Donate to Charity or Buy an Impact NFT?
Donating to charity feels good. Knowing you are contributing to helping others is empowering and gratifying. It also inspires those around you to do the same. Over time, we’ve seen new giving trends gain traction around the globe. From the evergreen strategy of one-time donations to ongoing sponsorship, crowdfunding campaigns, volunteering, crypto donations, and more — organisations in need of support constantly find themselves needing to innovate or differentiate how to support them in order to ensure a consistent stream of revenue. But with the rise of NFTs, a single choice of charitable support can have a longer-lasting impact.
At The Æternals, we constantly get asked why someone would want to invest in one of our “space trees” instead of making a direct donation to Rainforest Partnership, our charity of choice. Our response is that while we also encourage direct giving, we believe NFTs offer a few key benefits that ultimately, maximise impact for the cause.
Continuous Contribution: NFT smart contracts allow for the opportunity to encode a royalty that is perpetual and automatically executed every time an NFT is resold. This means a charitable organisation can generate passive income from royalties over the long-run, rather than only benefit from a single transaction.
Community Building and Social Movement Organisation: Beyond being financial instruments, NFTs function as a form of social organisation — we’ve seen communities form around a particular project and/or its derivatives. Easily identifiable as a member of a community via the assets in one’s wallet and interacting on Twitter and Discord accordingly, NFTs and NFT-based communities offer non-profits an opportunity to build an engaged, on-going community, and organise a social movement with greater ease than ever before.
Transparency and Accountability: By channeling donations via a public chain, the public knows exactly how much funding the organisation is receiving, and can expect greater transparency and clarity around the outcomes from that funding. This increases an organisation’s trustworthiness and provides them with an opportunity to differentiate themselves on the basis of their impact efficiency.
Financial Sovereignty: Most of the existing funding pathways for non-profit organisations limit their financial sovereignty. For example, grants usually provide strict restrictions on how the money can be spent, leaving organisations to get creative when needing funds to cover expenses that are not included. Donation platforms can also impose high fees or restrictions on when the money can be taken out. For example, some crowdfunding platforms require a goal being met before the funds can be withdrawn. These limitations increase risk for organisations, and may hinder their operations or decision-making pace. NFT-based funding doesn’t have to be so conditional but is still transparent and accountable.
Converged Economic Incentives: One-time donations have unidirectional economic incentives. One party willingly loses money for the other to gain. With NFTs, both parties’ economic incentive converges. If the value of the NFT rises, the resale value will be higher, meaning increased profits for the collector, and greater royalties for the non-profit organisation. This makes non-profits more active participants in financial markets, and re-aligns incentives toward the economic and community growth of the NFT, whilst contributing to impact over time.
Proof-of-Impact: NFTs also provide donors with the opportunity to demonstrate their proof-of-impact, via the trusted custody information associated with their NFT. A verified owner of a charitable NFT can use their ownership as a public badge of contribution to the cause they care about. Organisations, in turn, can highlight now easily identifiable owners, even being able to respect if those owners wish to remain anonymous. Visible proof-of-impact can be motivating to donors and inspiring to others who may also wish to show off their own impact footprint.
There is no wrong way to support the causes we care about, but NFTs offer a viable, meaningful way to give and build a giving community around that cause. The next time you spot a charitable NFT, consider investing in long-term impact and dive into its community of like-minded, passionate, and caring collectors.
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