Tuesday Project Spotlight: Endaoment
Updated: Feb 25
THE PROBLEM
You are an early adopter of crypto and recovering HODLer looking to offload some of your lesser known coins. Now, while you are little concerned with the tax implications, you are also a consummate do-gooder and want those coins to fund a good cause. The thing is, when you approach your favorite charity about making a crypto donation, they say, “Thanks, but we can’t do anything with those coins. Can’t you just sell them and give us cash?”
THE PROPOSED SOLUTION
“Endaoment.Org is the first on-chain 501(c)(3) public charity, established with the mission of managing and encouraging the charitable contributions of digital assets. Federally tax-exempt under Internal Revenue Code section 501(c)(3), Endaoment is built to facilitate tax-deductible donations of more than 1,000 cryptocurrencies to any nonprofit in the United States, providing philanthropic financial services to the blockchain community and introducing nonprofit organizations to the benefits of blockchain technology. Donors can give through Endaoment using its Donor-Advised Funds [DAFs], Community Funds, and Direct Donations, all of which charge industry-low fees to maximize throughput to recipient organizations (1).”
HOW IT WORKS
“Donors pay a one-time fee to create their DAF’s contract address on the blockchain — about $15. Each DAF name is a unique string of letters and numbers.
“When donors contribute cryptocurrencies to their digital ‘wallet,’ Endaoment immediately sells them for a stable digital currency pegged to the U.S. dollar, called USD Coin. Donors pay a 0.5 percent fee for each currency exchange based on the liquidated value. The remaining money is stored in a donor’s digital DAF.
“Donors recommend grants to a nonprofit the same way they would with a traditional DAF. After Endaoment approves the grant, it contacts the recipient nonprofit for its banking details so the funds can be wired. Endaoment keeps 1 percent of the grant amount to cover its development needs.
“Endaoment provides a tax receipt with the dollar amount generated from the currency’s sale, but it’s the donor’s responsibility to work with a qualified appraiser to determine the fair market value of the gift at the time of donation for tax-deduction purposes (2).”
Thus, the granted amount is equal to the fair market value of the donation (read: there is no tax on the sale); the potential tax deduction is equal to the market value of the donation; and all actions occur on-chain, and are publicly verifiable using a blockchain explorer like Etherscan.
Here’s an example as outlined by Elias Ahonen for Cointelegraph Magazine: “Suppose Fred bought 1000 ETH at $3 for $3,000. At $3,000 per ETH, he now has $3 million in unrealized capital gains. Presuming a 33.33% capital gains tax, he would owe the government about $1 million upon sale, being left with $2 million for himself. Alternatively, he could choose to donate 250 ETH to Endaoment, which would issue him a tax receipt for the equivalent of the $750,000 donation, allowing him to deduct that $750,000 from the remaining $2.25 million, so that he only owed taxes on $1.5 million. The $750,000 donation brought Fred’s capital gains tax from $1 million to $0.5 million, while allowing him to donate $750,000 to the charity of his choice (3).”
If that “math ain’t mathing” for you, don’t worry, you’re not alone. Here’s a simpler way to think of it from Endaoment’s Donor FAQ. “Imagine that Anonymous Alex has $25,000 of Ether. Let’s assume they purchased 10 ETH initially at $1,000 ($10,000 total), and that the federal long term capital gains rate is 25%. If Alex were to sell their 10 ETH worth $25,000 and then donate the proceeds, they would pay ~$3,750 in taxes (on the $15,000 gain) making the final grantable amount and taxable deduction $21,250. However, if Alex were to donate their long-term-held Ether using Endaoment, they’d pay $0 in taxes and their grantable amount and taxable deduction would be $25,000(4).”
PROJECT SUCCESS STORIES
Endaoment issued over 355 grants to 243 different organizations in its first year (5). “Currently, Endaoment has six active Public Community Funds which support a wide range of causes, including: climate justice, journalistic integrity, the Black LBGTQ+ community, and the Asian American and Pacific Islander (AAPI) community (6).” Below is just a sample of the organizations positively impacted by Endaoment.
Asian Americans United
Established in 1985, Asian Americans United (AAU) exists so that people of Asian ancestry in Philadelphia exercise leadership to build their communities and unite to challenge oppression. At press time, through Endaoment, AAU received $25,000 in grants (8).
Asperger/Autism Network
The Asperger/Autism Network (AANE) helps people with Asperger’s and similar autism spectrum or neurodiverse profiles build meaningful, connected lives. We provide individuals, families, and professionals with information, education, community, support, and advocacy in an inclusive atmosphere of validation and respect. At press time, through Endaoment, AANE has received $61,850.25 in grants (8).
Cancer Research Institute
The Cancer Research Institute (CRI) was founded on January 27, 1953 by Helen Coley Nauts and Oliver R. Grace Sr., two visionary individuals who believed that, together, they could end the devastation of cancer. Their legacy is an organization that has built up an entire field of cancer research—the field of tumor immunology—that today is producing immunotherapies that are extending and saving lives of cancer patients. At press time, through Endaoment, CRI has received $61953.74 in grants (9).
Carbonfund.Org Foundation
Carbonfund.org is leading the fight against global warming, making it easy and affordable for any individual, business or organization to eliminate their climate impact and hastening the transformation to a clean energy future. Carbonfund.org achieves its goals through: Climate change education; Carbon offsets and reductions; and Public outreach—Reduce What You Can, Offset What You Can’t™. They encourage everyone to continually strive to reduce their carbon footprint through sensible energy reductions combined with cost-effective carbon offsets to eliminate their overall carbon footprint. Carbonfund.org supports renewable energy, energy efficiency and forest preservation projects globally that reduce carbon dioxide emissions and the threat of climate change. At press time, through Endaoment, Carbonfund.org has received $283,839.50 in grants (10).
Committee to Protect Journalists
The Committee to Protect Journalists (CPJ) promotes press freedom worldwide and defends the right of journalists to report the news safely and without fear of reprisal. Why do they protect journalists? Journalism plays a vital role in the balance of power between a government and its people. When a country’s journalists are silenced, its people are silenced. By protecting journalists, CPJ protects freedom of expression and democracy. When journalists can’t speak, CPJ speaks up. At press time, through Endaoment, CPJ has received $182,926.04 in grants (11).
Jane Goodall Institute for Wildlife Research Education & Conservation
The Jane Goodall Institute (JGI) is a global nonprofit focused on inspiring individual action to improve the understanding, welfare and conservation of great apes and to safeguard the planet we all share. Our mission is based in Dr. Jane Goodall’s belief that the well-being of our world relies on people taking an active interest in all living things. At press time, through Endaoment, JGI has received $61,850.25 in grants (12).
WHERE TO LEARN MORE
If you want to hear directly from Endaoment’s founder and CEO Robbie Heeger, check out this recent fireside chat with Cardstack‘s Founding Director Chris Tse.
And, of course, you can follow Endaoment on Twitter and connect on Discord.