How NFTs are raising money for charity

Amidst inflatable toy soldiers, dogs and happy dragons, last November the US department store Macy’s added another element in its annual Thanksgiving Day Holiday Parade: non-fungible tokens (NFTs). 

As part of the event, Macy’s released a collection of 10 NFTs based on its most iconic parade floats. Then, it donated the proceeds from the sale to the Make-A-Wish Foundation, a charity that aims to fulfill the wishes of terminally ill children. 

The NFTs earned the charity over $250,000 in primary sales. On top of that, more than $34,000 in sales on secondary marketplaces, with 10% of every additional NFT resale benefiting Make-A-Wish. 

That sums up why charitable organizations have been among the early adopters of NFTs: not only are they new things that can be sold to generate revenue, but they can also be programmed to keep providing value every time they change hands.

In all, NFTs earned charities over $12 million in 2021 — most commonly by receiving most or all of a direct sale or a percentage of royalties through secondary sales, according to The Giving Block, an organization that gives charities the tools to accept crypto donations.

Macy’s and Make-a-Wish aren’t the only big-name organizations using NFTs to raise money for charity. UNICEF, a United Nations humanitarian organization providing aid to children internationally, raised a total of $740,000 through the sale of 1,000 NFTs released last month. 

At the same time, artists have embraced the idea that their NFTs could be a new way to use their art to raise money for causes they support. And several crypto-focused organizations have emerged to make it easier for them to do that.

Non(profit) Fungible Tokens

Charities are nonprofit organizations that aim to benefit the public in some way. Nonprofits generally get their funding from three main sources: charging a fee for a service (for instance selling merchandise or charging admission to a gala), donations, or grant funding, according to the American charity assessment organization Nonprofit Impact Matters. 

But these revenue sources only net nonprofits an estimated $0.40 for every dollar spent. So charitable organizations are always open to new ways of making money, says Danny Greene, founder of an organization called Luna for Good that helps nonprofits benefit from NFT sales.

“Nonprofits are constantly looking for sustainable revenue sources because the amount of time and effort that it takes to solicit donors to put on events to do fundraising takes a lot of time away from actually doing the work that the nonprofit is designed to do — to actually create the social change that they're seeking,” Greene says.

Greene says what is especially compelling about NFTs is that they can keep generating money for the charity even after the initial sale ends. “NFTs represent something new and creative and different in the way that the built-in royalties exist,” says Greene. 

Greene’s Luna for Good held an NFT auction on December 16 to fund the humanitarian organization Choose Love, which provides aid to refugees worldwide. Artists voluntarily chose to enter their work into the collection, paying the upfront minting cost themselves. They then earned around 15% of NFT sales with the remaining 85% going to Choose Love. In total, the collection has raised 4.88 ETH (over $15,000) through 29 sales so far.

Doing good with art

There’s a market for projects like Luna for Good because some artists are now seeing NFTs as a new way to make a difference with their art.

Desiree Deleau, a 29-year-old Canadian who refound her passion for art while getting treatment for breast cancer, felt the unique nature of NFTs could benefit her nonprofit. The charity, called Girlfrens NFT, raises money from NFT sales to buy art supplies for people undergoing cancer treatment. The project also partnered with Little Pink Hope in December to provide free housing to patients and family members affected by breast cancer. 

Deleau says that NFTs provide a new way to raise money from a dedicated community — like fans of an artist or a particular style of art. “When I started learning more about NFTs I was like, ‘This has every piece to bring it all together.”

Artists tend to be intrinsically motivated to align themselves with causes they value and show to their audiences their support of these causes, says Manu Alzur, founder of an organization called DoinGud, which allows digital artists to donate 5% to 95% of their NFT sales directly to a charity of their choice. Over 200 artists have used the platform, according to Alzuru. 

DoinGud does not touch the funds that an artist may earmark for charities or social causes, Alzuru explains. Rather, a creator uses the DoinGud website to specify a social cause when preparing the NFT for sale. When the sale occurs, the NFT’s smart contract automatically splits the funds between the NFT’s creator and the charitable organization. Social causes can then claim the funds through a Polygon wallet that they must provide during the DoinGud onboarding process. 

As of publication, DoinGud has facilitated donations of $64,500 to charitable organizations through four creators’ drops. The organization has also formed partnerships with 40 nonprofits,  including the International Women’s Media Foundation, TeachRock, Malala Fund, Bye Bye Plastics Foundation and United Way Worldwide. 

NFTs can fill a hole in the current infrastructure for charitable giving, argues Alzuru. 

“Many creators and humans, in general, want to give back to their communities and to causes that have a social impact agenda,” he says. “However, with the current infrastructure, there is lack of transparency when it comes to donations and also a lack of a sustainable and symbiotic relationship between creators and their communities.”