Donating bitcoin/cryptocurrency to a DAF [donor advised fund]

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numberman
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Joined: Wed Sep 23, 2015 3:42 pm

Donating bitcoin/cryptocurrency to a DAF [donor advised fund]

Post by numberman »

Can anyone provide their experience with donating bitcoin or other cryptocurrencies to their donor advised fund? Specifically I'm wondering about Fidelity, but if others handle it well, I'd like to know.

I have a DAF with Schwab, and last year I asked them about donating some bitcoin I had, since my crypto gains were more severe than my "normal" taxable securities. I was a little surprised by the response: I had to fill out some pdf form, and they only accepted donations over some limit (around $50k, I think?). It sounded like they had to have someone manually review and process it; it felt like they treated bitcoin donations like a special case like donating a piece of art or a car or real estate, and was primarily done for the people who made millions by gambling their life savings on it. I wasn't planning on giving $50k, so I just said "forget it" and just gave to a couple of charities directly that accepted bitcoin (which was annoying: I had to look around and find some that weren't my first choices, and I couldn't hide my personal info behind the DAF).

I was hoping that the process would be more like donating traditional securities: no significant limits, and just submit some online form. I heard a long time ago Fidelity partnered with Coinbase for automated cryptocurrency processing, which sounds more like what I was looking for. Has anyone here actually gone through the process at Fidelity or elsewhere, and can verify if that's true?

I know I could just ask their service reps or whatever, but it can be hard to know if they're really telling the truth until you go through the process, especially for something like this where a rep may have no idea what I'm talking about.
Topic Author
numberman
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Joined: Wed Sep 23, 2015 3:42 pm

Re: Donating bitcoin/cryptocurrency to a DAF [donor advised fund]

Post by numberman »

arcticpineapplecorp. wrote: Thu Jan 21, 2021 10:26 pm let the search bar be your friend:
Thanks, but I don't see any new information in there. I know Fidelity accepts cryptocurrency in their DAF; so does Schwab, but the process of donating is awful. I'm asking if the process is better with Fidelity (or elsewhere).
Rowmore
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Joined: Wed Feb 03, 2021 7:04 pm

Re: Donating bitcoin/cryptocurrency to a DAF [donor advised fund]

Post by Rowmore »

The issue is that the IRS requires the use of a qualified appraiser for charitable gifts of donated property with a fair market value of more than $5,000. This is the reason for the $50k minimum with Fidelity/Schwab. The appraiser will charge somewhere around $600, so they have to make the transaction large enough to justify the expense.

I know this is silly because it is "easily appraised" by making a transaction on Coinbase, Kraken, etc.

If you gifted more than $5k, you will need to fill out your form 8283 for non-cash charitable contributions.

Talk to your financial advisor if you have further questions on Charitable gifting or taxes.
Topic Author
numberman
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Joined: Wed Sep 23, 2015 3:42 pm

Re: Donating bitcoin/cryptocurrency to a DAF [donor advised fund]

Post by numberman »

After talking to a Fidelity rep (eventually), to partially answer the original question: Fidelity also has a paper form to fill out for cryptocurrency donations ("Letter of Understanding for Cryptocurrency Contributions"), but it does seem a little simpler than the Schwab form that I remember. If anyone seeing this wanted to know, it asks for which cryptocurrency you're donating, amount, and "How was your cryptocurrency acquired?"

But after submitting that form, it goes through some Coinbase system for actually submitting the coins (I assume they send you an "invoice" or something). I wondered if they require actual on-chain transactions, or if it goes through an internal Coinbase transfer to avoid transfer fees if the coins are already on Coinbase, but the rep wasn't sure. Otherwise he seemed pretty on the ball for a topic that seems to get rarely asked about, and they accept btc, bch, eth, and ltc (according to him).

At least for now, I won't be seeing the process first-hand, since I've decided to not bother, and just try to find places to donate some coins directly.
Rowmore wrote: Wed Feb 03, 2021 7:10 pm The issue is that the IRS requires the use of a qualified appraiser for charitable gifts of donated property with a fair market value of more than $5,000. This is the reason for the $50k minimum with Fidelity/Schwab. The appraiser will charge somewhere around $600, so they have to make the transaction large enough to justify the expense.
This is not the reason, at least at Fidelity (according to that rep). They effectively have no minimum, but they do inform their customers that they do need to get an appraisal for amounts over $5k. Fidelity doesn't handle that; you need to do it yourself. Maybe things are different at Schwab; if they absorbed the cost of appraisal, that could be a reason to use them and save money. But that would seem surprising to me... even a $50k minimum seems low for absorbing a ~$500 cost (~1%), and I would wonder if that breaks any rules about the appraisal needing to be independent.
Prahasaurus
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Re: Donating bitcoin/cryptocurrency to a DAF [donor advised fund]

Post by Prahasaurus »

numberman wrote: Mon May 03, 2021 3:49 pm But after submitting that form, it goes through some Coinbase system for actually submitting the coins (I assume they send you an "invoice" or something). I wondered if they require actual on-chain transactions, or if it goes through an internal Coinbase transfer to avoid transfer fees if the coins are already on Coinbase, but the rep wasn't sure. Otherwise he seemed pretty on the ball for a topic that seems to get rarely asked about, and they accept btc, bch, eth, and ltc (according to him).
Interesting that Coinbase is at the heart of this. As a Coinbase investor, I like to see this...
Asset Allocation: VT
HootingSloth
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Re: Donating bitcoin/cryptocurrency to a DAF [donor advised fund]

Post by HootingSloth »

numberman wrote: Mon May 03, 2021 3:49 pm At least for now, I won't be seeing the process first-hand, since I've decided to not bother, and just try to find places to donate some coins directly.
If you haven't already, take a look at Giving Block, which helps a number of different charities accept cryptocurrency donations directly. I believe there is a list of participating charities on their site.
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