US Bail Funds Are Seeing an Uptick in Cryptocurrency Donations

For many people arrested, especially low-income citizens, bail funds are their best hope for freedom while they await trial. Now, some of those funds are accepting cryptocurrency donations.

Facilitated by crypto payment processor The Giving Block, the Bail Project, the Chicago Community Bond Fund and the Nashville Community Bail Fund, for example, accept cryptocurrency including bitcoin (BTC), ether (ETH) and even basic attention token (BAT). They’ve taken in thousands of dollars in crypto donations since the summer, according to The Giving Block, which could be a sign of larger adoption in the space of bail funds.

This summer saw a rise in civil action against police violence in the U.S., with thousands of protestors taking to the streets over the police killings of George Floyd and Breonna Taylor.

Numerous protestors were arrested. Around this time, Alex Wilson, co-founder of The Giving Block, started hearing from bail funds that were interested in using The Giving Block to process cryptocurrency payments.

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According to the director of the Community Justice Exchange, Pilar Weiss, not many of the organization's member bail funds accept crypto. She said that is based on the grassroots nature of many crowdfunding actions for bail funds. While a handful of their member funds accept crypto, including the Richmond Bail Fund, if they do it’s usually because they have some back-end administrative capacity to accept.

Weiss said she could see that change, however, as fundraising platforms like PayPal, for example, move into accepting cryptocurrency donations.

“The traditional kind of nonprofit donor, which some nonprofits rely on, are on the older side, in their fifties and sixties, and often even retired,” said Wilson. “Sometimes [nonprofits] have a hard time connecting with younger donors. So they see this as one of those ways of doing that. It also helps them look a little bit more innovative when they're starting to play with stuff like crypto and not just taking checks in the mail.”

Bail and bail funds

When someone is arrested, a judge sets bail and the detainee must either pay that amount or stay in jail until the trial. But not everyone has access to ready cash and the system disproportionately impacts low-income citizens in both the short and long term.

According to research from the Bail Project, a single night in prison can have cascading effects such as the loss of a job, a home and even custody of children.

Waiting in jail prior to trial also impacts a detainee’s likelihood of going to prison, according to a regularly updated report on cash bail from the Brennan Center for Justice, a nonpartisan law and policy institute.

The report found that “those who are held pretrial are four times more likely to be sentenced to prison than defendants released prior to trial. Pretrial detainees are also likely to make hurried decisions to plead guilty to a lower charge to spend less time behind bars rather than changing a higher charge and longer sentence at trial.”

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Bail funds are essentially large, crowdsourced funds that are then used to bail people out of jail as they await their trials. Organizations like the Bail Project, the Chicago Community Bond Fund and the Nashville Community Bail Fund are working to pay bail for those who can’t afford it in such situations.

Co-director of the Nashville Community Community Bail Fund Jessica Lamb says the fund was founded in 2016 to free low-income Nashvillians from jail, and work to end what the fund calls "wealth-based detention."

“Our vision is a society where money does not determine any person's access to freedom,” said Lamb in an email. “Since our inception, we have freed nearly 1,500 Nashvillians from jail. We also work with community partners to disrupt the criminal legal system and work toward money bail policy reform.”

Bail funds, civil rights and the 2020 US election

Bail has a cascading effect on things from civil rights to elections. If people know they’re unlikely to be able to risk arrest because they can’t afford bail, they will be less inclined to take to the streets against injustice. That threat of arrest and staying in jail is a coercive measure that, in effect, curbs protestors' right to free speech and assembly.

Bail also has downstream consequences for elections. Given that being unable to afford bail affects whether they will plead guilty as well as how long they’re held, it can curb people’s ability to vote. Besides being unable to vote, If someone is held in detention and pleads guilty to something on the level of a felony, that voting ability can be curtailed for years.

Why crypto matters

Wilson said there are a number of benefits for bail funds taking cryptocurrency donations.

One is it helps them offset economic loss, given the economic uncertainty of the times, by diversifying their revenue and donation streams. Another aspect he has noticed in his work is that cryptocurrencies tend to appeal to a younger demographic, and they’re likely to be completely new donors.

See also: Monero-for-Bail Project Sees Increased Demand During Protests

The important ability of international donors to contribute easily through crypto is specifically something Wilson was hearing from groups that were part of The Giving Block’s Crypto for Black Lives campaign, which was kicked off this summer to raise money for civil rights organizations, including bail funds. While that wasn’t the reason The Giving Block became interested in crypto, it’s become an important component.

The final reason is simple: taxes. When you realize a capital gain (price increase) on a cryptocurrency and trade or cash it out, that’s a taxable event. But bitcoin or other cryptocurrency donations to a nonprofit are treated like donations of stock. As such they are not considered taxable events, meaning you don’t pay those capital gains taxes when you donate and you can deduct them on your tax return.

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The Bail Project’s Chief Financial Officer Zach Herz-Roiphe said he’d encourage any nonprofit to cast as wide a net as possible for donors. Thus far, bitcoin specifically and crypto in general have historically made up an extremely small portion of total donations over the years, but as crypto becomes more mainstream he expects that to change.

“We expect that more people will embrace crypto as their preferred method of making donations – especially as people understand the tax benefits of giving via crypto, which are similar to those of donating conventional securities,” he said.

Crypto’s impact on social justice

Practically, The Giving Block is serving as a payment processor and enabler for these organizations to expand how they take donations.

“We essentially try to make it as easy as possible for bail funds or other nonprofits to be able to accept crypto and not have to worry about, for example, the volatility of crypto,” said Wilson. “So all these nonprofits have an option to automatically convert the crypto to U.S. dollars.”

Wilson said that while his organization has seen a tailing off of interest from bail funds after the summer, there is still a greater level of interest than there has been. On a high level, according to Wilson, these projects have gotten thousands of dollars, but less than $25,000 each since June in crypto donations.

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Lamb said cryptocurrency donations are a small portion of the Nashville Community Bail Fund’s total donations.

“But it's cool to see donations coming in a new way. One of the best parts about it for us has been learning more about the crypto community, especially the ways it has pitched in to support both the COVID-19 crisis and the movement for Black lives,” said Lamb.

These aren’t the only projects leveraging crypto in the service of supporting efforts for systemic change. Bail Bloc is a project that lets you mine monero (XMR) for bail funds. A few months ago, a group of activists put together a project to document police violence on the InterPlanetary File System (IPFS) and the Ethereum blockchain.

“I think the issue of addressing bail will continue to be popular with the crypto community,” said Wilson. “In general I think the cause of ending cash bail is one that really resonates. In the meantime, helping people afford bail is an alternative.”