Frequently Asked Questions
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Does my endowed asset need a fair market valuation?
In general, all endowed assets, including cash, property, some securities, and other assets, require a fair market valuation for tax purposes. This is because the fair market value of an endowed asset determines the amount of the endowee’s tax deduction for the charitable contribution and the basis of the asset for the recipient organization. For example, if a company stock is endowed, the endowee’s charitable contribution deduction will be based on the fair market value of the stock on the date of the donation. Similarly, the private operating foundation will use the fair market value of the stock to determine its basis in the asset for tax and accounting purposes. It is important to note that the specific requirements for fair market valuations may vary depending on the type of asset and the circumstances of an endowed asset. For example, endowed property may require a qualified appraisal to determine its fair market value, while publicly traded securities may have readily available market values. Bitcoin and other crypto assets are treated differently because of how they are categorized by the IRS. To ensure compliance with tax laws and regulations, independent qualified professionals, such as certified public accountants or appraisers, are required to determine the fair market value of donated assets. These professionals can help ensure that the valuation is accurate and meets the requirements set forth by the IRS.
Who performs a Fair Market Valuation?
A fair market valuation (FMV) of donated assets is typically performed by a qualified appraiser or a certified public accountant (CPA) with experience in valuation. These professionals are trained to evaluate assets and determine their FMV for tax and accounting purposes. Endowee’s will choose a third party, independent professional.
How is the fair market value of Bitcoin determined for donation purposes?
IRS guidance is constantly changing for donations of all types. Bitcoin and other digital assets specifically are subject to changing guidelines because of their relative novelty. Bitcoin is considered tangible personal property for endowments and therefore is subject to fair market valuation appraisal guidelines for endowments exceeding $5,000. The Bitcoin Endowment does not provide tax or legal advice. Schedule a consultation to learn more.
What assets can I endow?
Private operating foundations can accept donations of a wide range of assets including cash, securities, real estate, tangible untitled personal property, business interests like LLC and partnership interests, Bitcoin, Bitcoin Hashrate, and other digital assets. The Endowment will accept all publicly traded assets. All other assets will be reviewed and approved on a case by case basis at the discretion of the Board of Directors.
Are there Endowment minimums or maximums?
A minimum endowed asset amount of 0.19 BTC in total fair market value is required to setup a client segregated and directed endowment for purposes of future giving on your behalf. Endowed assets below 0.19 BTC will be pooled in The Bitcoin Endowment general treasury account where bitcoin giving is directed at the discretion of the Board of Directors on behalf of the entire community through The Bitcoin Endowment brand. The Bitcoin Endowment intends to roll out a nakamoto consensus mechanism in the future, involving all Endowees in the flow of bitcoin giving from The Bitcoin Endowment.
What is The Bitcoin Endowment's investment policy for the treasury?
All assets donated to the Endowment will converted to and endowed solely in Bitcoin. Bitcoin will be held in multi-signature institutional grade custody. Exceptions may be made on a case by case basis for the Endowment holding bitcoin-focused equities and bitcoin mining equities if the asset falls within the underwriting and legal parameters of the foundation and treasury policy. As The Bitcoin Endowment grows, the investment policy for Endowees may expand as well to include bitcoin-focused fund options.
Does The Endowment actively manage, trade, or leverage the bitcoin treasury?
No, Bitcoin is stored in institutional grade cold storage multi-signature as part of a long duration hold strategy, and is not actively managed or leveraged for return purposes. The Bitcoin Endowment does not actively manage the Bitcoin in client segregated accounts. A percentage of The Endowment’s general account will be used for operating expenses including vendor payments, payroll, etc., and may require more active management of the Bitcoin to meet any dollar denominated expenses.
What is your organization's mission, and how do you achieve it?
Our mission is simple: Create a Bitcoin friendly ecosystem in the nonprofit world and to endow the ethos and shared values of Bitcoin in perpetuum. We believe Bitcoin is good. We believe Bitcoin will be synonymous with trust, good, cooperation and abundance. We exist to accelerate the rest of the world coming to understand Bitcoin as good. We will reinforce and spread the shared values of Bitcoin through giving.
What is your organization's budget and how do you allocate funds?
According to Charity Navigator, top performing 501c3 nonprofits dedicate over 75% of donation revenue towards their mission. The Bitcoin Endowment’s operational budget is well above this efficiency benchmark. We are pleased to exceed this target and provide a valuable service, and optimize our total impact at a low operational cost. Our priority is to maximize our total giving impact over time through compounding: 1) make endowing an asset as easy and obvious as possible and 2) protect a compounding treasury of bitcoin intended for future giving.
How does your organization ensure transparency and accountability in its operations?
The Bitcoin Endowment operates on a Bitcoin network and asset standard so Endowees benefit from the most secure network of trust, transparency, accountability, verifiability, and incorruptability. Endowees are provided public key access to their segregated client accounts for transparency and accountability of the operation. The Endowment follows operational foundation industry best practices to approve qualifying charities only. The Endowment will look to open source where possible with annual reports.
Are there any tax benefits to donating to your organization?
Yes. Endowed assets are tax deductible. The Endowment provides a receipt of your endowed asset, so you may work with your appraiser and accountant for fair market valuations and tax deductibility purposes. Please schedule a consultation to learn more and explore tax efficiency model frameworks you may review with your own accounting/finance/legal professionals. The Bitcoin Endowment does not provide tax, legal or financial advice.
How can Endowees get involved with your organization beyond making a financial contribution?
We provide volunteer opportunities on the orange pill team and for sales and marketing. Live and spread the shared values of Bitcoin, including honesty, truth, responsibility, equality, freedom, choice, and property rights. Encourage others to endow to The Bitcoin Endowment. Encourage nonprofits aligned with the Bitcoin ethos to apply and qualify for the ability to receive Bitcoin giving.
Are there any limits on the amount of tax deduction that can be claimed for donated assets?
Yes, there are limits on the amount of the tax deduction that can be claimed for your endowed assets. These limits are very situation specific and depend on a number of factors. Generally, Endowees may be limited by their Adjusted Gross Income (taxable income), the type of asset being endowed, whether you are an individual or corporation, among other factors. Adjusted Gross Income limits vary by individual, LLC, S-corp, and C-corps. While the Bitcoin Endowment will provide you with IRS guidelines, the Endowment does not provide tax, legal or investment advice specific to any Donor’s endownment.
Can Endowees carry forward unused deductions for donated assets to future tax years?
Yes, Endowees may be able to carry forward unused deductions for endowed assets to future tax years, subject to certain limitations. Please consult with a tax professional for your unique situation. The Bitcoin Endowment does not provide tax, legal or investment advice.
How does the IRS audit endowments of assets, and what documentation do donors need to keep to support their tax deduction claims?
The IRS may audit endowments of assets to ensure that they comply with tax laws and regulations. Endowees should keep detailed records of the valuation process and any documentation related to the asset endowment, such as the third party valuation and the endowed asset receipt from The Bitcoin Endowment.
Are there any special rules or requirements for endowments of appreciated assets, such as securities or real estate?
Yes, there are special rules and requirements for endowing appreciated assets, such as securities or real estate. These rules may affect the amount of tax deduction that can be claimed and the timing of the donation. Reach out for a consultation and we can also help direct you to third party licensed professionals for fair market valuations. The Bitcoin Endowment does not provide tax, legal or investment advice.
How does the tax treatment of endowed assets differ from the tax treatment of cash donations?
Donations of assets is treated differently by the IRS than donations of cash are. These differences include the amount of the tax deduction, the timing of the deduction, and the required documentation. Please schedule a consultation to discuss tax efficiency of endowing assets versus cash. The Bitcoin Endowment will be happy to discuss general IRS guidelines but does not provide tax, legal or investment advice on any specific donation.
Are there any restrictions on the sources of endowed assets?
We will follow all applicable 501c3 guidelines, laws, and regulations regarding qualifying endowed assets for private operating foundations.
What are your policies on accepting assets from corporations, individuals, or government entities?
All donations are subject to the approval of the Endowment’s Gift Acceptance Committee. Assets from all qualified sources may be considered and acceptance will be determined by our mission, values, and the laws and regulations.
How do you acknowledge endowed assets and provide tax receipts to donors?
We acknowledge donations through a variety of methods, including email, mail, and even social media if applicable. We provide tax receipts to Endowees for all endowed assets in compliance with IRS regulations.
What sort of control or access do I have to the Bitcoin in my account?
Endowees are able to transparently view their bitcoin client segregated account with public key access. Endowees may also request more transaction detail and view transparently on any block explorer. We aspire to be a platform to channel the aspirations and values of our Endowees, providing them with control, transparency, and access wherever possible. However, it is important to understand that endowed assets are irrevocable donations to The Bitcoin Endowment, according to IRS rules.
How do you manage the assets and investments of the foundation?
The Bitcoin Endowment follows strict investment policy and procedures set by the Board of Directors and it’s vendors in service to our mission and values. Our investment policy is Bitcoin. Exceptions to our policy of holding only Bitcoin may be considered on a case by case basis but must ulitmately be approved by the Board of Dirctors.
Why is the investment policy only bitcoin focused?
“If you don’t believe me or don’t get it, I don’t have time to try to convince you, sorry” – Satoshi Nakamoto
What is your policy on spending and distribution of bitcoin?
Our policy is to distribute funds in a way that best supports our mission and goals while also maintaining a sustainable level of funding for the future. Private operating foundations are required to grant a minimum of 5% of principal treasury assets annually. We will exceed a 6.15% minimum annually in service to our mission and values.
How do you ensure compliance with legal and regulatory requirements?
Those who serve on our Board of Directors have many combined years of experience in the nonprofit world. Therefore, we have a legal and compliance team that stays up-to-date with all relevant laws and regulations and this means the Endowment follows best practices for operating a foundation in the nonprofit industry.
How do you evaluate and manage financial risks?
We have a risk management committee and an independent third party risk management consultant that identifies and evaluates financial risks. We have policies and procedures in place to avoid, reduce, and transfer risks.
How can I get started and endow in this tax year for tax deductibility purposes?
Please submit a form to “Join the Queue” to ensure you are in the queue for the fiscal and tax year for your endowment.
Tell me more details about Hashrate as an endowed asset?
The Bitcoin Endowment is the first and only 501c3 to process hashrate as an endowed asset. AQ Capital worked with and retained Nylen & Partners, LLC, a law and tax firm to develop a Fair Market Valuation framework for the valuation of Hashrate as an endowed asset. This framework has been submitted for publication in peer-reviewed literature. The novel framework captures a market value of Hashrate over a specific period of time (e.g. 12 months). The framework will be open-sourced to the world upon publication in the peer-reviewed literature, which is in process. Until that time, please schedule a consultation to learn more.
When I commit to endowing hashrate, does The Endowment now own my asics? Am I committed to doing this annually?
No, you are not endowing your asics as an asset, you are endowing your Hashrate for a period of time as an asset. You still own your asics. At the end of the commitment period, you may choose to have your hashrate directed back to your business or renew your hashrate endowment agreement for another tax deduction.
What are the terms of the Hashrate endowment agreement? What time periods are available?
We currently fulfill hashrate terms of 30 days to 2 years. Remember, the longer the term of committing to re-direct hashrate to The Endowment, generally the greater the fair market value, and therefore the greater the up-front deduction for tax efficiency purposes. Please schedule a consultation. The Bitcoin Endowment does not provide, tax, legal, or investment advice.
I have some older, inefficient asics that are still plugged while we wait for the new asics to arrive. Can I endow hashrate for 30 days or so before we unplug these older asics when the new ones arrive?
I wish to endow hashrate for a 12 month term. Am I then committed to all 12 months? What happens if I am out of business, can't maintain estimated uptimes, or need to pivot the hashrate revenue back to the business in the future?
Good question. An endowed asset is an irrevocable donation. The Bitcoin Endowment is flexible and grateful for any endowed asset amounts, but your biggest concern here would be the discrepancy of the fair market valuation of what you claimed as a tax deduction in the immediate tax year of when our agreement was signed versus the actual endowed hashrate revenues you ended up delivering to The Endowment during your commitment period. Please seek counsel from a qualified tax professional and your qualified appraiser for the fair market valuation so you understand fully for tax deductions, options, etc. The Bitcoin Endowment does not provide tax, legal, or investment advice.
What types of giving do you offer to qualifying nonprofits?
We offer Bitcoin giving to nonprofits that align with our mission and values, including those that support Bitcoin and its ecosystem. Our giving is done exclusively in Bitcoin the asset. In partnership with Unchained Capital, we provide nonprofits concierge onboarding to the Bitcoin network, best practices cold storage custody, and education on Bitcoin the asset and it’s role as a long duration asset that should be amongst the last you sell from your treasury to fund your nonprofit operations.
What are the reporting requirements for giving recipients?
Bitcoin giving recipients will be asked to provide regular reports on the progress and impact of their work, as well as their financial status. We plan to feature nonprofits and the stories of the impact of their missions to our Endowees
How do you measure the impact of your bitcoin giving?
‘Compounding is the 8th wonder of the world’. The Bitcoin Endowment is specifically designed as a ‘low time preference’ giving platform. Bitcoin’s unique characteristics as a scarce, long duration, store of value asset provides a path for compounding The Endowment over many years. This approach is designed to maximize total giving impact over time.
How do you ensure that the nonprofits you fund align with your ethos and shared values?
Shared values of Bitcoin include honesty, integrity, transparency, accountability…but also trust. The Bitcoin Endowment will feature our various nonprofit members throughout the year to our Endowees, and ask for stories, anecdotes, impact examples, and annual reports.
Are there any restrictions on the use of funds by Bitcoin giving recipients?
There are no restrictions and the recipient is free to use the Bitcoin funding immediately towards their mission. However, a central mission of The Endowment is to provide education on treating Bitcoin as a long duration asset in a treasury with a recommended holding period of at least 4 years to maximize the return profile given the volatility. For example, a 1% bitcoin 99% cash portfolio has consistently outperformed the S&P500 and with lower risk. Feel free to visit https://nakamotoportfolio.com/ for technical analysis of portfolio construction and asset allocation of bitcoin with other assets. The Bitcoin Endowment and AQ Capital do not provide tax, legal or financial advice.
How can I apply to receive Bitcoin giving?
Fill out the “Join the Queue” form on the “For Nonprofits” page and we will be in touch.
What is the deadline for submitting an application to qualify and receive bitcoin giving?
Anytime. Highest volume of grant decisions occur near year end, so being on the radar of Endowment members year round should be a priority for your organization.