Accounting for NFT and cryptocurrency donations: Not-for-profits should develop policies now

Non-fungible token NFT Accounting Cryptocurrency

The COVID-19 pandemic has created many challenges for not-for-profit organizations, including the need to innovate fundraising campaigns. As organizations evaluate their fundraising strategies for the upcoming years and identify new methods to attract and retain donors, they may want to consider NFT and cryptocurrency donations.

Non-fungible tokens (NFTs) have created quite a buzz in 2021, with the “market capitalization,” as described by Forbes, of such projects having increased by 1,785% in just the first three months of the year. Typically, cash and stocks have been the main sources of gifts to charities. However, technology and innovation could transform donors’ approaches to giving. As the ownership of such digital assets becomes more common, people’s interest in donating those assets may continue to grow. Not-for-profits that are prepared to accept and account for these types of gifts could reap tremendous benefits.

What is an NFT?

An NFT is a digital method of proving ownership of a unique and usually digital asset, with ownership encryption tracked on a blockchain, a distributed digital ledger. NFTs are not copyrights or trademarks; instead, they are an authentication of ownership over a specific asset.

NFTs are becoming a popular way to buy and sell ownership interests in digital artwork, music, photographs, and videos. NFTs are not interchangeable, and they are commonly purchased and sold using cryptocurrencies in a variety of marketplaces. Earlier this year, an NFT of a meme was sold for 180 Ether – a form of cryptocurrency worth, at the time, approximately $500,000 – and a portion of the proceeds was expected to be donated to charities.

Receiving NFT and cryptocurrency gifts

With the increased likelihood that many not-for-profit organizations could receive NFTs and cryptocurrency gifts, they may soon find it advantageous to develop policies to accept, track, exchange, and account for these emerging digital assets. To accept NFTs or cryptocurrency donations, an organization will need to establish a digital wallet and use a reliable exchange platform. NFT gifts may be auctioned on a marketplace by the donor, with the donor designating a not-for-profit organization as the recipient of the auction proceeds. Once the not-for-profit organization receives those proceeds, which may be in a cryptocurrency, they may exchange them on a platform for domestic currency.

Accounting for NFTs and cryptocurrency gifts

Currently, the Financial Accounting Standards Board (FASB) has not issued accounting standards specifically for NFTs or cryptocurrencies. However, the American Institute of Certified Public Accountants (AICPA) has developed guidance on how to account for certain digital assets under existing U.S. Generally Accepted Accounting Principles (GAAP).

Based on that AICPA guidance, we believe that digital assets such as NFTs and cryptocurrencies meet the U.S. GAAP definition of an “intangible asset” because they lack physical substance. Accordingly, we believe that these digital assets should be accounted for under FASB Accounting Standards Codification (ASC) 350, “Intangibles – Goodwill and Other.”

When a donation is received by a not-for-profit, the not-for-profit recipient recognizes the gift at fair value (measured in accordance with FASB ASC 820, “Fair Value Measurement”) and as a contribution. Assuming the gift of a digital asset is not immediately converted to cash, the fair value determination of the donation will vary depending on the type of digital asset. If a not-for-profit receives a cryptocurrency donation, the not-for-profit will determine the fair value of the donation based on the cryptocurrency’s principal market or, if a principal market is not available, the most advantageous market. If a donation of an NFT is received by a not-for-profit organization, it could be more complicated to value and require the not-for-profit to evaluate the characteristics of the NFT received, including whether the fair value thereof is determinable at all.

Donations of cryptocurrency and NFTs received by a not-for-profit are subsequently accounted for as intangible assets in accordance with ASC 350, as described in the aforementioned AICPA guidance. If uncertainty exists about whether an NFT donation received by the not-for-profit has value, it should not be recognized. Accordingly, intangibles recognized for NFTs and cryptocurrencies held by a not-for-profit should be evaluated for impairment in accordance with applicable accounting standards. When an NFT or cryptocurrency is sold by a not-for-profit and converted to cash, any gains or losses from the sale – consideration received less carrying value – should be recognized and presented separately from revenue on the statement of activities.

Overall, not-for-profit organizations should identify the valuation methodology best suited for the digital assets they are willing to accept and develop policies to account for those assets.

Tax guidance

Currently, the tax rules treat NFTs and cryptocurrencies as property, and hence their receipt by not-for-profits is treated as receipt of donated property. Not-for-profits receiving donated property generally have information reporting requirements such as providing the donor with the usual written acknowledgment; however, in the case of a property (i.e., noncash) donation, no statement of value is required to be included in this acknowledgment. In addition, if the donor provides Form 8283, “Noncash Charitable Contributions,” to the not-for-profit, the not-for-profit should complete Part V, “Donee Acknowledgment,” and return the form to the donor. Also, Form 8282, “Donee Information Return,” would be required to be filed with the IRS within 125 days after the date a not-for-profit disposes of the NFT or cryptocurrency if the claimed value of the donated item (or group of similar items) exceeds $5,000, and presuming the not-for-profit disposes of the property within three years of its receipt. Cryptocurrency is not considered to be a publicly traded security for tax purposes, and so that exception to filing this form would not be available. Individual donors should be aware of the tax implications that are involved with the donation of digital assets. Finally, on the annual Form 990, Schedule M, “Noncash Contributions,” would need to be completed with the NFT reported on line 1 (works of art) and cryptocurrency reported on line 25 (other).

What does CohnReznick Think?

NFT and cryptocurrency donations have opened a new channel for many not-for-profit organizations to raise funds and support their missions. Organizations should understand the opportunities and challenges that come with accepting and holding such digital asset gifts; particularly, the difficulty in valuing these gifts. We encourage not-for-profit organizations to develop policies and procedures to determine the types of digital assets they are willing to accept; whether gifts will be monetized upon acceptance; how gifts held will be accounted for in the organization’s books and records; and if they are complying with the applicable information reporting requirements for tax purposes.


John Alfonso, CPA, CGMA, Partner, Not-for-Profit and Education practice leader


Mindy Ng, CPA, Senior Manager, Not-for-Profit and Education practice



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John Alfonso

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CPA, CGMA, Partner - Not-for-Profit & Education Industry Leader

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Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice specific to, among other things, your individual facts, circumstances and jurisdiction. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.