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Crypto giving grew rapidly in 2021 and even more so in recent weeks, when it has been such a vital way to channel funds for humanitarian aid in Ukraine. But how does it all work, what are the pitfalls and what do fundraisers need to know to make a success of it? Matt Smith of THINK gives us the low down on crypto philanthropy.
The rise of cryptocurrency provides charities and not-for-profits with a compelling, but complex, new income generation opportunity. In this short blog we’ll attempt to demystify all things crypto-philanthropic by answering the following questions.
What is the blockchain? Which cryptocurrencies should we care about? Why are people so excited for NFTs (non-fungible tokens)? And ultimately, how can charities understand and maximise the opportunities?
Understanding blockchain
Let’s start at the beginning. The blockchain is the digital ledger on which this new wave of cryptocurrencies and NFTs are stored. Public blockchains provide a secure place to put information that everyone can add to, that no one can change, and that isn’t controlled by any single person, government, or company. So unlike in the traditional world of hard, physical currencies and systems of regulation, there isn’t one individual or company keeping track of everything. The responsibility for doing so is shared between everyone on that network.
As physical notes and coins disappear from society (and it is likely that we will see physical currency all but totally disappear from our economies in the next thirty years) traditional & cryptocurrencies will start to look more and more alike. Crypto is the next chapter in money being digitised.
To support the rise of these new currencies, the most traded of which include Bitcoin, Ethereum, Ripple and EOS, we’re now seeing several platforms enter the crypto-philanthropic space to help charities receive, store and exchange these currencies.
Crypto fundraising platforms
The Giving Block is an online crypto fundraising platform, that is now working with causes across the globe. By using The Giving Block, crypto donors can easily find organisations they want to donate to through the Block’s donation platform and partners.
There have been numerous recent examples of charities working with, and raising money from, the crypto community. Edinburgh Dog & Cat Home has received several donations from the Pawthereum community. The most recent has enabled this animal welfare organisation to partly-fund a new digital fundraising role which will help them further establish relationships in the crypto community.
We are beyond grateful to have received Scotland’s biggest known cryptocurrency donation. 26ETH has converted to $118,000USD or £87,000GBP Thank you @pawthereum Read more: https://t.co/NQNggeXsZB #ETH #PAWTH 💚🐾
— Edinburgh Dog and Cat Home (@EdinDogCatHome) November 15, 2021
Then in 2021, the Children’s Heart Unit Fund, working with The Giving Block platform, received crypto donations worth £38,000. One of the donors had themselves been supported by the charity his whole life, which shows that despite the new technology behind this way of giving, the motivations to give remain the same in crypto.
At the bigger end of the scale, Save the Children were recently chosen by the Munch Token community to benefit from their charitable efforts. This community regularly votes on which organisation should benefit next and has donated over $4 million in total to worthy causes.
Alongside cryptocurrencies, NFTs (non-fungible tokens) have seen a meteoric rise in popularity. These blockchain-enabled pieces of exclusive art and experiences are similar in many ways to the physical art and in-person experiences that have been central to charity auctions for decades. NFTs just bring this giving method into the 21st Century.
Launched in late-2021, Doin Gud is a new platform to watch in the NFT space. However, recent NFT trials have not been without their controversies. WWF launched their Non-Fungible Animal campaign in early 2022 but were met with significant backlash on social media due to the tokens’ environmental implications (despite the charity being very clear that they were using technology that minimised the impact on the planet).
Just 24 hours to go… ⏳
Our #WWFTokensForNature focus on 13 endangered species 🐼🦧🦍
Releasing our NFTs on the eco-friendly @0xPolygon blockchain, each transaction has the equivalent carbon emissions of a glass of tap water.
Join the discussion: https://t.co/T6l20zFpnA pic.twitter.com/urFOjZRDE7
— WWF UK (@wwf_uk) February 2, 2022
Weighing up the risks and opportunities
As this example demonstrates, there are several risks and ethical considerations when fundraising through crypto and NFTs. As with all parts of the internet, crypto servers come with an environmental cost. Other big risks include fluctuations in value and the danger of the technology being used as part of elaborate pyramid schemes and money laundering.
Having robust policies, donation terms and conditions, and working with trusted partners is essential. As we have discussed, The Giving Block is doing great work to make this easier and safer for charities. But ultimately, charities should be treating the risks and opportunities in crypto with the same scrutiny as their traditional income streams. Environmental, investment fluctuations and money laundering are all familiar risks in more traditional income generation methods – these should not be barriers to entry for organisations when considering new ways to raise money.
In summary, there is a huge opportunity for charities to engage with the incredibly generous and future-thinking crypto community. The risks do need to be identified and considered, but there are now the case studies and established partners to support. It is a great time to for charities of all sizes to dive into this world and learn more about how they could work with this new generation of donors.
Matt Smith, THINK
About Matt Smith
Matt is head of development & innovation at THINK, a leading international consultancy dedicated to not for profit fundraising. As an innovation and fundraising leader, his specialist skills include digital fundraising, new product development and facilitation. He is proficient in setting up innovation functions, strategy development and managing large, cross-organisational change projects.
THINK has been working with charities across the world for over twenty years. Beyond core consultancy services, THINK also offers market intelligence, interim management and specialist forums.
Main photo (top) by Viktor Hanacek on Picjumbo
