Cryptocurrency is changing how nonprofits raise money
The way that charities collect donations and disperse money to those in need is changing as they adopt the use of non-fungible tokens (NFTs), decentralized autonomous organizations (DAOs), and decentralized finance (DeFi).
Crypto philanthropists said that they have seen “new wealth distribution methods” that have never been seen before, through cryptocurrency and blockchain technology that is constantly developing.
Omar Antila, Product Lead at Crypto for Charity explained:
“Philanthropy has traditionally been seen as a high-cost-of-entry, individualistic activity but with web3, collective decision-making bodies like DAOs can use tools that streamline financial coordination and encourage more participation.”
“Crypto enables new innovative fundraising strategies, like charitable NFT-drop campaigns, or allowing people to pool their crypto funds in decentralized finance (DeFi) protocols that earn interest for a specific cause,” he added.
Some breast cancer-focused groups began using NFTs in October to highlight Breast Cancer Awareness Month.
Non-fungible tokens (NFTs), according to Antila, have been the foundation of many other philanthropic groups that have generated money for pressing social issues like testicular cancer, human trafficking, and the fight in Ukraine.
A 1/1 Ukrainian flag nonfungible token was purchased with $6.1 million in crowd funding last year by UkraineDAO, a decentralized autonomous organization (NFT). The money raised went to charities in Ukraine that aid those harmed by the Russian invasion.
The co-author of “Bitcoin and the Future of Fundraising,” Anne Connelly, believes that the crypto charity sector will soon expand from Bitcoin (BTC) and Ether (ETH) as the main cryptocurrencies for donations:
“Over time, however, we’ll see organizations accepting a much larger spread of tokens — similar to how they would accept gifts of securities. We’ll also see gifts of NFTs and other tokenized assets like real estate or collectibles.”
“I believe that once […] more organizations realize the philanthropic potential of this donor segment, every organization will have a crypto donation platform, the same way every organization accepts credit cards,” she added.
According to Antila, the total potential market for cryptocurrency charity is enormous because of the widespread nature of the technology.
The roughly 2 billion adults who are currently unbanked will soon have the means “to engage in the global economy, transact, and build wealth without third parties getting in the way or taking a piece,” according to Antila.
This may be particularly true for nations where there is a lack of confidence in the nation’s monetary system, which also happen to have the greatest adoption rates for cryptocurrencies.
Connelly claimed that because they cannot trust their government’s monetary system, adoption rates are higher in developing countries, particularly in Nigeria, Argentina, Vietnam, and South Africa:
“Over half the world’s population lives under double, triple, or quadruple inflation rates. For most people, they can’t trust their governments to effectively manage the monetary system.”
“Having the choice to use crypto is an important option for citizens, but also shows governments that if they want people to use their fiat currency, they will need to clean up their act,” she added.
