Going Commando With Crypto: What NPOs Need to Know
Just kidding. About the commando part.
by Kala Philo
Crypto controversies, security breaches, volatile valuations, and Bitcoin billionaires make for big headlines. All of that drama put crypto at the forefront of the financial scene in recent months.
Headlines like that don’t attract thoughtful non-profit leaders creating fundraising strategies. And for good reason! Crypto can feel like the financial equivalent of going commando — exposed, unregulated, lots of fraud, and very wild-west in some corners of the Dark Web for sure.
We all know, though, that clickbait rarely tells the whole story. Some large non-profits are welcoming donations in cryptocurrency and experimenting with NFTs as a new fundraising channel.
The truth is that donors’ desire to donate with crypto is trending as quickly as the alt currency space is. Giving Tuesday donations in crypto totaled $2.4M, a whopping 583% increase from 2020. Fidelity Charitable received over $274 million in crypto donations in 2021, four times the total in 2019.
Just like NFTs, every NPO is non-fungible and unique, too! Deciding whether or not to dive into a crypto donation strategy will depend upon your capacity, audience, and advocacy focus.
Who Is Donating With Crypto?
Given the lower adoption rate of cryptocurrencies among people over 50, it won’t surprise you that the average Crypto user is age 38 compared to the average donor in the nonprofit sector at 64 years old. Crypto fans also tend to be higher-income, with a per capita annual income of $111,000.
This reflects the early adopter crypto profile in the US, mostly younger white males. That trend is changing rapidly as women gain a share in the crypto space. In 2015 90% of crypto users were male, compared to 67% in 2021.
The Giving Block, which facilitates crypto donations to non-profits, reports that 45% of crypto users donate at least $1,000 to charity each year. The average crypto donation is the equivalent of $11,000, nearly 100 times higher than the average online donation.
Why Do Some Donors Want to Donate Cryptocurrency?
There are several reasons why donors with crypto may want to donate some to their favorite NPO. If you are getting questions like “Do you accept cryptocurrency?”, take a minute and ask them about it.
One reason is tax-related. Since 2014, the IRS has considered crypto an asset class subject to capital gains tax. The IRS also stipulates that donating cryptocurrency to a tax-exempt non-profit or charity aid is not a taxable event. Investors can donate crypto to mitigate capital gains on windfall profits from crypto or other sources.
President Biden is creating a new Executive Order (EO) for updating crypto regulation. One scenario is higher taxes for Bitcoin and alternative digital currency transactions. In theory, this could cause a drop in the price of cryptocurrencies and less demand from investors.
The new EO and other changes could increase crypto donations, at least in the short term. No one knows for sure. The point for NPOs is, whatever happens, those that make it easy to donate crypto stand to benefit the most.
This is the part of the post where I say “Oh lordy, I am THE farthest thing from a tax or legal expert!” Like, across the metaverse far.
For more advice on the tax implications of crypto for you and your donors, check with your own trusted legal and tax counsel. Just be sure they’ve done their homework and aren’t simply reading headlines, right?
NPO Fundraising With NFTs
Another way NPOs are experimenting with new ways of fundraising is by selling or auctioning NFTs. NFTs are digital files posted on a public record. They are like receipts, or ownership titles for digital and real artwork, event tickets, collectibles, and more. If you would like to know more about what the hey an NFT is, check out this post.
Yes, the NFT world is confusing and geeky, but so was the Internet when it was born. Remember all the drama about “do we need a website or not”? Well, maybe you don’t remember, if not, count your lucky stars. Trust me, that was a real debate back in the day.
We are at the very beginning of learning new ways of interacting that will become much more mainstream in the near future. The long game for NFTs is this: story and building community. NPOs have long experience and deep expertise in both vectors, so don’t be intimidated by the tech. There may be other benefits for your organization in getting to know NFTs, than just an immediate cash inflow.
The NPO Save the Chimps created NFTs of chimp paintings. They didn’t make a windfall from the auction, but it wasn’t nothin’, either. Sara Halpert, their marketing director, noted, “The exciting part was they were all first-time donors.”
This speaks to another fundamental perspective that NPOs are good at — taking the long view. Cultivating relationships, telling stories, documenting impact — community is the staying power in this new space. You got this, even if the stage is changing.
You may have read about some controversial NFT drops by NPOs, mostly around questions about environmental impact. The short answer is that there are some sustainable options for NFT campaigns, especially if you are already using some traditional fundraising methods that may have a bigger carbon footprint than you think. One high-profile example was the World Wildlife Fund’s NFT drop. WWF leadership canceled the campaign after receiving criticism and some fan backlash.
What I never saw anyone talk about or ask, though, is the carbon footprint of the WWF’s long-term fundraising through catalog and merchandise sales, starting with all those reusable shopping bags with the ubiquitous panda logo? The point is, NPOs may want to review and compare all of their strategies when considering whether or not a NFT campaign is a good fit.
At Impactoverse, we did extensive research when choosing the blockchain for our platform. We are happy to answer any questions you may have.
How NPOS Can Get Started With Crypto Donations
At Impactoverse, we are creating the PetDropsNFT edutech impact experience. PetDropsNFT will provide fun, low-risk ways to dip a toe in the NFT ocean while helping animals in need. We’ll be offering two ways to participate in our creator community:
- A DIY portal — Immortalize your pet for all eternity in an NFT, while helping other animals! Petdrop DIY will teach anyone how to create an NFT, share the news with your friends, and list your NFT for sale with proceeds benefitting animal welfare NPOs.
- A DFY service — pressed for time? Allergic to tech but love animals? Our “done for you” service is for people, NPOs and companies that want to join the PetDrops impact community but don’t want to actually mint the NFT. Join our email list to get the scoop and more details as we build this out!
To set all this up, we are talking with many smart, cool people, asking the questions you may also have. We created a starter guide for you that covers emerging Web3 technologies without the jargon and how NFTs, DAOs, cryptocurrency, and blockchain are related and may benefit impact investors, creatives, and impact-driven companies and NPOs.