Are NFTs the future of fundraising?
Unless you’ve been living under a rock, chances are you’ve heard of NFTs. But how much do you really know about them? For most of us, these three letters conjure up a jumble of disjointed factoids: ugly monkeys selling for vast sums of money while the rainforest burns. But there’s a lot more to NFTs than you might know, and they hold incredible fundraising potential. We caught up with Mikey Deegan of Mint Studios to learn more.
First things first, what is an NFT?
NFT stands for non-fungible token. The non-fungible part means an NFT is unique, one of a kind, and can’t be duplicated. “But how?” we hear you ask. The NFTs most of us have seen (or think we have seen) are digital images or videos, and we all know those can be copied. So, what gives? It might be more helpful to think of the NFT as the envelope that holds the piece of digital art. That envelope also holds other information about it, like the chain of ownership, contract details, copyright, and more. The envelope can’t be duplicated and the token lives on a secure blockchain. There’s a lot more to it, but you can find a more detailed explainer here.
So, what do NFTs have to do with fundraising?
Charities across the world are already benefitting from NFT sales, whether or not the organisations themselves are aware of it. Many NFT creators donate a portion of sales to charities they support, and some have even donated NFTs in much the same way as they might donate a physical asset. Brands have also begun partnering with nonprofits for hugely successful auctions; selling its first NFTs, Coca-Cola raised over half a million dollars for Special Olympics.
Engaging with the NFT world can bring other benefits for your organisation, too. NFT communities are highly engaged with one another – and could be highly engaged with your cause. While you may be familiar with collectible NFTs like the images and videos mentioned earlier, NFTs can open many more doors. Utility NFTs can function like a ticket to an event or the key to a community, granting access and unique benefits to the holder only. Collectible NFTs may also possess utility benefits. One example might be an NFT sold by a conservation nonprofit. The NFT could name the holder as the adoptee of an endangered animal giving them naming rights, and providing them with updates on how their adopted animal is doing, as well as access to a community of other adoptees where they can discuss conservation, talk to staff at the nonprofit about their work, and provide direct feedback. The holder of the NFT is encouraged to be emotionally and intellectually engaged with the cause, increasing retention and lifetime value.
But what about the environmental implications?
Most NFTs are based on Ethereum, a cryptocurrency that uses huge amounts of power in its energy-intensive verification system. It is this power use that has driven the valid environmental concerns around NFTs and cryptocurrencies. There are alternatives, however. Solana is another cryptocurrency gaining traction in the NFT world, and it’s one with a far lower environmental footprint. The energy use of a single Solana transaction is estimated to come in at 1,837 J. For comparison, keeping a LED lightbulb on for just one hour uses 20 times that much. The company achieved carbon neutrality in 2021, and other crypto developers have made promises to reduce their impact.
It’s one thing to know a little more about NFTs, but another to get involved. The first thing to know is that your organisation will need to have a digital wallet set up in the relevant cryptocurrency in order to take part in transactions (as well as to receive cryptocurrency donations, but that’s another blog post!). Your organisation can then get involved in the space through a number of ways:
- Ambassador collaboration: If your organisation has a well-known ambassador with a strong following or fan base, that person can create a piece of digital art for auction to their audience
- Approach existing creators: If you know of an NFT creator who already supports your organisation or whose values you know align with your cause, you can approach them directly. Many creators donate a portion of their sales to causes anyway, and doing so can improve their performance at auction, so it can be a win-win situation. If the creator has a following they can share their passion for your cause with, they can help you reach huge new audiences, too
- Use your creative assets: Some organisations own creative assets, such as iconic logos, that can be sold as NFTs
- CSR: Brands, especially bigger brands and household names, are exploring the NFT space. Because the space is community-based, avoiding accusations of cash-grabbing is important for brand reputation. Partnering with a charity while they explore and experiment is a great way to fulfil CSR obligations as well as improving brand image
As with any new venture, the best step to take is the first one. Reach out to other nonprofits who have had success in the space, spend an afternoon on YouTube, or do some reading. Whether or not crypto-philanthropy is right for your organisation is up to you, but if it is, you don’t want to miss out.