Non-fungible tokens (NFTs) have created a wealth of opportunities over the last few years—especially for nonprofits and global charitable organizations.
NFTs can be digital art pieces, photos, videos or even physical items. But they are more than just fun to look at and collect—they are also the newest catalyst for an emerging type of philanthropic fundraising. Over the last few years, NFTs have allowed charities, celebrities, corporations, and individuals to auction off digital creations and raise millions of dollars for charities worldwide.
Last year, Procter & Gamble auctioned artwork inspired by its Charmin brand and donated proceeds to Direct Relief, a nonprofit that provides emergency medical supplies and resources to communities in need. Charmin had five designs ready for bidding, selling only one NFT per design. The bids ranged between $500 to $2,100.
Meanwhile, for UNICEF’s 75th anniversary, the organization launched 1,000 NFTs to support digital connectivity among schools in underserved communities. In collaboration with emerging artist, Nadieh Bremer, the partnership created “Patchwork Kingdoms” to support 2.9 billion people, of which around 1.3 billion are children, who do not have access to the Internet.
Celebrity charities have also been quick to embrace NFT philanthropy. Shaq Gives Back featured 10,000 unique NFTs, each displaying an image of Shaq sporting different costumes, team jerseys, accessories, and even food items. Within 24 hours of its release, the collection raised $2 million for the Shaq Foundation, which partnered with the Boys & Girls Clubs of America to help children across the United States.
NFTs have also evolved beyond digital creations and can be tied to physical items as well. When singer-songwriter Shawn Mendes released his album, “Wonder,” he partnered with the NFT company, Genies, to release a set of digital and physical NFTs, including necklaces and earrings. The profits were used by the Shawn Mendes Foundation and Wonder Grants to create programs to support young creators. The auction raised over $10 million within 10 minutes of release.
To date, millions of dollars have been donated and raised to and for charities by various actors. The decentralization and easy on-ramps for NFTs also enable individuals, creators, communities and even governments to quickly mobilize and rally behind important causes.
For example, in March, the government of Ukraine started auctioning off a collection of digital images titled the “Meta History: Museum of War,” which included silhouettes of warplanes, screengrabs of news reports and a cartoon-style image of explosions—each digital image marked a different day in the Ukraine-Russia conflict. To date, the government claims to have raised $54 million through crypto-philanthropy efforts.
So how does it work?
NFTs are a one-of-a-kind, blockchain-based token and are highly programmable and contain unique data that makes each one entirely distinct and non-interchangeable—or non-fungible. Each comes with its own verifiable history. NFTs can tie virtual and physical items or collectables as well. Think of a virtual asset and its real-life twin, paired with digital DNA. The future financial life of each NFT can also be pre-programmed with smart contracts to allow an NFT artist or charitable foundation to receive perpetual royalties automatically every time the NFT is sold. With the NFT’s built-in royalty distribution – philanthropic entities, including nonprofit organizations and wealthy donors, can ensure that utilizing NFT campaigns can become long-term sources of perpetual funding.
The best part? NFTs can engage residual, small donors, too.
NFTs offer new ways for community building, engaging donors and aligning with any philanthropy’s over-all giving strategy. For charities and NGOs, sustaining donors who give a small amount every month has never been easier. Donors can get small benefits—like an invitation to an event, a collectable token or piece of art—and charities can stay away from redundant thank you notes and email campaigns.
However, it will take more than launching an NFT on the marketplace (i.e., minting an NFT) to generate a good buzz. Anyone can mint an NFT but that doesn’t mean anyone will buy it. Creating a truly successful NFT auction requires the power of marketing, celebrity, charity, or community—just like a GoFundMe campaign – but not all organizations have these resources ready at the helm. Which means – not all campaigns are created equally, sustainably, or democratically. To make the ecosystem truly democratic, smaller charitable organizations need the support, financial resources, and ease of products to adopt crypto currencies as fluidly as larger non-profits, celebrities, and global charitable organizations. Moreover, not all philanthropic NFT auctions are strategically considered with people, planet and purpose in mind. Organizations embarking on their own NFT journey need to do their homework and develop strategies that align with their values and objectives, as well as anticipate reputational and stakeholder reactions.
So, what’s one way to get to equal? Ensure your organization’s next NFT auction includes diverse and authentic voices, creators, and investors.
The lack of diversity in tech is a tired tale that has been heard before. The world of Web3 is no different. Women are half as likely as men to say they’ve invested in, traded, or used a cryptocurrency, and women account for only 16 percent of the NFT art market. There is much to be done to ensure the future of the internet (i.e. Web3) remains accessible, diverse, and equitable for every user from every background. As more charitable organizations enter the world of Web3, they will be in a position of power to pressure industry leaders to evolve the ecosystem and ensure it becomes more accessible to diverse audiences, artists, and investors. There is no shortage of ‘clubs’ driving and advocating for diversity in Web3 for these charitable organizations to partner with – from WomenofWeb3, Black Bitcoin Billionaire, People of Crypto (POC) and more.
The new dawn of fundraising is here. Despite recent concern that has caused onlookers to question the future of the industry, the crypto community proves to be a powerful force for good and a needed disruption for traditional philanthropy.