Why the Summer Bear Market is a Perfect Time for Charities to Engage with NFTs & Web3
With cryptocurrency and NFT markets down significantly in 2022 and demonstrated continued volatility in their value, why would a charity want to engage in the space? Should nonprofit leaders be ditching their Web3 fundraising plans right now? Here’s what has me, Sostento’s CEO, bullish about the impact of NFTs on charitable giving even during a bear market.
Charitable giving seems to be baked into the DNA of the NFT community. I first encountered this when in the late spring of 2021, NBA TopShot, an NFT community built around the professional basketball league, ran a “shots for shots” campaign and raised over $100,000 for community covid vaccination events. This was not a donation by the company behind the NFT, instead the fundraiser was driven by donations from the community of NFT collectors. At the time I was trying to raise money for covid response at my nonprofit and so I immediately became curious how NFTs could be quickly turned into real world social impact.
From there I dove into the deep end of the NFT world, learning about the underlying technology of NFTs and getting to know the artists and community that were eager and motivated to talk about their commitment to social causes. The dedication to giving from the community drove me to run a charity NFT auction for Sostento in the fall of 2021, a challenging but ultimately rewarding journey that raised over $130,000. I wasn’t alone, according to the nonprofit times nearly $70 million in donations via Web3 were made last year, up from $4 million in 2020.
In 2022 the generosity of the NFT community has continued and demonstrated the speed which large scale donations can be mobilized whether it be the millions raised for Ukraine in a matter of minutes through NFT art charity auctions or the ten million dollar crypto matching program from The Giving Block hit goals in a short few weeks in early 2022. These numbers are sure to raise the eyebrows of nonprofit fundraising teams, but if that is what brings you in, beyond the hype of these large donations are truly dedicated people that drive the space and move you beyond the numbers.
The NFT community represents a new younger generation of first time donors. They are just finding their footing as philanthropists and are eager to engage and learn with social causes. That’s why even though fundraising prospects feel down at the moment due to the current market conditions, there are people in the NFT space who are still building, collecting and creating. That makes it a perfect time for nonprofit professionals to network and build relationships with this emerging donor class for the future.
Here is what charities can be doing during a bear market when donations are sparse:
- Foster open, honest and authentic conversations with NFT leaders, and get used to meeting them where they are, i.e. Twitter and Discord.
- Do research on the underlying blockchain technology that underpins the entire NFT system, and get accustomed to the lingo that the community uses to talk about their projects.
- Begin education with your administrative and finance team early in the process, and have a plan in place for turning NFTs into funds for your mission before you begin to seriously engage.
- Explore the different aspects of NFTs to find your potential fit, there are artists, collectors and community projects that may be the connection you are seeking
What’s keeping me positive on Web3 and busy during this down time is conversations with colleagues and other nonprofit leaders and continuing to explore the diverse ecosystem of the NFT and philanthropy world. I’m joining NFT related Twitter Spaces to listen and share. I’m talking with innovative players that connect NFT holders and charities like Endaoment. While I’m not an investor in NFTs, I’m following projects of interest and learning more about the values and motivations behind projects in the space.
Even with the doom and gloom that can come with the down part of the crypto hype cycle, I am clearly seeing the new NFT donor class that is here to stay. With the needs of society only growing, NFT communities will be an important partner in the future of charity, and I believe those that continue to build and engage during the lows will benefit when the bull markets return.
This article was written by Sostento’s CEO Joe Agoada with support from Simon Green, Sostento’s Marketing Officer and resident NFT expert.
