NEW YORK, NEW YORK – JUNE 29: Sir Tim Berners-Lee auctioned the source code for the World Wide Web, which was given to the world for free, as an NFT at Sotheby’s on June 29, 2021 in New York City. The auction raised $5.4 million which Berners-Lee said would be donated to charity.
Noam Galai | Getty Images Entertainment | Getty Images
This Giving Tuesday, philanthropy is undergoing a tech revolution. NFTs, known for pushing the art and entertainment industries forward, are innovating in charitable giving as well, and some of the crypto community’s biggest bulls and earliest backers are getting on board.
Gemini, the cryptocurrency company founded by bitcoin billionaires Cameron and Tyler Winklevoss, unveiled in February a “Give Back with Crypto” feature, giving Gemini wallet holders the opportunity to donate to over 300 nonprofits, courtesy of a three-year-old platform named The Giving Block. The Giving Block provides the technology stack to connect the crypto community with the philanthropic community, meaning that Gemini wallet holders, FTX users, and all of The Giving Block’s other partners can donate any one of dozens of cryptocurrencies directly to a nonprofit of their choosing.
The Giving Block has become one of the mainstays in crypto charitable giving, partnering with dozens of platforms and exchanges and hundreds of charities. And, trendy as they are, the logistics and tax implications of crypto donations aren’t all that different from stock donations.
Donating cryptocurrency isn’t new; United Way was one of the first and largest nonprofits to start accepting bitcoin donations in 2014. Edwin Goutier, vice president of innovation for United Way, told CNBC that back then, “We saw a growing thriving community of individuals who were passionate as well as a growing base of wealth.”
Today, Goutier sees a similar rise with NFTs.
Jack Dorsey famously sold his first tweet as an NFT and donated the proceeds to charity earlier this year, and CNBC’s own ‘Haines Bottom’ NFT sold at auction for over $61,000 just a few months later. The Winklevii haven’t slept on the NFTs for philanthropy model either. To commemorate the 13th anniversary of the bitcoin white paper, Gemini displayed over 100 phrases from the paper on a former CNN billboard in NYC’s Columbus Circle. Each phrase sold as an NFT on the Gemini-owned Nifty Gateway, and all proceeds were donated.
If donating cryptocurrency is akin to donating stock, Nifty Gateway COO Patrick McLaren says donating NFTs is analogous to donating physical goods, like a traditional piece of art or a similar high-value collectible. And, McLaren says, it’s in the DNA of the crypto community. “I recall when the blockchain industry was just becoming an industry, and it was all happening very, very quickly, it always struck me how much people wanted to give back.”
Venture capitalist and longtime cryptocurrency optimist Bill Tai saw the charitable potential in NFTs early on. He was Zoom’s first investor and an early Twitter and Tweetdeck backer, but he’s also backed DapperLabs, the company behind NBA TopShot and CryptoKitties. In 2018, he commissioned what eventually became the first NFT for charity: Honu Kitty, a part cat, part turtle that yielded $25,000 for marine conservation. Now three years later, Tai has set up Metagood, an NFT marketplace that enables donations for each NFT drop. Metagood’s investors include Owen Wilson; Richard Branson’s children Holly and Sam Branson; Charlie Lee, inventor of Litecoin; and Woody Harrelson.
Metagood is one of many social impact NFT projects to launch this year. Binance launched the NFT for Good collection over the summer, benefiting charities for children. OpenSea has hosted charitable drops, and DoinGud, an NFT marketplace with a donation requirement for each sale, launches for the public on Tuesday.
The charitable opportunity in crypto and NFTs isn’t occurring without a related opportunity for the new platforms to make money. While many in crypto emphasize community as the industry’s standout feature, more use of crypto means a bigger market overall. “Any time you have a community of interest, you have the ability to create commerce, and a currency,” Tai said.
How charities view the blockchain
The NFT donation appeal for charities, and for donors, lay less in the novelty of the blockchain and more in its long term impact. The royalties that attracted the likes of Steve Aoki, Kings of Leon, and Gary Vaynerchuk to the NFT ecosystem are also attracting nonprofits who see the NFT’s secondary and tertiary markets as opportunities for donations in perpetuity.
Built on the Polygon blockchain, DoinGud allows artists to determine how much of the token’s proceeds go to charity, as well as which charity the sales will benefit. The platform is, for now, allowing no less than a 5% allocation in the primary market, and the donations from the secondary market sales are determined in each NFT’s individual smart contract. The default, says co-founder and curator Kyle Gordon, is a donation of 2.5% in the secondary market.
Since NFTs, like traditional art and collectible assets, accrue value over time, Goutier says the potential in this new donation model is in part why the nonprofit agreed to work with DoinGud. “We’ll have the opportunity to receive a portion of secondary market sales,” he said.
As the original NFT increases in value, so does the donation, and the nonprofit first chosen by the creator benefits with every transaction, forever. The benefits are monetary, certainly, but also cultural. With each transaction, the nonprofit reups its relevance. “It’s a sustainable donation model,” Goutier said.
For artists, NFT profits are typically blunted by notorious gas and transaction fees, and donating a cut of proceeds may not seem feasible for newer creators. To combat that, DoinGud has instead put gas and minting fees on the collectors, offering creators a chance to retain 95% of their sale’s proceeds.
Like all things crypto, though, it’s still early days. While United Way has accepted crypto donations for seven years, cryptocurrencies still comprise an extremely small amount of its $4.8 billion raised annually — Goutier estimates less than 1%. NFTs may very well help raise that number, but nonprofits are now considering other implications of their corporate wallets. “Do we keep crypto on our balance sheet?” Goutier said.
The Giving Block has launched its own version of Giving Tuesday: NFTuesday, scheduled for December 7, in conjunction with the Sotheby’s auction benefiting Sostento, a nonprofit for health-care workers. The two are touting the upcoming event as the “biggest NFT charity auction ever.”