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Monday, April 11, 2022

NFT Fundraising: What Nonprofits Need to Know

Technology has changed the nonprofit fundraising landscape time and again. In the not-so-distant past, fundraisers were divided over whether to accept online credit card donations. Today, there’s similar intrigue about the use of cryptocurrency and NFTs (aka “non-fungible tokens”) in fundraising practices. For nonprofits eager to explore the fundraising possibilities of NFTs, the first step is all a matter of getting the basic facts down first. Common questions include: Where do the donations come from? Is my nonprofit responsible for creating the NFTs? Can my nonprofit really benefit from NFT fundraising? 

No matter your nonprofit’s size or mission focus, NFTs can help you raise awareness and money for an important cause. Launching an NFT fundraiser can help your nonprofit not only modernize its donor engagement strategy, but also take advantage of the opportunity to be one of the first movers in this new fundraising space.

So let’s get into the details about what NFTs are, and how they can be used for good:

What is an NFT?

Technically speaking, a non-fungible token (or “NFT”) is a unit of data that can be exchanged on a blockchain. Crypto jargon aside, at its core an NFT is simply a new way to prove ownership of something more tangible, such as an original .jpeg file of an artwork or an .mp3 of a song. Because it is exchanged on a blockchain, every time an NFT is created (aka “minted”), bought, or sold, there is a digital record of the transaction. 

What this means for creators and collectors is that there is a verifiable way to show that you have created or purchased something. What nonprofits need to know is that NFTs are becoming an increasingly relevant part of our digital lives. Just like the physical items we purchase, NFTs can serve as our status symbols as well as reflections of our core values.

What are the benefits of NFTs in nonprofit fundraising?

There are numerous reasons to incorporate NFTs into your nonprofit’s fundraising strategy. Most importantly, your nonprofit should be considering NFTs if you want to:

Diversify your nonprofit’s revenue streams by accepting donations in Bitcoin, Ethereum, and other cryptocurrencies

Engage with a young, affluent donor base of crypto enthusiasts who tend to give more generously than cash donors

Champion your cause using an innovative, cutting-edge technology that is becoming increasingly popular worldwide

Collaborate with creators and major brands to elevate your organization’s visibility and reach

As the trend becomes more mainstream, it’s becoming less of a question of whether your nonprofit is the kind of organization that partakes in an NFT fundraising strategy, and more of a question of the specific approach you’ll take. 

How does NFT fundraising Work?

Since NFTs are exchanged with cryptocurrency, you’ll want to set up a secure way to accept cryptocurrency donations. While the do-it-yourself approach is possible, there are crypto fundraising platforms that offer the ability to automatically convert your crypto donations to cash, accept multiple cryptocurrencies, and even generate donor receipts—potentially saving your organization a lot of time and resources. 

Once you’re equipped to handle the donations you’ll receive from an NFT-related charitable donation, the next step is to put your first campaign together. You’ll need to decide whether you want to run a charity auction with 100% of the proceeds supporting your mission, or work with an NFT project that wants to donate a portion of its sales to your cause. You may also want to connect with a brand looking to use NFTs as part of their Corporate Social Responsibility (CSR) strategy. 

All of these scenarios are possible, but it may take time to find the right collaborators. No matter which approach you choose, these are some steps to follow once you’re ready to get started: 

  • Step 1. Get equipped to accept cryptocurrency donations
  • Step 2. Connect with an NFT artist, creator, or project 
  • Step 3. Decide what kind of fundraising strategy you’ll use 
  • Step 4. Determine the number of works in the mint or auction and the pricing
  • Step 5. Choose an NFT platform or marketplace and a campaign launch date
  • Step 6. Create promotional materials and inform your donor base
  • Step 7. Launch, engage, and learn! 

After the campaign wraps, it’s a good time to debrief internally, share your success with your donor base, and thank all of your supporters. 

How to talk about your first NFT campaign 

We’re in the middle of a generational shift in philanthropic giving. While many donors still give checks via snail mail, there is now a rising generation of digital natives who prefer to donate via online platforms using credit cards and cryptocurrency. 

Ahead of any questions you may receive from your board chair to your newest donors, here are a few talking points to help you navigate conversations with your supporters:

  1. The global crypto user base (including NFT creators and collectors) is growing exponentially and is predicted to reach 1 billion by the end of 2022
  2. Individual NFT fundraisers have raised hundreds of thousands of dollars, even millions, for numerous charitable causes
  3. There’s a lot of excitement around NFTs as collectors’ items, and great interest from NFT creators to donate a portion of their proceeds to nonprofits
  4. Recent innovations have changed the conversation around crypto’s energy usage, with more sustainable models for crypto mining now in play

Preparing for your first NFT fundraiser

Once your team is well-versed in the basics, it’s time to develop the outline for your NFT fundraising campaign. If you’ve never received a crypto donation before, consider timing your initiative so that it overlaps with one of the major days for crypto charitable giving, such as #CryptoGivingTuesday, held on the first Tuesday following Black Friday. By doing so, you’ll raise your nonprofit’s visibility among donors who may not be familiar with its mission.

Want to go the extra mile? Try framing your nonprofit’s impact in terms of the value of cryptocurrency. For example, what could one bitcoin do for your mission? You’re likely to find that crypto users are excited to see your nonprofit joining the thousands of other charitable organizations helping to bring crypto to the mainstream—and showing that crypto and NFTs can be used for good. 

Authored by Sam Kahler, Content and SEO Manager at The Giving Block, which makes Bitcoin and other cryptocurrency fundraising easy for nonprofits and other mission-driven organizations. To learn more, visit: https://thegivingblock.com

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