Can NFTs be used for charity?
The acronym “NFT” stands for Non-Fungible-Token, and by now most people already know what it is: a token that represents the deed to a digital asset that is non-fungible, i.e., not replaceable with anything else. This deed is recorded on the blockchain, thus becoming immutable and visible to anyone. It is, in the extreme, the deed to a unique object in the world.
Usually, when we think of an NFT we think of a digital work of art, but in reality an NFT can coincide with a variety of digital assets: songs, photos, tickets to unique experiences, and much more.
NFTs today represent not only a fast-growing trend, increasingly attracting the attention of companies and investors, but also a very interesting opportunity for the nonprofit sector. Let’s see how.
Crypto-fundraising through NFTs
With the rapid growth in the popularity of the crypto market and NFTs, it has become increasingly evident that a large proportion of cryptocurrency holders are showing sensitivity to social and environmental causes and are willing to donate part of their crypto assets.
According to data from Fidelity Charitable, in 2020 about 50% of cryptocurrency investors decided to donate to charities. The average donation is around $1,000, a figure that is reached by only 33% of non-crypto donors.
Crypto-fundraising can benefit NFTs in an important way. The key mechanism of fundraising through NFTs is the sale of these tokens through auctions and the donation of the proceeds to a charity.
Nonprofit organizations can thus create partnerships with artists interested in donating in through their digital works in any form.
In addition, fundraising through NFTs has an important advantage from the user/donor perspective. When a crypto-philanthropist donates through the purchase of an NFT, he or she actually receives something in return, a work of art that from then on belongs only to him or her.
The opportunity to acquire something unique, and to do so while supporting a cause one believes in, can be an important motivating factor in pushing a crypto user to donate.
Thanks to an NFT, the donor can also display a kind of certificate publicly attesting to his or her generosity. With respect to this possibility, a new form of NFT is also emerging today: these are Soulbound Tokens.
Soulbound Tokens are non-transferable, non-saleable tokens that can be used to verify certain information. Through Soulbound Tokens, for example, one’s date of birth, level of education, but also the donation made to a nonprofit can be verified.
Soulbound Tokens, unlike traditional NFTs, cannot be sold or exchanged with anyone. They can thus become actual badges uniquely linked to a specific person, attesting to support for a specific cause.
NFTs and charity: which projects are the most popular
From saving biodiversity to the war in Ukraine, NFTs are increasingly being used by charities to raise funds to support their causes and projects. Here are some of the NFT projects that have had the biggest impact.
NFT for Ukraine
The outbreak of war in Ukraine represented a historic moment for the crypto world: it was the first time in history that a government asked for help through cryptocurrency donations, tweeting two wallets on which to direct these digital assets.
Since the very first days of the conflict, several projects have sprung up to support Ukraine and its people.
One of the most striking examples of solidarity on the part of the crypto world was the formation of the UkraineDAO, a DAO created precisely for the purpose of supporting the nation under attack. The DAO was founded by Pussy Riot, an openly anti-Putin Russian activist group, along with artist Trippy Labs and members of the PleasrDAO collective.
UkraineDAO has raised more than $6 million through sales of an NFT representing the Ukrainian flag.
Another project that has garnered strong acclaim is THEIR FUTURES, a collection of 50 drawings made by Ukrainian children under the age of 14, all refugees forced to flee because of the conflict.
The drawings, turned into NFTs and represent the war as seen through the eyes of children, their desire for peace and normalcy. The funds raised are donated to the charity Hand To Hand, which supports activists, military and medical personnel in places affected by humanitarian disasters.
The Reli3f initiative also achieved eye-popping results, with a collection of 37 NFTs signed by as many artists. Within about 30 seconds of its launch, the collection sold out, raising $1 million in support of Ukraine.
NFTs for the environment and animals
Perhaps the most famous example of an NFT project supporting an animal nonprofit organization is that of the famous Bored Ape Yacht Club (BAYC).
The Bored Ape Yacht Club’s NFTs quickly became the most popular on the web3 and it was this collection that made NFTs truly mainstream.
The BAYC regularly supports the Orangutan Outreach organization, which is committed to the preservation of orangutans in the forests of Borneo and Sumatra. In August 2021, BAYC donated the equivalent of $850,000 to this organization.
Today, the sale of NFT for charitable purposes is being pursued by many charities that recognize its potential. One of these is WWF, which has launched its own collection of NFAs, the “Non-Fungible Animals”.
Just as NFTs constitute exclusive works of art, often available in limited editions, the animals represented in the NFA collection also exist in limited numbers because they are endangered.
Proceeds from NFA sales go precisely to the protection of these endangered animals. In addition, if a user purchases an NFA and decides to resell it, WWF will receive 10% of the value at which the asset is resold. The same process occurs for any re-sale in the NFA. This project has currently raised more than 270 thousand euros for the protection of endangered animals.
Artist Beeple has also decided to support environmental charities through his digital art. Beeple is one of the most famous NFT artists in the world. In 2021, one of his works sold for more than $63 million during a Christie’s auction-it was one of the most valuable auctions of a living artist in history.
Beeple made an NFT for the Open Earth Foundation, which works to study and foster technological innovation to combat the climate crisis. The work sold for a value of $6 million.
NFTs and charity: more successful projects
The areas in which fundraising through NFTs can take action are endless. Today there are NFT for Good projects dedicated to so many other causes.
Among the nonprofit organizations that have been able to quickly ride the popularity of NFTs is Unicef, which in December 2021 announced the launch of its own collection of 1,000 NFTs. The initiative is designed to raise funds to connect schools in disadvantaged communities to the Internet and thus improve learning opportunities for children and youth.
The collection, called “Patchwork Kingdoms” was created in collaboration with Nadieh Bremer, a data analyst and digital artist. The sale of the NFTs generated total proceeds of 235 ETH (about $360,000). The revenue in this case came not only from direct sales, but also from secondary sales. In fact, if a user had decided to resell their NFT, Unicef would have received 20% of the value of the transaction.
If we look instead at the sphere of women’s rights, one of the most interesting NFT projects is Remarkable Women, a collection of digital artworks focused on women’s representation, inclusivity, and equality. Ten percent of the proceeds (about $50,000) went to the Fund for Women’s Equality, which works to promote gender equality in the United States.
Remember when we said that any digital asset can become an NFT? Jack Dorsey, the founder of Twitter, sold the first tweet in history in the form of an NFT to support the organization Give Directly, a nonprofit committed to the economic support of the poorest families in Africa. The value of Dorsey’s donation was $2,915,835.47.
Digital artist collective ArtBlocks is also committed to the charity. Before making a work available online, ArtBlocks agrees with the artist on a percentage of the proceeds to be donated to nonprofits. Through this system, the dedicated NFT platform has been able to donate $23.5 million to charity.
Among the nonprofits supported by ArtBlocks is Doctors Without Borders. The organization, which was among the first to accept donations in cryptocurrency, received $3.5 million from an ArtBlocks artist who decided to remain anonymous.
NFTs: what trends and statistics tell us
The value of the NFT market has reached staggering figures, reaching $40 billion by 2021.
According to data from Fidelity Charitable, the target audience most interested in the crypto world is Millennials. Millennials, in fact, would generally be more willing to invest in cryptocurrencies, but also to buy NFTs. A survey conducted by Morning Consult would confirm this trend: 42% of Millennials say they are inclined to collect digital assets, compared to 20% of Generation Z.
NFTs now exist in different forms, and users who purchase them can choose to keep them within their wallets or sell them on. In either case, the implications for fundraising are interesting.
In the case where a user decides to purchase an NFT for resale, in the process of creating and minting the NFT, it is possible to stipulate that for each resale of that digital asset, a percentage is allocated to the charity (as in the case of WWF’s NFAs).
However, the most popular forms of NFT seem to be so-called “collectibles,” which are those digital assets that people buy with the intention of preserving and collecting them. According to data published by Nonfungible.com, sales of collectibles in 2021 surpassed those of crypto-art, utility tokens, and NFTs for use in video games or the Metaverse.
One of the most successful forms of collectibles is PFPs (an acronym that stands for “Photo for Profile”).
NFT PFPs are thought of as a kind of digital avatar and are derived from the random combination of several features, e.g., different types of eyes, colors, accessories. Typically, they are sold in large quantities and each of these digital assets is characterized by a different degree of rarity (with which a different price is associated)
An example of this type of NFT is precisely the Bored Ape Yacht Club, a project that, as we have seen, has also used its success to support a charity. Moreover, currently one of the Bored Ape Yacht Club’s PFP creations has become the face of the Orangutan Outreach organization, further strengthening the link between NFT and the nonprofit world.
Implications for the future of nonprofits
All the examples cited above clearly show us the great power of NFTs as a means of fundraising for nonprofits.
NFTs and cryptocurrencies are gradually becoming a mainstream phenomenon, capable of attracting more and more people to this world and, therefore, to its charitable implications.
For this reason, it is now more important than ever for nonprofits to be able to position themselves in this scenario as one of the most innovative realities, capable of accepting new forms of support from donors and the crypto ecosystem.
Giving the opportunity to donate in cryptocurrency and to collaborate with digital artists for the common good represents a way in which nonprofits can approach a new target audience of donors, donors who are young and willing to use their digital assets for causes they believe in.
It can be revolutionary for the fundraising strategy of nonprofits to decide to create their own collection of NFTs by partnering with artists close to the cause, thus rewarding those who donate with a unique piece of artwork, perhaps related specifically to the cause being fought for.