Crypto and NFT users are one of the fastest-growing donor demographics in the world. A new report outlines what charities need to know.
First created in 2014, non-fungible tokens, better known as NFTs, have gained mainstream interest from a wide audience that includes crypto investors, sports fans, art collectors and… fundraisers.
Today’s vision for NFT fundraising as a subset of Crypto Philanthropy was born in 2021. Seeking a way to give back, a handful of the NFT community began to make a social impact through acts of charitable giving.
Luckily, the generosity trend caught on. To date, millions of dollars have been donated to charities by the NFT community. Crypto donation solution, The Giving Block, alone processed more than US$12.3 million in crypto donations from NFTs in 2021.
So how do NFTs work, how can you incorporate them into your fundraising strategy, and which donors will they connect you to? We explore The Giving Block’s ‘The Rise of NFT Fundraising’ report to find out.
In the most basic sense, a NFT is a way to store data on a blockchain such as Ethereum. Unlike a fungible asset, such as the Australian dollar, one NFT cannot be swapped interchangeably for another NFT. That’s because each token functions as a way to validate unique ownership of something, such as a single work of digital art.
In the case of digital art, NFTs are often misunderstood to be the work of art itself, but that is not the case. Instead, the NFT is the underlying technology that has enabled digital artists to mint and sell uniquely verifiable works of art (think of it as a deed to a house, not the house itself).
In recent years, nonprofits have adjusted their donor strategies in response to a spate of major global disruptions. Many have also identified the need to embrace new technologies to connect with younger supporters. These two considerations have helped fuel the trend of nonprofits embracing NFTs as a fundraising tool.
As NFTs have caught the attention of mainstream culture, the market for them has grown exponentially. In 2021 it grew by more than 22,000% versus the previous year, and sales topped US$17.6 billion. As a result, creators and collectors have seen a rise in profit margins from the sale of NFTs and this has empowered them to use their affluence to make a positive social impact, often in the form of charitable donations to nonprofit organisations.
The global crypto user base increased by 178% in 2021, rising from 106 million in January to 295 million in December.
For a variety of reasons, crypto and NFT donors are generally considered to be uniquely generous compared to their cash-giving peers. A hot NFT market can create massive wealth for many and crypto investors are a charitably inclined cohort. About 45% of crypto investors donated at least US$1,000 to charity in 2020, compared to only 33% of the general population.
Crypto and NFT users are one of the fastest-growing donor demographics in the world. According to a study by Crypto.com, the global crypto user base increased by 178% in 2021, rising from 106 million in January to 295 million in December. Based on their giving habits, they are showing signs of becoming one of the greatest forces for social impact in recent years.
The report attributes NFT giving motivation to four main factors:
Like any other fundraising activity, there are a raft of stakeholders involved in making NFT fundraising successful. The main players are:
Here are five of the most common ways that nonprofits receive NFT donations:
NFTs donations often deliver enormous clout, with some nonprofits receiving transformative donations worth hundreds of thousands or millions of dollars.
One example is Trees for the Future, an environmentally-focused US-based nonprofit, which has received hundreds of thousands of dollars through donations and collaborative fundraising efforts with NFT projects such as Woodies.
Over on Australian shores, MSF Australia received the world’s largest crypto donation from an NFT project in 2021 – a gift to the tune of US$3.5 million (AU$5.1 million). Whilst the donor remains anonymous, the gift was facilitated through the GenerativeNFTs and Art Blocks platforms.
For nonprofit organisations to receive a direct form of charitable giving from the NFT community, accepting cryptocurrency donations is a must. That’s because NFTs are listed, bought and sold on marketplaces that handle cryptocurrency transactions.
When an NFT is sold, the creator receives a royalty in the form of a cryptocurrency such as Ethereum or Solana. For them to donate a portion (or all) of the proceeds to a nonprofit in cash, they must exchange the cryptocurrency. In the US, this is likely considered a taxable event by the IRS, and the creator would end up with less to donate (to find out more about tax implications of crypto donations in Australia, click here and here).
Solution providers such as The Giving Block make it possible for nonprofits to fundraise from multiple crypto assets, generate tax receipts for donors, and embed a crypto donation widget on their website.
Full details for the following steps can be found in the report:
More money invested in the NFT economy means greater opportunities for social impact through charitable donations. The global NFT community’s charitable giving could rise to over US$100 million in crypto donations by the year 2025.
Nonprofits and NFT creators are already fundraising together in exciting ways, from developing art collaboratively to hosting educational webinars and Twitter Spaces. These early collaborations will inspire future partnerships to reach new creative heights, make use of new blockchains and crypto tokens, and take bold new approaches to donor engagement.
As NFTs claim more of the cultural spotlight, we will see more CSR efforts with a NFT component. There will be an increase in corporate-sponsored NFT charity auctions, such as the one coordinated by VaynerNFT for Stella Artois and its charity partner Water.org.
As NFT projects grow, they often nurture their fan bases through direct engagement on platforms such as Discord and Twitter. Increasingly, these projects ask their supporters for input on ideas for future projects and charitable giving decisions. Nonprofits active in the NFT space will also be able to find and sustain a following through their connections with projects and creators and by effectively communicating the impact of donations.
“If there’s one word to describe NFT fundraising, it would be ‘limitless’,” says the report. It certainly seems that, when it comes to NFT fundraising, we’ve only just scratched the service.
To access the full report, including in-depth information to help you launch a NFT fundraiser and the case studies of five nonprofits maximising the potential of NFT charitable giving, click here.
Click here for more F&P articles about NFT fundraising.
BlockchainCryptocurrencyDigital fundraisingNFTNFTsNon-fungible tokenTech trendThe Giving Block
Originally hailing from a small fishing town on England’s north-east coast, Fiona spent 14 years working in Australia’s nonprofit space. Her NFP career has spanned events, fundraising and communications at the RSPCA, St Kilda Mums and Bayley House, with her love of writing leading her to the Content Creator role at F&P. Fiona is a hiker, runner, mum and self-confessed dog-obsessive, taking part in the Vision Australia puppy caring program and sharing her home with her second ‘child’ – a released Seeing Eye Dog called Everett. Through her role at F&P, she feels privileged to talk to so many people doing incredible nonprofit work and loves helping them share their stories.
What’s inside the WINTER ISSUE #93
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