In a brave new world of fundraising, more charities accept virtual currencies.
Guests mingling at a recent gala for the Spare Key charity didn’t know it, but they had entered a new frontier in nonprofit fundraising. Folks who bought auction items ranging from French wine to a Mexican vacation were allowed to pay with check, credit card — or cryptocurrency.
It’s a term used to describe virtual currencies with names such as bitcoin and dogecoin. They don’t exist in paper or coin form but are downloaded from a virtual wallet, often on the owner’s cellphone, to the charity’s website, which is equipped to convert it to cash.
Spare Key is one of the first Minnesota nonprofits to make an appeal to crpytocurrency holders, and among a tiny but growing group nationally.
Last week Spare Key even hired a consulting “director of cryptocurrency development” to build online infrastructure and facilitate donations by tech-savvy currency users — who it believes are a largely untapped market of donors.
“We are venturing into the unknown bravely,” joked Erich Mische, executive director of Spare Key, a Minneapolis nonprofit that provides emergency mortgage and rent payments to families with critically ill children in the hospital.
“The demographic of people participating in the crytpocurrency economy are not people who normally contribute to Spare Key,” he said.
That demographic is embodied by Erik Goebel, a 29-year-old U of M graduate student studying chemistry, a self-described geek who “likes to experiment with new technologies and try new gizmos and gadgets.”
He showed up at the Spare Key auction after learning about the nonprofit’s move into virtual currencies on reddit.com. He had donated to a couple of charities online in the past, such as the Jamaican Olympic Bobsled Team, but never in the real world.
“This was the first time I paid for something in person with cryptocurrency,” said Goebel. “It was pretty awesome. To take my phone somewhere and use my virtual currency and receive physical items back — that was really cool.”
New way to pay
Virtual currencies can be bought and sold at online currency exchanges, much like stocks, with exchange rates that vary daily. Bitcoin, the best known, started in 2009. Since then, there’s been an explosion of others.
The currency is not backed by any central bank or tied to any nation, which creates risks for users. In February, for example, a leading bitcoin exchange called Mt. Gox filed for bankruptcy, claiming it had lost 750,000 of customers’ bitcoins to computer hackers and saying that $27 million in Japanese bank accounts was missing.
Regardless, the currencies have been embraced by libertarians, speculators and traders who like the anonymity and ease of the transactions, as well as the ability to transfer money anywhere in the world without fees.
Young, tech-savvy folks are core users, part of a socially conscious generation accustomed to donating to causes in nontraditional ways.
During the silent auction at the Spare Key Groove gala, Goebel used a currency called dogecoins to pay for a bottle of cherry rum, two restaurant certificates and an extra $25 donation.
To make the purchase, he pulled out his cellphone, opened up his dogecoin account, and transferred 90,000 dogecoins to Spare Key’s website. That’s roughly $90.
Spare Key, meanwhile, has an arrangement with an online payment processor called Moolah, which captures crypto currency and converts it to U.S. dollars.