Cryptocurrency donations are on the rise, as a way for users to support projects they like within gaming communities. The value of cryptocurrency increases and decreases daily but these funds give supporters significant bragging rights in the community.
The “donate nft to charity” is a new way of donating cryptocurrencies and NFTs. Instead of donating to a cause, you can donate your digital assets as well as bragging rights for the amount donated.
For example, at the Oscars in late March, a Hollywood minute of silence for the people of Ukraine was cut to a commercial for Crypto.com, which directed viewers to a site where they could give crypto, purchase nonfungible tokens, or use a regular credit card. The revenues were all donated to the Red Cross Red Crescent Movement’s humanitarian operations.
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However, there was a snag. Because the Red Cross does not accept cryptocurrency donations, the funds had to be converted to US dollars first.
Charities are primarily interested in tapping into the approximately $2 trillion in money collected by crypto investors on the blockchain. However, these kinds of gifts come with a slew of legal, technological, and logistical issues. Many NGOs are walking gingerly as a result of this.
“Charities are caught between the fear of losing out and the fear of doing something that may expose them to some amount of compliance risk,” said James Lawrence, co-founder of Engiven Inc., one of numerous firms that have sprung up to act as go-betweens for charities and digital-asset contributors.
Mr. Lawrence, who has founded other businesses that provide technology to churches and NGOs, said that this apprehension is similar to what he witnessed when charities initially contemplated accepting credit card payments online.
According to Steven Kalifowitz, the Singapore-based firm’s chief marketing officer, the Crypto.com campaign garnered $1.6 million in contributions, 60% of which came from the sale of NFTs made by artists for the cause, plus a $1 million match from the company.
“But then the slap occurred,” Will Smith added, referring to the actor slapping Chris Rock in the face on stage at the awards presentation, and it became all people wanted to talk about.
“‘Charities are caught between the fear of missing out and the worry of doing anything that may expose them to some kind of compliance risk.’
– Engiven Inc. co-founder James Lawrence
Mr. Kalifowitz said it was not unexpected that NFTs would account for more than half of all contributions. He went on to say that some customers used the digital artwork as their social media avatars to publicize their support for the fundraising. The method is similar to the virtue-signaling tote bags used during public radio and television pledge campaigns.
“You’ll see a lot more fund drives with an NFT component because people want something tangible to show for their donation,” he said. “People who live in a digital environment may not appreciate tangible items as much.”
NFTs and crypto both have a huge gain in value in a short period of time. Donors and NGOs alike have an incentive in making this work since today’s capital gains become tomorrow’s tax-deductible charitable gifts. According to Una Osili, assistant dean of the Indiana University Lilly Family School of Philanthropy, people typically contribute their most valuable asset, which for many younger investors is bitcoin, ethereum, or NFTs.
“It was their stock portfolios or land for prior generations of Americans,” she said.
Because the IRS considers crypto and NFTs to be property, investors who give them may avoid paying capital gains taxes on assets held for more than a year, as well as deduct the amount of the donation itself.
According to co-founder Alex Wilson, another business, the Giving Block, works with 1,500 NGOs and has handled more than $100 million in digital-asset gifts, largely in the last year. Save the Children was an early adopter, raising more than $5 million in crypto contributions via its HodlHope campaign.
Ulysses Gonzales, an artist, sold his NFTs at the Oscars’ Crypto.com fundraising.
SHELBY RAE PHOTO
“The business justification is that practically all of those donations were new money from new contributors,” said Ettore Rossetti, Save the Children’s senior consultant for digital innovation.
Most nonprofits that receive bitcoin donations promptly sell the digital assets, but Mr. Rossetti believes Save the Children may keep some crypto. According to him, cryptocurrency presently accounts for roughly 1% of earnings from individual contributions. The organization has also embraced NFTs, collaborating with artists to give works that may be transformed into NFTs and sold for a good cause.
The most popular philanthropic use of NFTs among charities and NFT artists is selling digital works and donating a portion of the revenues to a charity. The smart contracts in the NFT may be programmed such that a portion of each future sale of that NFT goes to the organization, making it a perpetual philanthropic contribution. Mr. Wilson believes that NFTs might account for as much as 20% to 30% of digital asset giving.
However, donating an NFT directly to a charity is more difficult since the worth of given property must be independently evaluated. Mr. Lawrence said that determining the value of a digital artwork embedded with a mark of authenticity might be difficult.
He went on to say that not all crypto contributors are in their twenties or thirties. Mr. Lawrence claimed a $10 million contribution “from an unnamed guy in his 70s” was maybe the greatest crypto donation to yet.
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According to DappRadar, a blockchain-analytics outfit, NFT sales hit $25 billion last year, with sales already reaching $27 billion as of March 10. Nonetheless, there are indicators that the market has calmed. An NFT created from Twitter Inc. founder Jack Dorsey’s first tweet, which sold for $2.9 million at the time, might today be worth less than $14,000.
Mr. Lawrence said, “Giving crypto is really basic.” “NFTs are essentially their own weird food category,” says the author.
Ulysses Gonzales, also known as Ugonzo, is a 34-year-old artist. In the Crypto.com fundraiser publicized during the Oscars, he sold over 3,000 versions of his PsychoKitties and PsychoMollies NFTs for $100 each.
“This is the single most effective approach to infuse art into charity and demonstrate that we’re not just in it for the money,” he added. Mr. Gonzales, a painter and muralist, said he was contacted “by a person from Estonia” a few years ago. “How would you like to earn $100 million?” he said as he made his pitch for NFTs.
Mr. Gonzales said that he did not earn a total of $100 million. “However, I did manage to manufacture around three.”
Jeremy Olshan can be reached at [email protected]
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