As cryptocurrency has continued to gain recognition, UK Charity, National Zakat Foundation (NZF), are embracing the digital currency as a way to make donations.
The Financial Conduct Authority (FCA) recently reported that 2.3 million people in the UK currently own crypto assets and that 78% of those aged 18 and above are aware of the digital currency – a 73% increase from last year, and Bitcoin, one of the main forms of cryptocurrency, is now the ninth most valuable asset in the world.
The charity, which collects and distributes Zakat to UK-based Muslim communities, believes its crucial to keep up with technological trends and donor habits, and accepting cryptocurrencies is the next logical step.
Monir Mohammed, head of technology for NZF, explained, “With a society as fast paced as ours, it’s so important that charities evolve at the same speed. Accepting cryptocurrencies will unlock a whole new realm of donors, as well as progress with existing ones.”
“The third sector isn’t known for being at the forefront of technological innovations, however, investing and developing in line with these changes can attract future donors, specifically the younger demographic.”
A survey carried out by Crypto Radar back in 2019 revealed that it was in fact younger British investors, aged between 35 to 44 years old that were more inclined to invest in bitcoin. As this demographic, as well as those younger, advance in their careers, the charity believes the future of crypto is looking positive.
There are many benefits to cryptocurrency; transactions are not just quicker, but also cheaper and easier to process as there are no transaction fees, making it increasingly attractive for donors.
That said, Mohammed mentioned that before onboarding the digital currency, charities should consider their donor demographic.
“As we are UK based, cryptocurrency will work well as around 96% of the population have access to the internet and many have disposable income to transfer in to crypto. It’s important to consider your donor base, as if these two key factors are not prevalent, traditional forms of currency may be preferable.”
Additionally, in response to the dramatic growth in cryptocurrencies, experts from the FCA have warned those new to the virtual currency to research and heavily educate themselves before investing.
As with any new form of technology or currency, there is less certainty, and with the decentralised nature of crypto, it can be difficult to track and standardise.
Regarding Zakat, a type of charitable wealth tax for Muslims, the charity explains that any form of cryptocurrency is ‘Zakatable’ but must still be converted into local currency at the time of calculation.
National Zakat Foundation are looking forward to seeing how the digital currency performs and hope to attract new donors to support their causes.