Most images found online can be saved to your collection with a single click. They are essentially free. Thus, it can be challenging for organizations to fundraise using online images. At least that was the case until the advent of non-fungible tokens (NFTs for short) in 2017.
What are NFTs
NFTs are digital assets representing real-world items like artwork, real estate and music. As the “non-fungible” would suggest, NFTs are unique and not easily replaced with something else.
To better understand NFTs, let’s look at the technical side of things for a moment. NFTs are a part of a blockchain like Ethereum. It is also a type of cryptocurrency (like Bitcoin or Dogecoin) and its underlying blockchain keeps an account of who owns and exchanges NFTs.
What Is a Blockchain
Blockchains are essentially a means of storing data accurately and securely. Rather than relying on a single person or organization to keep track of the data, the responsibility is spread out to everyone involved, providing a transparent audit trail.
The “blocks” are where you will find data stored on the blockchain. The type of data stored in these blocks is up to whoever creates the blockchain. Blocks usually contain transaction records. In this sense, they are kind of like electronic receipt drawers: a place for you to store and easily access all of your past transactions. When you add several blocks together, they create a “chain” of blocks.
Of course there are complexities and exceptions to the blockchain, which you can explore further in Built In’s blockchain guide, but when most people use the term “blockchain,” they are referring to this type of tech.
Why Would Someone Purchase an NFT
When you purchase an NFT, you get basic usage rights of the work.
Think artwork. Almost anyone can purchase a “Starry Nights” print at their local home goods store, but none of these prints can compare to the original. That painting is one-of-a-kind. It can’t be replicated.
It’s the same with an NFT. Sure, anyone can screenshot the digital file and use it as their desktop background, but only one person can own it (with a blockchain to back it up.) As ownership of the NFT changes, the value of the original copy can increase. Just like the famous Van Gogh painting, NFTs are sold on a world market to owners who value them and all it takes is one purchase to get things started.
In both physical and digital art, perhaps the biggest benefit is being able to financially support artists you admire and, in the case of fundraising, causes you support and want to get behind.
Benefits of NFTs in Fundraising
Our attention is constantly pulled in different directions. From an organization’s point of view, it’s a tough time to make your fundraising and marketing efforts stand out in the crowd.
NFTs can give organizations an edge in the fundraising sector by decreasing overall costs, modernizing donor engagement strategy and providing the opportunity to be one of the first movers in this new fundraising space. More specifically, utilizing NFTs in nonprofit fundraising can:
- Diversify revenue sources by enabling the organization to accept donations in Bitcoin, Ethereum, and other cryptocurrencies.
- Engage a young, rich donor base of cryptocurrency enthusiasts who may be inclined to donate more generously than cash donors. According to Fidelity Charitable, roughly 50% of cryptocurrency investors donated an average of $1,000 to charities in 2020.
- Increase donation margins by utilizing virtual products (lower expenses than physical goods) and avoiding hefty taxes (organizations do not pay taxes on NFTs that they sell or receive as gifts!)
- Promote the organization’s cause by using ground-breaking technologies that are gaining popularity worldwide.
- Expand reach and exposure by joining forces with influential creators and companies.
As NFTs become more widespread, it is less important to determine whether a particular organization “fits the bill” for using an NFT fundraising strategy. It’s more about the specific strategy they employ.
How to Find or Create an NFT for Fundraising
We know that NFTs are a terrific way for organizations to generate money through fundraising in a transparent manner while engaging a new audience and boosting brand recognition. But how do you actually get your hands (bad choice of words, but you get the idea) on an NFT to use for the cause?
The best way is to create one.
If you’re not feeling too confident in your artistic abilities, don’t fret. Many organizations already own creative assets that could potentially be sold as an NFT. Take Covid:Aid for example. In 2021, they auctioned off their logo as an NFT and provided the highest bidder with the opportunity to be the world’s first “crypto-philanthropist”.
Alternatively, the organization could work directly with an NFT artist to develop a digital piece specifically suited to their fundraising objectives. Many artists are known for donating auction proceeds to non-profit organizations. In 2021, the NFT artist Beeple raised over $6 million for the Open Earth Foundation by auctioning off one of their latest NFTs.
Or maybe you have just the right person on your team to create a NFT for fundraising, but that person needs a bit of inspiration to get started. There have been some pretty inspirational NFT fundraising concepts over the past years, including:
- Wildlife rescues auctioning off digital paintings of wild animals.
- Shelters auctioning off digital portraits of people who have received aid.
- Cancer research teams selling digital ribbons.
- Cities auctioning off digital homes to support their earthquake relief funds.
After determining your notion and artist, the next step is to create an Ethereum (ETH) wallet and pay any creator fees. To “mint” the NFT as digital art on the blockchain, list it on the marketplace such as Rarible, Foundation or OpenSea.
Once these steps are complete, the NFT is ready for sale and the organization can arrange for proceeds to support their preferred cause.
Successful NFT Fundraising Projects
As we now know, NFTs are being used increasingly often by non-profit organizations to generate money to support various causes and initiatives worldwide. Here are some initiatives that have “figured out” fundraising with NFTs:
Environment & Wildlife
Perhaps the most well-known NFT fundraising initiative that supports wildlife is the Bored Ape Yacht Club. According to their website, a group of friends set out to “build something ridiculous” and began designing an NFT collection of cartoon apes. It went viral. Big-name celebrities purchased a cartoon ape and as of 2022, the collection has generated over $1 billion in sales. They provide generous monthly donations ($850,000 in August 2021 alone) towards a good cause: The Orangutan Outreach Group, dedicated to protecting wild orangutans.
Another equally impressive crypto-philanthropy venture is the NFT collection produced by Open Earth, an NPO that tracks worldwide progress on climate change. Instead of creating their own NFTs, they sought the expertise of the Social Alpha Foundation to partner with several NFT artists, who designed eight tokens based on sustainability and environmental preservation. Each token sold for $20,000 to $6 million, with all proceeds going directly towards climate change research.
Society and Sickness
One of the largest non-profit organizations in the world, the Make-A-Wish Foundation has always been somewhat of a trailblazer in the fundraising community and is no different when it comes to crypto. The foundation partnered with Macy’s during the Macy’s Thanksgiving Day Parade last year to auction off a collection of digital balloons, with all of the proceeds going towards Make-A-Wish. Macy’s benefited from the positive press associated with their charitable contributions. Make-A-Wish was able to increase donations and attract more crypto donors.
The beginning of the war in Ukraine was a pivotal moment for the cryptocurrency community. This was the first time in history that a government requested assistance through bitcoin donations, publicly tweeting wallets in which supporters could transfer assets.
Since then, numerous crypto initiatives to aid Ukraine have popped up including UkraineDAO, a decentralized autonomous organization established by Pussy Riot, Trippy Labs and members of the PleasrDAO collective, to aid Ukraine whilst under attack. Through the sales of a digital Ukrainian flag, UkraineDAO has raised over $6 million to support the country’s efforts.
Another project quickly making an unprecedented name for itself is Tractors and Tanks, a Ukrainian-based NFT fundraiser created by the open NFT platform Restack.AI, to directly support the Ukrainian army through an NFT collection of digital Ukrainian tractors. According to their website, the collection was inspired by the real-life efforts of the Ukrainian farmers, who have been stealing Russian tanks and other military equipment using their tractors, which have since become a symbol of resistance and defiance for the country.
Prior to the release of their collection, Tractors and Tanks has already been mentioned on Grid and the Finnish news source Maaseudun Tulevaisuus. The Lviv, Ukraine based company plans to further their fundraising efforts by releasing NFTs representing the stolen Russian military equipment and developing a blockchain-based tractors and tanks game.
Looking to the Future of Fundraising
With the continued rise in popularity of NFTs and cryptocurrencies, more individuals are drawn into this realm and its charitable implications. It is now more crucial than ever for organizations to position themselves in this innovative space and be ready to take on new forms of support from donors.
The next generation of donors is here and eager to use their digital assets toward causes they care about. Offering donors the option to use cryptocurrency and partner with digital artists, organizations are reaching a new target demographic.
Our biggest piece of advice to the non-profit organizations of the future: seek comfort in the uncomfortable. Recognize that there is always more to learn about cryptocurrencies, particularly NFTs, and embrace the learning curve.