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What are NFTs: Understanding the new means of fundraising

What are NFTs - fundraising with NFTs for nonprofits

If you opened this blog looking for an answer to the question, what are NFTs, you are not alone.

NFT fundraising is only one aspect of the larger cryptocurrency donation conversation. NFTs are evolving from a far-reaching idea to a transactional norm. It is up to non-profits to embrace this digital currency revolution by gaining an understanding of how they can reach new audiences and fuel their long-term missions with NFTs.

In the second episode of our Crypto Philanthropy series, Goodera partnered with DoinGud to host the Crypto Philanthropy 2.0 – Raising funds with NFTS, which focused on ways to start fundraising using NFTs right away. The session was presented by Rebecca Stokes, nonprofit relationships and partnership director, and Wendy Feher, the Steward for Nonprofits relations and community team at DoinGud. It focused on learning what are NFTs and how do they work, how they matter, and how nonprofits can use them to raise funds.

Here’s what they had to share:

  1. The NFT definition
  2. Why do NFTs matter
  3. Real examples of NFTs
  4. Real-life fundraising successes through NFTs
  5. Myths and realities:
  6. Get started with NFTs

For a beginner’s guide on how nonprofits can gain from cryptocurrency, we recommend you watch the first episode of our series, Crypto Philanthropy 101, with Tina Roh, the founder and chief operating officer of Every.org, or read our blog.

Let’s now understand what NFT is.

The NFT definition

An NFT is an item that can be bought or sold using cryptocurrencies, which are digital currencies. These transactions are recorded on the blockchain.

A non-fungible token, also known as NFT, is a digital version of a physical collector’s item. NFTs include both tangible and intangible items like arts, GIFs, video highlights, collectables, virtual avatars, video game skins, sneakers, and music. Due to their unique data, they can be verified as owner-held and transferred between owners.

Why do NFTs matter:

Centralized structure free marketplaces:

In combination with blockchain technology, NFTs are a unique way for artists and creators to monetize their work. It is no longer necessary for creators to sell their art through galleries or auction houses. Instead, a creator can sell it directly to consumers as an NFT and keep a more significant portion of the profits.

Receiving royalty payments:

Creators can program royalty payments to receive royalties when their works are sold. The fact that creators receive future proceeds is an attractive feature since most do not receive future proceeds after the first sale. For creators, it could lead to some generational wealth. NFTs and digital marketplaces like DoinGud enable artists and creators to establish relationships with their audiences.

Real-life fundraising successes through NFTs

Instances of real-life fundraising through NFTs are plenty. Let’s take a look at a few of them:

  • Justin Roiland, creator of the acclaimed animated series “Rick and Morty,” sold an art collection on Nifty Gateway, backed by Gemini. The sale valued the group at approximately $1.65 million. Roiland stated that a substantial amount of the sales went to the aid of homeless people in Los Angeles who are bearing the brunt of the coronavirus pandemic.
  • Another remarkable instance of raising funds through NFTs is the collaboration between Beeple and CarbonDrop. 6 million dollars were raised through the first big charitable NFT event to fund the Open Earth Foundation’s open digital infrastructure for the Paris climate agreement.

Myths and facts:

When it comes to the digital world, several myths are associated with it. And crypto and NFTs are no exception. So let’s explore a few myths and understand the reality behind them.

Myth 1: NFTs are a passing fad

Most people agree it’s premature to declare the end of NFT just yet. Art and culture organizations known for their commitment to integrating creativity and art into society are slowly embracing non-traditional forms of art and including them in the lineage of legitimate forms of creativity. Art world experts agree that NFTs are revolutionizing the way art is curated and sold, as well as how artists are viewed. In this sense, NFTs appear to be here to stay.

Myth 2: Cryptocurrency and NFT minting consume a large amount of energy

There is a lot of talk about how cryptocurrency and blockchain systems consume large amounts of energy. Essentially, it served to deter hackers from attacking them because they needed networked computers and people to do so. However, this entire space has experienced some dramatic changes and has grown tremendously. As blockchain, cryptocurrency and NFTs become more sophisticated; their energy consumption profiles are also improving. In fact, UN experts believe that blockchain could greatly benefit in fighting the climate crisis and help bring about a more sustainable global economy.

Myth 3: Criminals use cryptocurrency to obscure their real identities and activities

A false narrative that crypto is used for illicit activities has weaved its way. But according to a report by Chainanalysis, in 2019, only 2.1% of all crypto transactions were related to criminal activity. This number further reduced to 0.34% in 2020. Crypto, as with every government-issued currency, is subject to a variety of uses and abuses. However, global governments are adopting new crypto-safety regulations on a daily basis. While the crypto space evolves, users must remain alert until the entire legal and regulatory framework is in place.

Myth 4: It’s a complicated process

There is a certain degree of complexity within the crypto space. Some nonprofits might not have the bandwidth to handle this. To aid with this, new organizations explicitly built to manage cryptocurrency for nonprofits and charities are coming into existence. These organizations facilitate the conversion of cryptocurrency to fiats or standard currencies.  Consequently, nonprofits can benefit from crypto technologies without having to deal with their complexities.

Get started with your NFT journey

It is imperative that you do your own research. Read all you can about this entire space and get doubts out of your head. Observing your peers is an excellent way to find out what you need to learn. They engage in crypto space. Keep an eye on your new donor pool.

Conclusion:

We hope that you will be able to maximize the use of NFTs in your nonprofit through the information we shared in this webinar.

Join the Karma Community for Nonprofits group on Facebook to stay updated on upcoming webinars. Resources that will support your nonprofit’s mission are shared here for free.

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