and a lot of our constituents are bitcoin people but there are those issues that you've got to be watching," Gericke says. Volatility is a problem because charities can "become speculators without meaning to," she says.

Because Bitcoin is a deflationary currency, it encourages holding or saving, which could be a conflict of interest for charities since most consumers expect their donations to be used right away.

Non-profits could hold a small balance of bitcoins and see it as a fund that provides greater value over time, said Gericke., an educational outlet for "news and views against the empire," also accepts bitcoins. The non-profit sometimes converts its bitcoins into FRNs, but other times it pays for services in the digital currency, said Angela Keaton, director of operations at

Bitcoin could offer a way for people to support controversial topics without worrying about the current political environment, Keaton said.

"Bitcoins can be sent online and anonymously," says Warmke in a separate interview. "In this way, Bitcoin … supports the work of revolutionary charities."

Plus PayPal and the credit card companies have ethical and/or legal reasons for blocking some transactions. The major payment providers blocked transfers and donations to Julian Assange of Wikileaks, after the organization released classified documents.

Before Fr33 Aid became a bitcoin-based charity, its PayPal account was locked down several times, Warmke said. When it received its first $1,000 donation, the charity was locked out of its account because it wasn't yet working as a 501c3 non-profit yet. It took two weeks for Fr33 Aid to get the funds back from PayPal, she said.

Charities and non-profits could "really spread the story of Bitcoin in a really positive way," Gericke said.

"One thing we hear all the time is Bitcoin is just used for drugs or nefarious purposes," she said. But more than 50% of bitcoin users said they use the digital currency for donations, according to a survey by Zero Hedge, a website designed to widen the financial, economic and political information available.

Non-profits are seeing increased attention from payments industry participants trying to help these charitable organizations collect and distribute their donations around the world quickly and easily.

In September, Billhighway created a mobile card reader similar to Square to allow people in the field to take plastic card payments. Billhighway focuses solely on non-profits. In October, Western Union announced NGO Global Pay, a financial platform to help nongovernmental organizations transfer funds to volunteers in the field. And the American Red Cross works with check-capture company Panini for a mobile check deposit system.

BitPay Inc., which exchanges bitcoins sent to merchants for "real" currency immediately, sometimes waives the 1% processing fee for non-profits.

Investors at the Bitcoin 2013 conference cited charitable giving as an area that Bitcoin had a strong chance for success. 

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