Cryptocurrency donations to churches are legal, increasingly common, and -- if handled correctly -- tax-advantaged for the donor in the same way stock donations are. If handled incorrectly, they create recordkeeping headaches and potential IRS exposure. Here is the plain-language version of what you need to know.

How the IRS Treats Cryptocurrency

The IRS treats cryptocurrency as property, not currency. This is the foundational fact that determines everything else about how crypto donations work. When a donor gives Bitcoin, Ethereum, or any other cryptocurrency to a church, it is treated the same way as a donation of stock or other appreciated property -- not as a cash gift.

That means:

  • The donor can deduct the fair market value of the cryptocurrency on the date of the transfer
  • If the donor held the crypto for more than one year, they owe no capital gains tax on the appreciation -- the same benefit as donating appreciated stock
  • The church, as a 501(c)(3), can sell the crypto tax-free
  • The church acknowledges the type and amount of crypto received but does not assign a dollar value -- that is the donor's responsibility

How to Accept Crypto Donations

There are two practical ways to accept cryptocurrency donations:

Option 1: Through a Crypto Giving Platform

Services like Engiven, The Giving Block, and Overflow are purpose-built for nonprofits accepting crypto donations. They handle the custody of the donation, convert it to cash automatically, and provide the necessary tax documentation to the donor. This is the right choice for most churches -- it removes the complexity of managing a crypto wallet and custody of the assets, and the tax documentation is built into the platform.

Option 2: Direct Wallet Transfer

A church can set up its own cryptocurrency wallet and accept donations directly. This gives more control but requires the church to manage custody of the assets, convert to cash on its own timeline, and track the recordkeeping manually. For most churches, a giving platform is simpler and reduces risk.

Key Takeaway

Regardless of which method you use, convert the cryptocurrency to cash as quickly as possible after receipt. Holding cryptocurrency introduces price volatility into your church's finances, which is not a risk most churches should take on. The goal is to accept the gift and liquidate it promptly.

Recordkeeping Requirements

When your church receives a crypto donation, record the following immediately:

  • The type of cryptocurrency (Bitcoin, Ethereum, etc.)
  • The quantity received (e.g., 0.5 BTC)
  • The date and time of receipt
  • The fair market value at the time of receipt (the price on a recognized exchange at the moment of transfer)
  • The donor's name and contact information

The fair market value at receipt is important for the church's own books -- you need to record the gift at the value you received and recognize any gain or loss when you sell. For accounting purposes, the crypto is an asset from the moment it arrives until the moment it is sold.

Donor Acknowledgment

The written acknowledgment to the donor should describe the cryptocurrency donated -- type and quantity -- but not assign a dollar value. Example language:

"Thank you for your gift of 0.25 Bitcoin received on [date]. No goods or services were provided in exchange for this contribution. As required by the IRS, the fair market value of this property gift is determined by the donor."

Donors who give crypto worth more than $500 must attach IRS Form 8283 to their tax return. Donors who give crypto worth more than $5,000 generally need a qualified appraisal. These are the donor's obligations -- mention them as a courtesy but make clear they are not the church's responsibility.

Watch Out

Do not accept crypto donations as payment for goods or services (tuition, event tickets, store purchases). Those transactions have different tax treatment -- the church may owe tax on the fair market value received as business income. Crypto gifts must be genuine charitable contributions with no goods or services provided in return.

Should Your Church Accept Crypto?

The question is not really whether to accept it -- the tax treatment is favorable and the donor base is growing. The question is whether to accept it now or wait until you have the right infrastructure. A church that accepts a Bitcoin donation without a plan for custody, conversion, and recordkeeping will create an administrative mess. A church that has a giving platform set up and a policy in place can accept crypto gifts as smoothly as stock donations.

If you have donors who hold significant cryptocurrency, the answer is yes -- set it up. If you have no donors asking about it today, it is reasonable to wait until someone does, then get the infrastructure in place quickly before the gift is made.

How Dime Handles This

We help churches evaluate crypto giving platforms, set up the accounting treatment for crypto donations, and prepare donor acknowledgments that meet IRS requirements. We also help churches that have already received crypto donations verify that prior transactions were recorded and acknowledged correctly.

If you are thinking about accepting cryptocurrency donations -- or if you already have and are not sure the recordkeeping is right -- reach out to our team. This is newer territory for most churches, and getting it right from the start is much easier than untangling it later.