As blockchain takes over classrooms across college campuses, higher ed institutions have begun grappling with another reality of the cryptocurrency: donations in the form of bitcoin.
While colleges tend to avoid accepting "atypical donations" with "volatility risk," one university—the University of Puget Sound—decided to accept an offer of $10,000 in the form of 14.5 bitcoin, writes Janet Lorin for Bloomberg.
In 2014, Puget Sound received an offer of a gift of 14.5 bitcoin from Nicolas Cary, the co-founder and vice chairman of Blockchain.
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Leaders of the private liberal arts college decided that to cultivate young alumni—many of whom are cryptocurrency pioneers and entrepreneurs—as long-term donors, they had to begin accepting crypto donations.
First, the college had to change its policy to allow the donation and open a virtual wallet for cryptocurrency exchange, Lorin writes. Gifts in the form of crypto—or other volatile assets, like art or shares of family businesses—aren’t ideal donations for colleges and non-profits. Lorin explains that these gifts "may raise accounting questions, complicate tax filings, or require special storage or security." And bitcoin, which is notoriously volatile, unregulated, and susceptible to hacking, requires special consideration before colleges accept.
But once Puget Sound decided to accept Cary's gift, the process was fairly simple. Cary was able to send the gift to the school from his phone in Berlin. "I wanted to prove that it could be done," says Cary.
Once Puget Sound received the bitcoin gift, the school immediately sold it to eliminate volatility risk, explains Sherry Mondou, Puget Sound's executive vice president and chief financial officer. While the college was able to sell the bitcoin for $10,000, Lorin writes that had they waited until December—during bitcoin's peak value—the college could have sold the cryptocurrency for more than $280,000. Today, the 14.5 bitcoin could have generated about $93,000. But most colleges likely wouldn’t hold on to crypto for long: "It's more volatility than they're looking for," explains Mondou.
Since Cary's initial donation, Puget Sound has received several more crypto gifts. "For us, it's just kind of normalized now," says Mondou.
And a number of other colleges are following Puget Sound's lead. For example, University of California at Berkeley, Massachusetts Institute of Technology, and Cornell University have all experimented with crypto gifts (Lorin, Bloomberg, 10/16).
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