As an increasing number of graduates of prestigious universities are finding success in the rapidly growing Cryptocurrency industry, the universities are finding themselves at the receiving end of donations made using digital assets. However, despite the fact that their alumni have embraced the technology, many universities have no clue as to what to do with the funds gifted to them.
The list of institutions receiving donations in the form of bitcoin and other digital assets continues to grow each year. However, it seems not all universities are exactly keen on accepting unfamiliar assets as payment owing to the fact that most endowment managers have are clueless as to how to handle cryptocurrencies.
To start off with, there is the issue of setting up a wallet to accept and trade digital assets. The volatility of the crypto market is the cause of the second major problem, forcing the sale of the donated assets as quickly as possible. Endowment managers would rather reject these donations than deal with theses these relatively trivial facets of digital currency use. The Internal Revenue Service of the US considers cryptocurrency as property, which complicates the process of accepting donations for nonprofits. Crypto donations greater than $5,000 require a qualified appraisal for the donor to receive a tax deduction. “How many gifts are they going to get a year—and is it worth the effort?” says Bryan Clontz of Charitable Solutions, a consultation firm that helps charities appraise and receive noncash assets.
In the US, the University of Puget Sound, the University of California at Berkeley, the Massachusetts Institute of Technology, and Cornell University have all successfully accepted undisclosed numbers of donations in cryptocurrency according to Bloomberg. Meanwhile, the prestigious Harvard University and Yale are yet to catch up with times to accept payment through digital assets – although a spokesperson for the latter institution did state that the process had been tested but it was an idea not being actively pursued.
Nicolas Cary, the co-founder of blockchain wallet service provider performed one of the earliest known successful payment to an educational institution using cryptocurrency when he gifted Puget Sound 14.5 Bitcoin (BTC) in 2014. The university relented and accepted the bitcoin only after several lengthy conversations regarding the logistics of accepting such an unconventional donation leading to a change of their endowments policy. The university quickly liquidated the donated tokens and missed out on around $95,000 at today’s prices. “I had to do a little bit of convincing for them to accept it,” Cary goes on to say that “They wanted to dig in about how it works and what the process would be. We had a lot of conversations.’’
Puget Sound had to change its policy to accept the gift, then they used Bitpay – a global bitcoin payment service provider headquartered in Atlanta to generate an invoice with a QR code, which Cary received on his laptop in a hotel in Berlin, where he was attending a conference.
It took about a day longer for the school to receive the donation owing to a surprise snowstorm in Atlanta, says Sherry Mondou, the school’s executive vice president and chief financial officer.
The fact that Yale has turned down donations made via digital assets seem curious, as David Swensen, it’s highly successful endowment manager, has been linked with investments in two funds based on cryptocurrencies and blockchain startups.
Bloomberg reports that a variety of weird and wonderful gifts have been turned down by universities over the years, ranging from timeshares and paintings, to wetland. But universities usually turn down donations that can’t be processed easily, citing accounting questions, complicate tax filings, or the need for special storage or security as reasons.
According to a report published by the technology news site Information Wednesday on Oct. 10. Ivy League and other prestigious U.S. universities have made “at least” one investment into cryptocurrency funds.
Harvard University, Stanford University, Dartmouth College, Massachusetts Institute of Technology (MIT), and the University of North Carolina are all reported to have invested capital in the rapidly growing crypto space. This is “a sign of the asset class’ growing acceptance among institutional investors,” according to the source. A number of top international universities have also been contributing to skill acquisition in the crypto space by offering blockchain, smart contract, and cryptocurrency-focused courses once the news that the world’s leading academic players are backing the emerging asset class broke.
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